This Agreement is made this 1st day of May, 2002 (the "Effective Date"), by
and between TETON PETROLEUM COMPANY, a Delaware corporation (the "Company"), and
H. XXXXXX XXXXXX (the "Employee"). This Agreement supersedes and replaces all
prior employment agreements between the parties whether written or oral.
R E C I T A L S:
A. The Company desires to continue to employ Employee.
B. Employee desires to continue employment with the Company.
THEREFORE, in consideration of the Recitals, the mutual promises contained
herein, and other good and valuable consideration, the parties, intending to be
bound, agree as follows:
1. Employment and Duties. The Company hereby agrees to employ Employee in a
senior management capacity for the term of this Agreement. Employee's job title
and description shall be as determined by the board of directors of the Company
from time to time. At the time of execution of this Agreement, Employee is to be
employed as the Company's president. Employee hereby accepts employment by the
Company and agrees diligently and faithfully to perform his duties on a full
time basis pursuant to this Agreement. Company shall provide sufficient
personnel, equipment, office space, and support necessary for performance of
Employee's duties. Employee's initial duties shall include the following:
management of the day-to-day operations of Company, direction and supervision of
Company's employees and all independent contractors engaged by Company, general
administration of Company's business, financial reporting, and all other duties
necessary to perform the foregoing responsibilities, all under the control and
with the advice and consent of Company's board of directors. BY HIS SIGNATURE ON
THIS AGREEMENT, EMPLOYEE ACKNOWLEDGES THAT HE IS, AND WILL REMAIN DURING HIS
PERIOD OF EMPLOYMENT, AN EXECUTIVE AND MANAGEMENT EMPLOYEE, WITH RESPECT TO WHOM
THE NON-COMPETITION PROVISIONS OF THIS AGREEMENT WILL BE FULLY VALID AND
2. Term. Subject to prior termination pursuant to Section 6, the term of
Employee's employment hereunder shall commence on the Effective Date and shall
continue for a period of three years (the "Initial Term"). At the end of the
Initial Term, this Agreement shall continue on a year-to-year basis, unless
terminated pursuant to Section 6.
3.1 Salary. As compensation for services, Employee shall be paid a
salary of $13,333.33 per month gross, subject to all federal, state and
municipal withholding requirements, payable in installments in arrears on
the Company's normal salary payment dates. This salary shall be reviewed
annually and adjusted by action of the board of directors of the Company.
3.2 Benefits. Employee also shall receive all other benefits generally
available to employees of Company from time to time, including without
limitation, life insurance, expense accounts, medical insurance benefits,
disability insurance, as well as the right to participate in any qualified
or non-qualified deferred compensation or retirement plans created by the
Company. The Company does not promise to provide any of the foregoing
fringe benefits, but agrees that if provided, Employee shall have the right
to participate. Such participation shall be subject to all qualification,
vesting and other requirements of the plans.
3.3 Expense Reimbursement. Employee shall be entitled to reimbursement
for all reasonable expenses that Employee may incur in the performance of
his duties and obligations under this Agreement, including, without
limitation, meals, lodging, travel, and automobile expense reimbursement
(at the rate published by the Internal Revenue Service for each calendar
year), for use of Employee's automobile for Company business; provided,
however that such reimbursement shall be subject to the Company's policies
for business expense reimbursement, and the Employee shall be required to
submit to the Company acceptable documentation for all such expenses.
3.4 Incentive Bonus. The Company agrees that, from time to time, the
Employee may be entitled to additional bonus compensation in the discretion
of the board of directors of the Company. The frequency, amount, payment
terms, and method of payment for such incentive bonus compensation, whether
the same be in the form of cash or warrants for the purchase of common
stock of the Company, shall be left to the exclusive discretion of the
board of directors of the Company.
4. Leave With Pay. In addition to standard Company holidays, Employee shall
be entitled to 30 paid vacation days. Such time off may be taken at one time or
in installments, as Employee and the Company may agree. Employee shall be
entitled to 12 days per year paid time off as sick leave. Employee shall not be
entitled to any other compensation or paid time off in the event of illness or
accident, except as may be determined by the board of directors. If Employee
fails in any year to use such accumulated days off, Employee shall forfeit them
without any additional compensation.
