UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): April 12, 2012 (April 10, 2012)

 

 

GASTAR EXPLORATION LTD.

GASTAR EXPLORATION USA, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

ALBERTA, CANADA   001-32714   98-0570897
DELAWARE   001-35211   38-3531640

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

1331 LAMAR STREET, SUITE 650

HOUSTON, TEXAS 77010

(Address of principal executive offices, including zip code)

(713) 739-1800

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Second Amendment to Employment Agreement

On April 10, 2012, Gastar Exploration Ltd. (the “Company”) and Gastar Exploration USA, Inc. entered into a Second Amendment (the “Second Amendment”) to the Employment Agreement dated as of April 26, 2005 and amended previously on July 25, 2008 (the “Employment Agreement”) with Michael Gerlich, the Company’s Chief Financial Officer. The Second Amendment changes the formula for determining Mr. Gerlich’s severance payment under the Employment Agreement to reflect a previous increase in his target annual bonus. Specifically, the Second Amendment increases Mr. Gerlich’s severance payment to 2.5 times the sum of his annual salary plus a target bonus of 60% of such amount (from 2.5 times the sum of his annual salary plus a target bonus of 35% of such amount).

First Amendment to Employee Change of Control Severance Plan

On April 11, 2012, the board of directors of the Company approved the adoption of an amendment (the “COC Severance Plan Amendment”) to the Gastar Exploration Ltd. Employee Change of Control Severance Plan, as previously amended and restated on February 15, 2008 (the “Plan”). The COC Severance Plan Amendment modifies the target bonus component of the change of control severance payment formula under the Plan to reflect previous increases in target annual bonuses and establishes the change of control severance payment formula for directors of the Company. Pursuant to the COC Severance Plan Amendment, the target bonus component of the change of control severance payment formula under the Plan is increased to 75% for the Company’s Chief Executive Officer (from 50%), 60% for the Company’s Chief Financial Officer (from 35%) and 50% for the Company’s vice presidents (from 25%). In addition, the COC Severance Plan Amendment establishes a severance period under the Plan of 1.5 years and a target bonus component of the change of control severance of 25% for employees of the Company in the position of director.

The foregoing descriptions of the Second Amendment and COC Severance Plan Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of the Second Amendment and the COC Severance Plan Amendment, respectively. A copy of the Second Amendment is filed herewith as Exhibit 10.1 and a copy of the COC Severance Plan Amendment is filed herewith as Exhibit 10.2.

Item 9.01. Financial Statements and Exhibits.

 

  (d) Exhibits.

 

Exhibit
No.

  

Description

10.1    Second Amendment to Employment Agreement entered into by and between Gastar Exploration, Ltd, Gastar Exploration USA, Inc. and Michael A. Gerlich as of April 10, 2012.
10.2    First Amendment to Gastar Exploration Ltd. Employee Change of Control Severance Plan, dated April 11, 2012.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: April 12, 2011     GASTAR EXPLORATION LTD.
    By:   /s/ J. Russell Porter
      J. Russell Porter
      President and Chief Executive Officer
    GASTAR EXPLORATION USA, INC.
    By:   /s/ J. Russell Porter
      J. Russell Porter
      President

 

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EXHIBIT LIST

 

Exhibit
No.

  

Description

10.1    Second Amendment to Employment Agreement entered into by and between Gastar Exploration, Ltd, Gastar Exploration USA, Inc. and Michael A. Gerlich as of April 10, 2012.
10.2    First Amendment to Gastar Exploration Ltd. Employee Change of Control Severance Plan, dated April 11, 2012.

 

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Exhibit 10.1

SECOND AMENDMENT TO

EMPLOYMENT AGREEMENT

THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT is entered into by and between Gastar Exploration, Ltd., a Canadian corporation, Gastar Exploration USA, Inc. (f/k/a First Sourcenergy Wyoming, Inc.), a Delaware corporation (together, the “Company”), and Michael A. Gerlich (“Gerlich”) as of April 10, 2012.

WHEREAS , the Company and Gerlich have heretofore entered into that certain Employment Agreement effective as of April 26, 2005, and subsequently amended on July 25, 2008 (the “Employment Agreement”); and

WHEREAS , the Company and Gerlich desire to further amend the Employment Agreement;

NOW, THEREFORE , in consideration of the premises set forth above and the mutual agreements set forth herein, the Company and Gerlich hereby agree, effective as of the date set forth above, that the Employment Agreement shall be amended as hereafter provided:

1. Section 8(b) is amended to read as follows:

Amount of Severance Payment . Gerlich shall receive a lump sum severance payment equal to the product of (i) 2.5 and (ii) the sum of (A) his highest rate of annual base salary in effect at any time during the one year period preceding Gerlich’s termination of employment and (B) a target bonus amount equal to 60% of such highest rate of annual base salary, and if Gerlich timely elects COBRA health plan continuation coverage under the Company’s group health plan, the Company shall pay Gerlich, on the first of each month during his COBRA continuation period, an amount equal to his required COBRA premium. If Gerlich dies during the COBRA continuation period, this health plan continuation coverage and the Company’s monthly payment of the COBRA premium amount will continue for the benefit of Gerlich’s eligible beneficiary(ies) for the remainder of the COBRA continuation period applicable to them.

Except as expressly modified by this Second Amendment, the terms of the Employment Agreement shall remain in full force and effect and are hereby confirmed and ratified. The Gastar Exploration, Ltd. Employee Change of Control Severance Plan (“Severance Plan”) provides severance benefits thereunder are to be offset by the severance benefits provided under this Employment Agreement to avoid any duplication of benefits. Nothing in the Severance Plan shall be construed or operate to eliminate the COBRA continuation coverage and Company monthly COBRA premium payments provided to surviving beneficiaries of Gerlich under this Employment Agreement.


IN WITNESS WHEREOF , the parties hereto have executed this First Amendment as of April 10, 2012 but effective for all purposes as of January 1, 2012.

 

GASTAR EXPLORATION USA, INC.     GASTAR EXPLORATION, LTD.
By:  

/s / J. Russell Porter  

    By:  

/s / J. Russell Porter     

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

/s/ Michael A. Gerlich   

    Michael A. Gerlich

 

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Exhibit 10.2

FIRST AMENDMENT TO AMENDED AND RESTATED GASTAR

EXPLORATION, LTD. EMPLOYEE

CHANGE OF CONTROL SEVERANCE PLAN

The GASTAR EXPLORATION, LTD. EMPLOYEE CHANGE OF CONTROL SEVERANCE PLAN (as previously amended and restated) (the “Plan”) is hereby amended effective as of January 1, 2012 pursuant to the authorization and direction of the Board of Directors of GASTAR EXPLORATION, LTD .

1. Appendix A of the Plan is hereby deleted in its entirety and replaced with the following:

APPENDIX A

 

Position of Covered Employee

   Severance Period (in years)    Bonus Target
CEO    3.00    75%
CFO    2.50    60%
VP    2.00    50%
Director    1.50    25%
Manager    1.25    0%
Supervisor    1.00    0%
Staff    0.75    0%

2. Except as expressly modified by this First Amendment, the terms of the Plan shall remain in full force and effect and are hereby confirmed and ratified.

EXECUTED on April 11, 2012

 

GASTAR EXPLORATION, LTD.
By:   /s/ J. Russell Porter
Name:   J. Russell Porter
Title:   President and Chief Executive Officer