THIS
AGREEMENT is effective as
of January 1, 2007.
OILSANDS QUEST INC.
, a corporation incorporated under
the laws of
Colorado, having its head office in the City of Calgary (the
“Corporation”)
[•] of Calgary, Alberta, Canada
(the “Indemnified Party”)
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1.
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The
Indemnified Party is, or has agreed to act as, a director or
officer of the Corporation and/or is acting or may, at the
Corporation’s request, act in an Authorized Capacity of
Another Entity and the Corporation wishes the Indemnified Party to
serve or continue in such capacity; and
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2.
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In
order to induce the Indemnified Party to serve or continue to
provide services to the Corporation or Another Entity, the
Corporation wishes to provide for the indemnification of, and
advancement of expenses to, the Indemnified Party to the maximum
extent permitted by applicable law.
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NOW
THEREFORE , in consideration of the premises and mutual
covenants herein contained, and in consideration of the Indemnified
Party agreeing to act, or to continue to act, as a director or
officer of the Corporation or in an Authorized Capacity with
Another Entity, the Corporation and the Indemnified Party do hereby
covenant and agree as follows:
1.1 As used in
this Agreement, including the Recitals:
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(a)
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“Act” means the Colorado
Business Corporation Act, as amended;
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(b)
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“Advance” means an
advance of Expenses to the Indemnified Party pursuant to
Section 3;
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(c)
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“Another Entity” means a
corporation, partnership, joint venture, trust or unincorporated
association or organization of which the Indemnified Party serves
in an Authorized Capacity at the request of the
Corporation;
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(d)
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“Authorized Capacity”
means a director or officer, or a similar capacity, of a Another
Entity;
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(e)
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“By-Laws” means the
by-laws of the Corporation;
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(f)
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“Court” means the Court
of Queen’s Bench of the Province of Alberta;
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(g)
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“Expenses” means all
costs, charges and expenses incurred by the Indemnified Party in
respect of any Proceedings including, without limitation,
reasonable fees and disbursements of counsel and other professional
fees and out-of-pocket expenses for attending discoveries, trials
or hearings and meetings to prepare for such proceedings, but shall
not include Loss;
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(h)
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“Liabilities” means the
Expenses and Loss incurred by the Indemnified Party in respect of
any Proceedings;
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(i)
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“Loss” means amounts
which the Indemnified Party is legally obligated to pay as a result
of a Proceeding against the Indemnified Party including amounts
paid to settle an action or satisfy a judgment or to satisfy any
fines or penalties levied in respect of such Proceedings, but shall
not include Expenses; and
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(j)
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“Proceedings” means any
threatened, pending or completed civil, criminal, administrative,
investigative or other proceeding (including formal and informal
inquiries and hearings), whether or not charges have been laid
against the Corporation or Another Entity or the Indemnified Party,
in which the Indemnified Party is involved by reason of the
Indemnified Party’s association with the Corporation or
Another Entity, or by reason of anything done or not done by the
Indemnified Party in the capacity as a director or officer of the
Corporation or in an Authorized Capacity with Another
Entity.
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2.1 Except in
respect of an action referred to in Section 2.2 and subject to
Section 2.3, the Corporation shall indemnify and save harmless
the Indemnified Party from and against all Liabilities, actually
and reasonably incurred by the Indemnified Party in respect of any
Proceedings if:
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(a)
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the
Indemnified Party acted honestly and in good faith with a view to
the best interests of the Corporation or Another Entity, as the
case may be; and
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(b)
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in
the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, the Indemnified Party had no
reasonable grounds for believing that the Indemnified Party’s
conduct was unlawful.
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2.2 In respect
of any action by or on behalf of the Corporation or Another Entity
to procure a judgment in its favour, to which the Indemnified Party
is made a party by reason of being or having been a director or
officer of the Corporation or serving in an Authorized Capacity
with Another Entity, or by reason of anything done or not done by
the Indemnified Party in any such capacity, the Corporation shall,
with the prior approval of the Court, indemnify and save harmless
the Indemnified Party against all Expenses actually and reasonably
incurred by the Indemnified Party in connection with such
Proceedings if the Indemnified Party fulfils the conditions set out
in Sections 2.1(a) and (b) above. The Corporation agrees
to make application
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to the Court
for approval of such indemnification and to use reasonable
commercial efforts to obtain approval to such
indemnification.