5. Best Efforts of the Employee. Employee shall at all times faithfully,
with diligence and to the best of Employee's ability, experience and talents,
perform all duties required of and from Employee pursuant to the express and
implicit terms hereof to the reasonable satisfaction of the Company.
6. Termination. The Employee's employment hereunder may be terminated under
the circumstances set forth below.
6.1 Death. The Employee's employment hereunder shall terminate
immediately upon his death.
6.2 Disability. The Employee's employment hereunder shall terminate if
Employee becomes physically or mentally disabled so as to become unable,
for a period of more than 90 consecutive working days, or for more than 90
working days in the aggregate during any 12-month period, to perform his
duties hereunder, to the same extent he performed them prior to the onset
of such disability.
6.3 Cause. The Company may terminate the Employee's employment
immediately for "Cause," as hereinafter defined. "Cause" shall mean the
occurrence of any of the following:
6.3.1 Employee intentionally damages Company property.
6.3.2 Employee commits an unauthorized disclosure of Company
6.3.3 Employee commits a violation of any federal, state, or
local law, ordinance, rule or regulation (other than misdemeanor
traffic violations or similar offenses).
6.3.4 Employee commits any breach of corporate fiduciary duties
owed to the Company.
6.3.5 Employee refuses to perform the duties required by the
Employee's position with the Company.
6.3.6 Employee fails to spend sufficient time in the pursuit of
Company business to fully carry out the functions required by the
board of directors.
6.3.7 The Company determines, in the exercise of good faith, that
the Employee's job performance is unsatisfactory.
6.3.8 The Employee refuses to assist in litigation, arbitration,
or other disputes involving the Company.
6.3.9 The Employee engages in any misconduct in the course and
scope of the Employee's employment with the Company, including, but
not limited to, dishonesty, disloyalty, disorderly conduct,
insubordination, harassment of other employees or business associates,
abuse of alcohol or controlled substances, or other violations of
6.4 Good Reason. The Employee may terminate his employment for "Good
Reason," as hereinafter defined, after giving the Company detailed written
notice thereof, if the Company shall have failed to cure the event or
circumstances constituting "Good Reason" within ten business days after
receiving such notice. "Good Reason" shall mean the occurrence of any of
the following without the written consent of the Employee:
6.4.1 Any material breach by the Company of this Agreement.
6.4.2 Any material reduction in the Employee's duties or
6.4.3 The assignment of duties that require the Employee to
locate outside of Steamboat Springs, Colorado, with the exception of
normal business trips outside of Steamboat Springs, Colorado.
6.5 Without Cause. The Company shall have the right to terminate the
Employee's employment hereunder without Cause by providing the Employee
with at least 60 days prior written notice of such termination.
6.6 Without Good Reason. The Employee shall have the right to
terminate his employment without Good Reason by providing the Company with
at least 60 days advance written notice of such termination.
7. Compensation Upon Termination.
7.1 If Employee's employment is terminated because of disability, for
Cause by the Company (as provided in Section 6.3 above), or other than for
Good Reason by the Employee, the Company shall only be obligated to pay
Employee the salary due Employee for work performed prior to termination
and reimbursement of all outstanding business expenses for which
reimbursement is due.
7.2 If the Company terminates this Agreement other than for Cause, or
if Employee resigns for Good Reason (as provided in Section 6.4 above), the
Employee shall receive from the Company, severance pay (the "Severance
Pay") equal to the total of Employee's salary for the preceding 24 months.
The Severance Pay shall be payable in equal monthly installments for a
period of 24 months from the date of termination of employment. Employee
shall also receive reimbursement of all outstanding business expenses for
which reimbursement is due. At the option of the Company, the Severance Pay
may be paid in a lump sum rather than in installments. The Company may
discontinue the Severance Pay if the Employee violates the provisions of
7.3 If Employee's employment is terminated as a result of his death,
the Company shall pay the Employee's spouse or estate, all salary due the
Employee and reimbursement of all outstanding business expenses for which
reimbursement is due.
