INDEMNITY AGREEMENT
This INDEMNITY AGREEMENT (the "Agreement")
is dated as of _________ , 2005 and
is made by and between Gran Tierra Energy,
Inc. a Nevada corporation (the
"Company"), and __________________________,
an officer or director of the
Company (the "Indemnitee").
RECITALS
A. The
Company is aware that competent and experienced persons are
increasingly reluctant to serve as
directors or officers of corporations unless
they are protected by comprehensive
liability insurance and/or indemnification,
due to increased exposure to litigation
costs and risks resulting from their
service to such corporations, and due to
the fact that the exposure frequently
bears no reasonable relationship to the
compensation of such directors and
officers;
B. Based
on their experience as business managers, the Board of
Directors
of the Company (the "Board") has concluded
that, to retain and attract talented
and experienced individuals to serve as
officers and directors of the Company,
and to encourage such individuals to take
the business risks necessary for the
success of the Company, it is necessary for
the Company contractually to
indemnify officers and directors and to
assume for itself maximum liability for
expenses and damages in connection with
claims against such officers and
directors in connection with their service
to the Company;
C. The
Nevada Revised Statutes under which the Company is organized
(the
"Law"), empowers the Company to indemnify
by agreement its officers, directors,
employees and agents, and persons who
serve, at the request of the Company, as
directors, officers, employees or agents of
other corporations or enterprises,
and expressly provides that the
indemnification provided by the Law is not
exclusive; and
D. The
Company desires and has requested the Indemnitee to serve or
continue to serve as a director or officer
of the Company. As an inducement to
serve and in consideration for such
service, the Company has agreed to indemnify
the Indemnitee for claims for damages
arising out of or related to the
performance of such services to the Company
in accordance with the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto,
intending to be legally bound, hereby agree
as follows:
1. Definitions.
1.1 Agent.
For the purposes of this Agreement, "agent" of the Company
means any person who is or at any time was
a director or officer of the Company
or a subsidiary of the Company; or is or at
any time was serving at the request
of, for the convenience of, or to represent
the interest of the Company or a
subsidiary of the Company as a director or
officer of another foreign or
domestic corporation, partnership, joint
venture, trust or other enterprise or
an affiliate of the Company; or was a
director or officer of another enterprise
or affiliate of the Company at the request
of, for the convenience of, or to
represent the interests of such predecessor
corporation. The term "enterprise"
includes any employee benefit plan of the
Company, its subsidiaries, affiliates
and predecessor corporations.
1.2
Expenses. For purposes of this Agreement, "expenses" includes
all
direct and indirect costs of any type or
nature whatsoever (including, without
limitation, all attorneys' fees and related
disbursements and other
out-of-pocket costs) actually and
reasonably incurred by the Indemnitee in
connection with the investigation, defense
or appeal of a proceeding or
establishing or enforcing a right to
indemnification or advancement of expenses
under this Agreement, Section 145 of the
Law or otherwise.
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1.3
Proceeding. For the purposes of this Agreement, "proceeding" means
any
threatened, pending or completed action,
suit, inquiry or other proceeding,
whether civil, criminal, administrative,
investigative or any other type
whatsoever.
1.4
Subsidiary. For purposes of this Agreement, "subsidiary" means
any
corporation of which more than fifty
percent (50%) of the outstanding voting
securities is owned directly or indirectly
by the Company, by the Company and
one or more of its subsidiaries or by one
or more of the Company's subsidiaries.
2. Agreement to Serve. The Indemnitee
agrees to serve and/or continue to serve
as an agent of the Company, at the will of
the Company (or under separate
agreement, if such agreement exists), in
the capacity the Indemnitee currently
serves as an agent of the Company,
faithfully and to the best of his ability, so
long as he is duly appointed or elected and
qualified in accordance with the
applicable provisions of the charter
documents of the Company or any subsidiary
of the Company; provided, however, that the
Indemnitee may at any time and for
any reason resign from such position
(subject to any contractual obligation that
the Indemnitee may have assumed apart from
this Agreement), and the Company or
any subsidiary shall have no obligation
under this Agreement to continue the
Indemnitee in any such position. For the
avoidance of doubt, the Company and
Indemnitee each acknowledge and agree that
the resignation or other termination
of Indemnitee as an agent of the Company
under this paragraph 2 shall not impair
any right that Indemnitee may otherwise
have to be indemnified under the terms
of this Agreement.