2.3
Notwithstanding any other provision of this Agreement, the
Corporation shall not be obligated to:
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(a)
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indemnify the Indemnified Party or
make Advances with respect to Proceedings initiated or brought
voluntarily by the Indemnified Party and not by way of defence,
except (i) with respect to Proceedings to enforce a right to
indemnification or Advance pursuant to this Agreement, or
(ii) in specific cases if the Board of Directors of the
Corporation has approved the initiation of such Proceedings;
or
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(b)
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indemnify the Indemnified Party in
respect of any amounts the payment of which by the Corporation is
not permitted by applicable law.
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2.4 For the
purposes of this Agreement, the termination of any Proceedings by
judgment, order, settlement or conviction, or similar or other
result shall not, of itself, create any presumption for the
purposes of this Agreement that the Indemnified Party did not act
honestly and in good faith with a view to the best interests of the
Corporation or Another Entity, as the case may be, or that, in the
case of a criminal or administrative action or proceeding that is
enforced by monetary penalty, the Indemnified Party had no
reasonable grounds for believing that the Indemnified Party’s
conduct was unlawful, unless the judgement or order of the court or
other competent authority shall specifically find or determine
otherwise.
2.5 In respect
of any claim for indemnification pursuant to this Agreement, the
Corporation may not indemnify the Indemnified Party unless a
determination is made that the Indemnified Party acted honestly and
in good faith and with a view to the best interests of the
Corporation or Another Entity, as the case may be, and, in the case
of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, to have had no reasonable grounds
for believing that his (her) conduct was unlawful. The
determination shall be made either: (1) by a majority vote of
the board of directors present at a meeting at which a quorum is
present, and only those directors not parties to the Proceedings
shall be counted in satisfying the quorum; (2) if a quorum
cannot be obtained, by a majority vote of a committee of board of
directors designated by the board of directors, including the
directors who are parties to the Proceedings, which committee shall
consist of two or more directors not parties to the Proceedings;
(3) if a quorum cannot be obtained under (1) and a
committee cannot be established under (2), then the determination
shall be made by independent legal counsel selected by a majority
vote of the full board of directors, or by the
shareholders.
2.6 If the
Indemnified Party is entitled under this Agreement to a portion but
not all of the benefit of the indemnification provided hereunder,
the Corporation shall indemnify the Indemnified Party for the
portion thereof to which the Indemnified Party is determined to be
entitled.
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3.1 Subject to
Section 2.3, the Corporation shall advance moneys to the
Indemnified Party for Expenses of the Indemnified Party reasonably
incurred in respect of any Proceedings referred to in
Section 2.1, as may be appropriate to enable the Indemnified
Party to properly investigate, defend, participate in or appeal
such Proceedings.
3.2 The
Corporation shall seek Court approval to the advance of moneys to
the Indemnified Party for Expenses reasonably incurred by the
Indemnified Party in respect of Proceedings referred to in
Section 2.2.
3.3 In the
event that it is ultimately determined that the Indemnified Party
was not entitled to be indemnified, or was not entitled to be fully
indemnified, for any Liabilities in any Proceedings in respect of
which Advances have been made under Section 3.1 or 3.2, the
Indemnified Party shall reimburse the Corporation for such Advances
or portion of such Advances.
3.4 An Advance
shall be made by the Corporation upon receipt of :
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(a)
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a
written request for Advance containing sufficient detail of the
Proceedings and Expenses to enable the Corporation to determine
whether and the extent to which the Indemnified Party is entitled
to an Advance;
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(b)
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copies of all receipts, invoices and
other supporting material reasonably required by the Corporation
(including in the case of legal or other professional advisors, a
detailed description of the services rendered) in respect of the
Expenses;
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(c)
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a
written acknowledgement of the Indemnified Party’s obligation
to reimburse the Corporation for the amount of all Advances if it
is determined that the Indemnified Party was not entitled to be
indemnified or fully indemnified for Expenses in respect of which
Advances were made by the Corporation; and
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(d)
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a
written affirmation that, based on facts known to the Indemnified
Party and in relation to the matter giving rise to the request for
the Advance, the Indemnified Party in good faith believes that the
Indemnified Party:
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(i)
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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 Entity for which the
Indemnified Party acted in an Authorized Capacity; and
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(ii)
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in
the case of a criminal or administrative proceeding that is
enforced by a monetary penalty, the Indemnified Party had no
reasonable grounds for believing that his or her conduct was
unlawful.
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(e)
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a
determination that is made pursuant to Section 2.5 that the
facts then known will not preclude indemnification under this
Agreement.
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