8. Covenants and Conditions.
8.1 Confidentiality. Employee acknowledges that during the course of
Employee's employment with the Company, Employee will be exposed to and
have access to confidential and proprietary information including trade
secrets concerning the business and affairs of the Company, its
subsidiaries and affiliated entities (collectively, the "Teton Group"). The
Employee acknowledges that such confidential and proprietary information
has been and will continue to be of central importance to the Teton Group
and that disclosure of it to or its use by others could cause substantial
loss to the Teton Group. Employee acknowledges that the Teton Group
developed such confidential and proprietary information for its exclusive
use and benefit and it is an exclusive, confidential, and proprietary asset
of the Teton Group. Accordingly, the Employee agrees as follows:
The Employee, except with the prior written consent of the Company or
as may be required by law or any legal process, will not, at any time
during or after employment, use (except in connection with employment by
the Company) or disclose to any person or entity any confidential or
proprietary information of the Teton Group which was obtained by the
Employee as a result of the Employee's employment with the Company, and
shall hold all of the same confidential. For purposes of this Agreement,
"confidential or proprietary information" means information, whether
written or otherwise, which has a business purpose and is not known or
generally available from sources outside the Teton Group, concerning, among
other things, (a) the Teton Group's business operations, internal
structure, and financial affairs, including, but not limited to, its
products, services, employees, forecasts, sales and marketing methods,
costs, geotechnical information, land status, exploration plans, sources of
capital, banking and brokerage house relationships, securities matters, and
audit and accounting matters; (b) the current, prospective, or past
customers of the Teton Group, their buying habits, and the prices at which
products or services are offered or sold to them; (c) past, present, or
future contracts held by the Teton Group respecting the business or
operations of the Teton Group or customers or potential customers or
suppliers of the Teton Group; (d) the work performed by the Employee for
the Teton Group; and (e) all other compilations of information which relate
to the business of the Teton Group.
The restrictions and obligations in this Section 8.1 shall survive in
perpetuity the termination of this Agreement and the termination of
Employee's employment by the Company.
8.2 Company Property. All contracts, agreements, financial books,
records, instruments and documents; reserve reports, geotechnical
information, memoranda, data, reports, programs, software, tapes;
rolodexes; telephone and address books; research; bids; proposals;
drawings; print-outs; graphs; listings; programming; and any other
instruments, records, or documents relating or pertaining to, or in
connection with the Teton Group's business (collectively the "Records"),
shall at all times be and remain the property of the Company. Except as
authorized by the Company, Employee agrees not to retain or carry away from
the premises of the Company any Records, copies of Records, equipment, or
any other materials or matter of any kind which are the property of the
Company. Upon the termination for any reason of employment with the
Company, Employee shall immediately turnover to the Company all Records,
copies of any Records, equipment, and other materials or matter which are
in the Employee's possession or control and which are the property of the
8.3 Developments. Employee acknowledges that all designs, drawings,
graphs, sketches, print-outs, formulas, software, inventions, discoveries,
innovations, new technology, or other developments, geological and
geophysical data, seismic interpretations, electrical logs of xxxxx,
drilling and sample logs (mud logs) of xxxxx, cores and core analyses,
samples, and any and all other data obtained or used in the oil and gas
exploration, development, production, marketing and transportation business
of the Company (collectively called "Developments") conceived or developed
by Employee during the term of employment, which Developments are related
in any way to the business of the Teton Group then being conducted or
proposed to be conducted by the Teton Group, are and will be the exclusive
property of the Company, and shall be subject to the provisions of Section
8.1 of this Agreement. Employee will promptly notify the Company of any
such Developments. Employee shall, when appropriate and upon request of the
Company, actively assist the Company in executing all papers and performing
all other lawful acts which the Company deems necessary or advisable for
the securing of legal protection for any such Developments, whether through
patent, copyright, or any other means. Employee further agrees that, upon
request of the Company, and at no charge, Employee will assign any rights
arising out of such Developments to the Company.
8.4 Papers, Drawings, and Other Documents. Employee agrees not to make
or permit to be made, except in the pursuance of employment duties under
the terms of this Agreement and for the sole use and account of the
Company, any copies, abstracts, or summaries of any designs, papers,
drawings, or any other documents of any kind which may come into the
Employee's possession and which relate or refer to the Teton Group or its
business. Employee grants to the Company all rights to possession and all
title in and to any such designs, papers, drawings, or other documents, or
copies, abstracts, or summaries thereof, which come into the possession of
Employee within the period of employment by the Company and which relate or
refer to the Teton Group's business. Notwithstanding anything herein to the
contrary, Employee may retain any course materials Employee obtains from
attending private or college courses or seminars. If the Company desires a
copy of such materials, Employee shall provide it to the Company for
copying, at the Company's expense, upon reasonable notice to Employee.
