Exhibit 10.1

 

 

 

GUARANTEE AGREEMENT

OF GASTAR USA SERIES A PREFERRED SECURITIES

Gastar Exploration Ltd.

Dated as of June 23, 2011

 

 

 

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TABLE OF CONTENTS

 

          Page  

Section 1

   Definitions and Interpretation.      1   

Section 2

   Guarantee.      2   

Section 3

   Waiver of Notice and Demand.      2   

Section 4

   Obligations Not Affected.      2   

Section 5

   Rights of Holders.      3   

Section 6

   Guarantee of Payment.      3   

Section 7

   Subrogation.      3   

Section 8

   Independent Obligations.      3   

Section 9

   Subordination.      4   

Section 10

   Termination.      4   

Section 11

   Successors and Assigns.      4   

Section 12

   Amendments.      4   

Section 13

   Notices.      4   

Section 14

   Third Party-Beneficiaries.      5   

Section 15

   Governing Law; Waiver of Trial by Jury.      5   

 

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GUARANTEE AGREEMENT

OF GASTAR USA SERIES A PREFERRED SECURITIES

This GUARANTEE AGREEMENT (the “Guarantee Agreement”), dated as of June 23, 2011,
is executed and delivered by Gastar Exploration Ltd., a corporation subsisting
under the Business Corporations Act (Alberta) (the “Guarantor”), and Gastar
Exploration USA, Inc., a Delaware corporation (the “Issuer”), for the benefit of
the Holders (as defined herein) from time to time of the Series A Preferred
Shares (as defined herein) of the Issuer.

WHEREAS, pursuant to the Certificate of Designation of Rights and Preferences of
8.625% Series A Cumulative Preferred Stock (the “Certificate of Designation”),
dated as of June 20, 2011, of the Issuer, the Issuer is authorized to issue up
to 10,000,000 shares of preferred stock, par value $0.01 per share, designated
as the 8.625% Series A Cumulative Preferred Stock (the “Series A Preferred
Shares”);

WHEREAS, as incentive for the Holders to purchase the Series A Preferred Shares,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Guarantee Agreement, to pay to the Holders the Guarantee
Payments (as defined herein) in the manner and to the extent set forth in this
Guarantee Agreement; and

WHEREAS, the Guarantee Agreement inures to the benefit of, and is intended to be
for, the Holders, who are intended third-party beneficiaries of this Guarantee
Agreement.

NOW, THEREFORE, in consideration of the purchase by each Holder of Series A
Preferred Shares, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders.

Section 1 Definitions and Interpretation.

In this Guarantee Agreement, unless the context otherwise requires: (a) a term
defined anywhere in this Guarantee Agreement has the same meaning throughout;
(b) all references to “the Guarantee Agreement,” “this Guarantee Agreement” or
“this Preferred Securities Guarantee” are to this Guarantee Agreement as
modified, supplemented or amended from time to time; (c) all references in this
Guarantee Agreement to “Sections” are to Sections of this Guarantee Agreement,
unless otherwise specified; and (d) a reference to the singular includes the
plural and vice versa.

“Dividends” means any accumulated and unpaid dividends (as described in the
Certificate of Designation) with respect to the Series A Preferred Shares.

“Guarantee Payments” means the following payments or distributions, without
duplication, with respect to the Series A Preferred Shares, to the extent not
paid or made by or on behalf of the Issuer: (a) any Dividends that have been
declared by the board of directors of Issuer to be paid on the Series A
Preferred Shares out of funds legally available for such Dividends, (b) the
applicable redemption price (as stated in the Certificate of Designation), plus
all accrued and unpaid Dividends to the date of redemption (the “Redemption
Price”), with respect to any Series A Preferred Shares called for redemption by
the Issuer or required to be redeemed by the

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terms of the Certificate of Designation and (c) upon a voluntary or involuntary
dissolution, winding-up or termination of the Issuer, the aggregate of the
liquidation amount of $25.00 per Series A Preferred Share and all accrued and
unpaid Dividends on the Series A Preferred Shares, whether or not declared,
without regard to whether the Issuer has sufficient assets to make full payment
as required on liquidation (the “Liquidation Distribution”).

“Holder” shall mean any holder, as registered on the books and records of either
the Issuer or the transfer agent, of any Series A Preferred Shares.

“Person” means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability
company, trust, unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever nature.

Section 2 Guarantee.

The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts thereto for paid
by or on behalf of the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor’s obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.

Section 3 Waiver of Notice and Demand.

The Guarantor hereby waives notice of acceptance of this Guarantee Agreement and
of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Issuer or any other
Person before proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.

Section 4 Obligations Not Affected.

The obligations, covenants, agreements and duties of the Guarantor under this
Guarantee Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:

(a) the release or waiver, by operation of law or otherwise, of the performance
or observance by the Issuer of any express or implied agreement, covenant, term
or condition relating to the Series A Preferred Shares to be performed or
observed by the Issuer;

(b) the extension of time for the payment by the Issuer of all or any portion of
the Dividends, Redemption Price, Liquidation Distribution or any other sums
payable under the terms of the Series A Preferred Shares or the extension of
time for the performance of any other obligation under, arising out of, or in
connection with, the Series A Preferred Shares;

(c) any failure, omission, delay or lack of diligence on the part of the Holders
to enforce, assert or exercise any right, privilege, power or remedy conferred
on the Holders pursuant to the terms of the Series A Preferred Shares, or any
action on the part of the Issuer granting indulgence or extension of any kind;

 

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(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;

(e) any invalidity of, or defect or deficiency in, the Series A Preferred
Shares;

(f) the settlement or compromise of any obligation guaranteed hereby or hereby
incurred; or

(g) any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a guarantor, it being the intent of this
Section 4 that the obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.

