Exhibit 10.1
FORM OF INDEMNITY
AGREEMENT
DATED as of the
day of
, 2006
BETWEEN:
GASTAR EXPLORATION
LTD. , a corporation
subsisting under the laws of Alberta (the
“Corporation”)
AND
(the
“Indemnified Party”)
WHEREAS Section 124(1) of the
Business Corporations Act (Alberta) (the “Act”),
under which the Corporation is subsisting, provides that a
corporation may indemnify a director or officer of the Corporation,
a former director or officer of the Corporation or a person who
acts or acted at the Corporation’s request as a director or
officer of a body corporate of which the Corporation is or was a
shareholder or creditor, against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment,
reasonably incurred by the director or officer in respect of any
civil, criminal or administrative action or proceeding to which the
director or officer is made a party by reason of being or having
been a director or officer of that corporation or body corporate,
if (a) the director or officer acted honestly and in good
faith with a view to the best interests of the Corporation and
(b) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, the director or
officer had reasonable grounds for believing that the
director’s or officer’s conduct was lawful;
AND WHEREAS the by-laws (the
“By-Laws”) of the Corporation permit indemnification in
accordance with the foregoing and in such other circumstances as
the Act permits or requires;
AND WHEREAS, Section 124(2) of
the Act provides that a corporation may with the approval of a
court indemnify a person referred to in subsection 124(1) in
respect of any civil, criminal or administrative action by or on
behalf of the corporation or body corporate to procure a judgement
in its favour, to which the person is made a party by reason of
being or having been a director or officer of the Corporation or
body corporate against all costs, charges and expenses reasonably
incurred by the director or officer in connection with the action,
if (a) the director or officer acted honestly and in good
faith with a view to the best interests of the Corporation, or, as
the case may be, to the best interests of another corporate entity
for which the individual acted as a director or officer at the
Corporation’s request and (b) in the case of a criminal
or administrative action or proceeding that is enforced by monetary
penalty, the director or officer had reasonable grounds for
believing that the director’s or officer’s conduct was
lawful;
AND WHEREAS in addition,
Section 124(3) of the Act provides that notwithstanding
anything in Section 124, a person referred to in subsection
124(1) of the Act is entitled to indemnity from the corporation in
respect of all costs, charges and expenses reasonably incurred by
the person in connection with the defense of any civil, criminal or
administrative action or proceeding to which the person is made a
party by reason of being or having been a director or officer of
the Corporation or body corporate, if the person seeking indemnity
(a) was substantially successful on the merits in the
person’s defence of the action or proceeding,
(b) fulfills the conditions set out in subsection 124(1)
of the Act and (c) is fairly and reasonably entitled to
indemnity;
AND WHEREAS in addition,
Section 124(4) of the Act empowers a corporation to purchase
and maintain insurance for the benefit of an individual referred to
in subsection 124(1) against any liability incurred by the person:
(a) in the person’s capacity as a director or officer of
the Corporation, except when the liability relates to the
person’s failure to act honestly and in good faith with a
view to the best interests of the Corporation; or (b) in the
person’s capacity as a director or officer of another body
corporate if the person acts or acted in that capacity at the
Corporation’s request, except when the liability relates to
the person’s failure to act honestly and in good faith with a
view to the best interests of the body corporate;
AND WHEREAS the Corporation desires
to have the Indemnified Party serve or continue to serve as a
director or officer of the Corporation, or as a director and/or
officer, or similar capacity (collectively referred to herein as
“director or officer”), of another entity if the
individual acts or acted in that capacity at the
Corporation’s request (each other entity is referred to
herein as an “Affiliate”) of which he has been or is
serving, or will serve at the request of the Corporation, free from
undue concern for unpredictable, inappropriate or unreasonable
claims for damages by reason of the Indemnified Party being, or
having been, a director or officer of the Corporation or an
Affiliate or by reason of the Indemnified Party’s decisions
or actions on their behalf;
AND WHEREAS the Indemnified Party is
willing to serve, or to continue to serve, or to take on additional
service for, the Corporation or the Affiliates in such aforesaid
capacities on the condition that he be indemnified as provided for
herein;
NOW THEREFORE, IN CONSIDERATION OF
the premises and mutual covenants herein contained, and in
consideration of the sum of One ($1.00) Dollar paid by the
Indemnified Party to the Corporation (the receipt of which is
hereby acknowledged) and the Indemnified Party acting and/or
agreeing to act or to continue to act as a director or officer of
the Corporation or of an Affiliate, the Corporation and the
Indemnified Party do hereby covenant and agree as
follows:
1. Agreement to
Serve
The Indemnified Party agrees to
serve or continue to serve as a director or officer (in the case of
an officer of the Corporation, at the will of the Corporation or
Affiliate or under a separate contract, if any such contract exists
or shall hereafter exist) of the Corporation or of an Affiliate
honestly and in good faith with a view to the best interests of the
Corporation or Affiliate so long as he is duly elected and
qualified in accordance with the provisions of the Act and the
By-Laws; provided, however, that (a) the Indemnified Party may
at any time and for any reason resign from such position (subject
to any contractual obligations which the Indemnified Party shall
have assumed apart from this Agreement) and (b) neither the
Corporation nor any Affiliate shall have any obligation under this
Agreement to continue the Indemnified Party in any such
position.