8.5 Security Regulations. Employee agrees to abide by the Company's
personnel policies and all security regulations and rules of employment
adopted by the Company from time to time.
8.6 Covenant Not to Compete.
8.6.1 The Employee acknowledges and agrees that as an Employee
and representative of the Company, the Employee will be responsible
for building and maintaining business relationships and goodwill on a
personal level and will also be responsible for creating and
developing processes, procedures and techniques for carrying out the
Company's business. The Employee acknowledges and agrees that his
responsibility creates a special relationship of trust and confidence
between the Company, the Employee, and those persons or entities with
which the Company does business. The Employee acknowledges and agrees
that this special relationship of trust and confidence could create
the opportunity for the Employee to misappropriate these relationships
and the goodwill existing between the Company and such persons and
entities. The Employee acknowledges and agrees that it is fair and
reasonable for the Company to take steps to protect itself from the
risk of such misappropriation.
8.6.2 The Employee acknowledges and agrees that he has received
and will continue to receive substantial, valuable consideration for
the Agreement set forth in this section including access to
confidential information and continued employment, and compensation
and benefits as described herein. The Employee acknowledges and agrees
that this constitutes fair and adequate consideration for the
agreement set forth in this section.
8.6.3 For the valuable consideration described above, the
Employee acknowledges and agrees that during the term of this
Agreement and for a period of two years following the termination of
this Agreement, by either party, for whatever reason, the Employee
shall not directly or indirectly, as a proprietor, director, officer,
employee, partner, stockholder, consultant, owner or otherwise, render
services to or participate in the affairs of any business which is
competitive with or substantially similar to the business of Teton
Group and will not engage in the same or a similar business as the
Company. The Employee acknowledges and agrees that these
non-competition agreements shall survive any termination of this
Agreement and shall be fully enforceable by the Company or its
successor or assignee subsequent to the termination of the Employee's
employment, regardless of the reason for such termination. For
purposes of this section, the "business of the Teton Group" is oil and
gas exploration, development, production, marketing and transportation
in the Western Siberian Basin in the Russian Federation.
8.7 Nonsolicitation of Employees. Employee agrees that during the term
of this Employment and for a period of two years following termination of
this Agreement with or without Cause, Employee will not, directly or
indirectly, solicit or attempt to solicit the employment of, hire, or
assist or participate in any manner in the hiring or recruitment (any such
action, hereinafter a "solicitation") of any employee or independent
contractor employed or retained by the Teton Group. This prohibition on
solicitation shall also apply to any former employee or independent
contractor whose employment or retention by the Teton Group has ceased
within six months prior to the date of such solicitation. The provisions of
this section shall not apply to the solicitation of Xxxx X. Xxxxxx.
8.8 Certain Stock Ownership Excluded. Nothing contain in this Section
8 shall be construed to prohibit Employee's ownership of not more than 1%
of the securities of an entity listed on the NASDAQ Stock Market, a
national securities exchange, or traded over the counter provided that
Employee does not perform any services on behalf of such entity.
8.9 Scope and Reasonableness. The Employee acknowledges and agrees
that the agreements set forth above are supported by valuable
consideration. The Employee further acknowledges and agrees that the
limitations as to time, geographical area, and the scope of activity to be
restrained are reasonable and acceptable to the Employee and do not impose
any greater restraint than is reasonably necessary to protect the goodwill
and other business interests of the Company. The Employee further agrees
that if, at some later date, an arbitrator or a court of competent
jurisdiction determines that these agreements did not meet the criteria set
forth under applicable law, these agreements shall be reformed by the
arbitrator or the court, as the case may be, and enforced to the maximum
extent permitted under law.