3. Directors' and Officers' Insurance. The
Company shall, to the extent that the
Board determines it to be economically
reasonable, maintain a policy of
directors' and officers' liability
insurance ("D&O Insurance"), on such terms
and conditions as may be approved by the
Board.
4. Mandatory Indemnification. Subject to
Section 9 below, the Company shall
indemnify and hold the Indemnitee harmless
to the fullest extent permitted by
the Law. Without limiting the generality of
the foregoing, the company shall
indemnify and hold harmless the
Indemnitee:
4.1 Third
Party Actions. If the Indemnitee is a person who was or is a
party or is threatened to be made a party
to any proceeding (other than an
action by or in the right of the Company)
by reason of the fact that he is or at
any time was an agent of the Company, or by
reason of anything done or not done
by him in any such capacity, against any
and all expenses and liabilities of any
type whatsoever (including, but not limited
to, judgments, fines, ERISA excise
taxes or penalties and amounts paid in
settlement) actually and reasonably
incurred by him in connection with the
investigation, defense, settlement or
appeal of such proceeding if he acted in
good faith and in a manner he
reasonably believed to be in, or not
opposed to, the best interests of the
Company and, with respect to any criminal
action or proceeding, had no
reasonable cause to believe his conduct was
unlawful; and
4.2
Derivative Actions. If the Indemnitee is a person who was or is
a
party or is threatened to be made a party
to any proceeding by or in the right
of the Company to procure a judgment in its
favor by reason of the fact that he
is or at any time was an agent of the
Company, or by reason of anything done or
not done by him in any such capacity,
against any amounts paid in settlement of
any such proceeding and all expenses
actually and reasonably incurred by him in
connection with the investigation, defense,
settlement or appeal of such
proceeding if he acted in good faith and in
a manner he reasonably believed to
be in, or not opposed to, the best
interests of the Company; except that no
indemnification under this subsection shall
be made in respect of any claim,
issue or matter as to which such person
shall have been finally adjudged, in a
judgment not subject to appeal, to be
liable to the Company by a court of
competent jurisdiction due to willful
misconduct of a culpable nature in the
performance of his duty to the Company,
unless and only to the extent that the
Court of Chancery in Delaware or the court
in which such proceeding was brought
shall determine upon application that,
despite the adjudication of liability but
in view of all the circumstances of the
case, such person is fairly and
reasonably entitled to indemnity for such
amounts which the Court of Chancery or
such other court shall deem proper; and
2
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4.3
Exception for Amounts Covered by Insurance. Notwithstanding the
foregoing, the Company shall not be
obligated to indemnify the Indemnitee for
expenses or liabilities of any type
whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or
penalties and amounts paid in
settlement) to the extent such have been
paid directly to the Indemnitee by D&O
Insurance.
5. Partial Indemnification and
Contribution.
5.1
Partial Indemnification. If the Indemnitee is entitled under
any
provision of this Agreement to
indemnification by the Company for some or a
portion of any expenses or liabilities of
any type whatsoever (including, but
not limited to, judgments, fines, ERISA
excise taxes or penalties and amounts
paid in settlement) incurred by him in the
investigation, defense, settlement or
appeal of a proceeding but is not entitled,
however, to indemnification for all
of the total amount thereof, then the
Company shall nevertheless indemnify the
Indemnitee for such total amount except as
to the portion thereof to which the
Indemnitee is not entitled to
indemnification.
5.2
Contribution. If the Indemnitee is not entitled to the
indemnification
provided in Section 4 for any reason other
than the statutory limitations set
forth in the Law, then in respect of any
threatened, pending or completed
proceeding in which the Company is jointly
liable with the Indemnitee (or would
be if joined in such proceeding), the
Company shall contribute to the amount of
expenses (including attorneys' fees),
judgments, fines and amounts paid in
settlement actually and reasonably incurred
and paid or payable by the
Indemnitee in such proportion as is
appropriate to reflect (i) the relative
benefits received by the Company on the one
hand and the Indemnitee on the other
hand from the transaction from which such
proceeding arose and (ii) the relative
fault of the Company on the one hand and of
the Indemnitee on the other hand in
connection with the events which resulted
in such expenses, judgments, fines or
settlement amounts, as well as any other
relevant equitable considerations. The
relative fault of the Company on the one
hand and of the Indemnitee on the other
hand shall be determined by reference to,
among other things, the parties'
relative intent, knowledge, access to
information and opportunity to correct or
prevent the circumstances resulting in such
expenses, judgments, fines or
settlement amounts. The Company