2. Indemnification
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(a)
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To the full
extent allowed by law, the Corporation and its Affiliate, as the
case may be, jointly and severally agree to indemnify and save
harmless the Indemnified Party, his heirs, successors and legal
representatives from and against any and all damages, liabilities,
costs, charges or expenses suffered or incurred by the Indemnified
Party, his heirs, successors or legal representatives, directly or
indirectly, as a result or by reason of the Indemnified Party being
or having been or having agreed to serve as a director or officer
of the Corporation or an Affiliate or by reason of any action taken
by the Indemnified Party in his capacity as a director or officer
of the Corporation or an Affiliate, including without limitation,
any liability for unpaid employee wages, provided that such
damages, liabilities, costs, charges or expenses were not suffered
or incurred as a direct result of the Indemnified Party’s own
fraud.
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(b)
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In addition and
without limitation of Section 2(a), above, the Corporation
agrees:
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(i)
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to indemnify
the Indemnified Party and the Indemnified Party’s heirs,
successors and legal representatives against all costs, charges and
expenses, including, without limitation, an amount paid to settle
an action or to satisfy a judgment, reasonably incurred by the
Indemnified Party in respect of any civil, criminal or
administrative action or proceeding to which the Indemnified Party
is made a party by reason of being or having been or having agreed
to serve as a director or officer of the Corporation or an
Affiliate, if the Indemnified Party met the following standard of
conduct (the “Standard of Conduct”):
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(1)
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the Indemnified
Party acted honestly and in good faith with a view to the best
interests of the Corporation, or, as the case may be, to the best
interests of an Affiliate; and
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(2)
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in the case of
a criminal or administrative action or proceeding that is enforced
by monetary penalty, the Indemnified Party had reasonable grounds
for believing that the Indemnified Party’s conduct was
lawful;
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(ii)
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to indemnify
the Indemnified Party and the Indemnified Party’s heirs,
successors and legal representatives in respect of an action by or
on behalf of the Corporation or an Affiliate to procure a judgment
in its favour, to which the Indemnified Party is made a party
because of the Indemnified Party’s association with the
Corporation or an Affiliate, against all costs, charges and
expenses reasonably incurred by the Indemnified Party in connection
with such action if the Indemnified Party has met the Standard of
Conduct set forth in subsections 2(b)(i)(1) and (2) set out
above and if the Corporation obtains the approval of a Court
(pursuant to the Act) to grant such indemnity;
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(iii)
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to indemnify
the Indemnified Party and the Indemnified Party’s heirs and
legal representatives against all costs, charges and expenses,
including an amount paid to settle an action or to satisfy a
judgment, incurred by the Indemnified Party in respect of any
civil, criminal or administrative action or proceeding to which the
Indemnified Party is made a party and which action or proceeding
relates to the duties or responsibilities of the directors and/or
officers of the Company during a time which predates the
appointment of the Indemnified Party as a director and/or officer
of the Company.
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(iv)
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in the event
that the approval of the Court is required to effect any
indemnification granted hereunder, the Corporation agrees to make
application for and use its best efforts to obtain the
Court’s approval to such indemnification provided that the
Indemnified Party has met the Standard of Conduct set forth in
subsection 2(b)(i)(1) and (2) herein;
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(v)
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notwithstanding
subsections 2(b)(i) and (ii) above, to indemnify the
Indemnified Party and the Indemnified Party’s heirs,
successors and legal representatives in respect of all costs,
charges and expenses reasonably incurred by the Indemnified Party
in connection with the defence of any civil, criminal or
administrative action or proceeding to which the Indemnified Party
is subject because of the Indemnified Party’s association
with the Corporation or an Affiliate if the Indemnified
Party:
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(1)
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was not judged
by the Court or other competent authority to have committed fraud;
and
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(2)
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has met the
Standard of Conduct set out in subsections 2(b)(i)(1) and
(2) set out above;
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(vi)
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to indemnify
the Indemnified Party and the Indemnified Party’s heirs,
successors and legal representatives in respect of all costs,
charges and expenses reasonably incurred by the Indemnified Party
in connection with the defence of any threatened civil, criminal or
administrative action or proceeding or alleged wrongdoing (or
settlement thereof with the consent of the Corporation) brought
against the Indemnified Party because of the Indemnified
Party’s association with the Corporation or an Affiliate;
and
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(vii)
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for the
purposes of this Agreement including, without limitation,
Section 2 hereof, the termination of any civil, criminal or
administrative action or proceeding by judgement, order,
settlement, conviction or similar or other result shall not, of
itself, create a presumption either that the Indemnified Party did
not act honestly or in good faith with a view to the best interests
of the Corporation or the Affiliate or that, in the case of a
criminal or administrative action or proceeding that is enforced by
a monetary penalty, the Indemnified Party did not have reasonable
grounds for believing that the Indemnified Party’s conduct
was lawful.
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(c)
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The intention
of this Agreement is to provide the Indemnified Party
indemnification to the fullest extent permitted by law and without
limiting the generality of the foregoing and notwithstanding
anything contained herein:
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(i)
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nothing in this
Agreement shall be interpreted, by implication or otherwise, in
limitation of the scope of the indemnification provided in
Section 2(a) and (b) hereof; and
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