Section 5 Rights of Holders.

A Holder may also directly institute a legal proceeding against the Guarantor to
enforce such Holder’s right to receive payment under this Guarantee Agreement
without first instituting a legal proceeding directly against the Issuer or any
other Person or entity.

Section 6 Guarantee of Payment.

This Guarantee Agreement creates a guarantee of payment and not of collection.

Section 7 Subrogation.

The Guarantor shall be subrogated to all (if any) rights of the Holders against
the Issuer in respect of any amounts paid to such Holders by the Guarantor under
this Guarantee Agreement; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Guarantee Agreement, if, at the time of any such payment, any amounts
are due and unpaid under this Guarantee Agreement. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Holders.

Section 8 Independent Obligations.

The Guarantor acknowledges that its obligations hereunder are independent of the
obligations of the Issuer with respect to the Series A Preferred Shares, and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 4 hereof.

 

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Section 9 Subordination.

The obligations of the Guarantor under this Guarantee Agreement will constitute
unsecured obligations of the Guarantor and will rank subordinate and junior in
right of payment to all existing and future indebtedness of the Guarantor. The
obligations of the Guarantor hereunder do not constitute indebtedness of the
Guarantor.

Section 10 Termination.

This Guarantee Agreement shall terminate upon the first to occur of
(a) Guarantor ceases to own a majority of the common stock of the Issuer,
(b) full payment of the Redemption Price of all Series A Preferred Shares or
(c) full payment of the amounts payable in accordance with the Certificate of
Designation upon liquidation of the Issuer. Notwithstanding the foregoing, this
Guarantee Agreement will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must restore payment of any sums paid
under the Series A Preferred Shares or under this Guarantee Agreement.

Section 11 Successors and Assigns.

(a) Neither this Guarantee Agreement nor any right, remedy, obligation nor
liability arising hereunder or by reason hereof shall be assignable by any party
hereto without the prior written consent of the other party, and any attempt to
assign any right, remedy, obligation or liability hereunder without such consent
shall be void, unless the successor or assignee agrees in writing to perform the
Guarantor’s obligations hereunder.

(b) This Guarantee Agreement shall be binding upon and shall inure to the
benefit of any successor or permitted assign of the Guarantor.

Section 12 Amendments.

The Guarantor may amend this Guarantee Agreement at any time for any purpose
without the consent of any Holder; provided, however, that if such amendment
adversely affects the rights of any Holder, the prior written consent of each
Holder affected shall be required.

Section 13 Notices.

Any notice, request, instruction or other document to be given hereunder by any
party to the other will be in writing and will be deemed to have been duly given
(a) on the date of delivery if delivered personally, or by facsimile, upon
confirmation of receipt, or (b) on the second business day following the date of
dispatch if delivered by a recognized next day courier service. All notices
shall be delivered, telecopied or sent by a recognized next day courier service,
as set forth below, or pursuant to such other instructions as may be designated
by the Guarantor or the Holders:

(a) If given to the Guarantor, at the Guarantor’s mailing address set forth
below (or such other address as the Guarantor may give notice of to the Holders
and the Issuer):

Gastar Exploration Ltd.

1331 Lamar Street, Suite 650

Houston, Texas 77010

Attention: Chief Financial Officer

 

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(b) If given to the Issuer, at the Issuer’s mailing address set forth below (or
such other address as the Issuer may give notice of to the Holders and the
Guarantor):

Gastar Exploration USA, Inc.

1331 Lamar Street, Suite 650

Houston, Texas 77010

Attention: Chief Financial Officer

(c) If given to any Holder, at the address set forth on the books and records of
the Issuer.

Section 14 Third Party-Beneficiaries.

This Guarantee Agreement inures to the benefit of, and is intended to be for the
benefit of the Holders, who are intended third-party beneficiaries of this
Guarantee Agreement.

Section 15 Governing Law; Waiver of Trial by Jury.

THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, AND ALL RIGHTS
AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD FOR THE PRINCIPLES OF
ITS CONFLICTS OF LAWS. EACH OF THE PARTIES HERETO AGREES (A) TO SUBMIT TO THE
EXCLUSIVE JURISDICTION AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF TEXAS FOR ANY AND ALL CIVIL ACTIONS, SUITS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS PREFFERED SECURITIES GUARANTEE OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND (B) THAT NOTICE MAY BE SERVED
UPON THE GUARANTOR AT THE ADDRESS AND IN THE MANNER SET FORTH FOR NOTICES TO THE
GUARANTOR IN SECTION 13. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PARTIES HERETO HEREBY UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY CIVIL LEGAL
ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

 

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THIS PREFERRED SHARES GUARANTEE AGREEMENT is executed as of the day and year
first above written.

 

GASTAR EXPLORATION LTD.,

as Guarantor

By:  

/s/ J. Russell Porter

Name:   J. Russell Porter Title:   President and Chief Executive Officer

GASTAR EXPLORATION USA, INC.,

as Issuer

By:  

/s/ J. Russell Porter

Name:   J. Russell Porter Title:   President

Signature Page to

Preferred Securities Guarantee Agreement