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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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(ii)
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Section 2(b) is intended to provide
indemnification to the Indemnified Party to the fullest extent
permitted by the Act and, in the event that such statute is
amende
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