9. Representations of Employee. Employee hereby represents and warrants
that as of the date hereof, Employee is not a party to any agreement, contract,
or understanding, and that no facts or circumstances exist that would in any way
restrict or prohibit Employee from undertaking or performing any of Employee's
obligations under this Agreement. Furthermore, Employee understands and
acknowledges that Employee may have confidentiality obligations to prior
employers under common law, statute, or contract. Employee represents and
warrants that in the course of rendering services to the Company, Employee will
not use or otherwise disclose any confidential or proprietary information
obtained by Employee in connection with any prior employment. Employee shall
indemnify and hold the Company harmless from any claims, demands, costs, or
liabilities (including attorneys' fees and disbursements) incurred by the
Company in connection with or resulting from Employee's breach of the
representations set forth in this Section 9.
10. Assignment. Employee's obligations and duties under this Agreement are
personal in nature. Employee shall not, without the consent of the Company,
assign or transfer this Agreement or any rights or obligations hereunder. The
provisions of this Agreement shall inure to the benefit of, and be binding upon,
the Company and its successors and assigns, including any subsequent successors
or assigns by reorganization, merger, consolidation, or sale of substantially
all of the Company's assets and business, transfer all or substantially all its
assets and business, or which shall manage the business and to which the Company
may assign this Agreement or any rights hereunder, in which case the term
Company, as used herein, shall mean such corporation or other entity.
11. Construction. The titles appearing herein are used for purposes of
convenience only and shall in no way change the meaning of this Agreement.
12. Notices. All notices, demands, and other communications hereunder shall
be deemed to have been duly given, if delivered by confirmed facsimile
transmission, personal delivery, one business day after being deposited with a
nationally recognized overnight courier or five days after being mailed,
certified or registered mail, with postage prepaid.
If to Employee, address to:
H. Xxxxxx Xxxxxx
X.X. Xxx 000000
Xxxxxxxxx Xxxxxxx, XX 00000
If to Company, address to:
Teton Petroleum Company
X.X. Xxx 000000
Xxxxxxxxx Xxxxxxx, XX 00000
or to such other address as either party may designate by written notice to the
other given from time to time in the manner herein provided.
13. Entire Agreement. This Agreement constitutes the full and complete
understanding and agreement of the parties, supersedes all prior understandings
and agreements as to the employment of Employee, and cannot be amended, changed,
modified, or terminated without the consent, in writing, of the parties hereto.
14. Non-Waiver. The waiver by either party of a breach of any term of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
15. Indemnification. During the Initial Term and all times thereafter,
Company shall indemnify the Employee to the fullest extent permitted by
applicable law, and the Employee shall be entitled to the protection of any
insurance policies the Company may elect to maintain generally for the benefit
of its directors and officers, with respect to all costs, charges and expenses,
including attorney's fees, whatsoever incurred or sustained by the Employee in
connection with any action, suit or proceeding to which he may be made a party
by reason of being or having been a director, officer, shareholder or employee
of the Company, or his serving or having served any other enterprise as a
director, officer or employee at the request of the Company. This
indemnification shall not extend to the gross negligence or willful misconduct
of the Employee, or claims made by the Company. The Company shall not be
obligated to indemnify Employee for Employee's liabilities to the Company.
16. Severability. If any of the provisions of this Agreement shall be or
become invalid or illegal under any provision of applicable law or for any other
reason, the remainder of the Agreement shall not be affected and shall remain in
full force and effect.
17.1 Any claim or controversy arising out of or relating to this
Agreement or any breach of this Agreement, shall be settled by final and
binding arbitration in the City and County of Denver, Colorado, in
accordance with the commercial arbitration rules of the American
Arbitration Association in effect on the date the claim or controversy
arises. The parties expressly agree that this arbitration shall be
conducted in accordance with an governed by the Federal Arbitration Act.
The Employee and the Company agree that either party must request
arbitration of any claim or controversy within sixty days of the date the
claim or controversy first arises, by giving written notice of the party's
request for arbitration to the other party (the "Arbitration Notice").
Failure to effectively communicate the Arbitration Notice within the time
limitation set forth in this section shall constitute a waiver of the claim
17.2 In the event that any dispute arising under this Agreement
concerns any payment required to be made under any provision of this
Agreement, both parties agree to deposit the amount of the disputed payment
in an interest-bearing account with a financial institution acceptable to
the other party within five days after either party effectively
communicates its Arbitration Notice.
17.3 All claims or controversies subject to arbitration under this
Agreement shall be submitted to an arbitration hearing within thirty days
after the Arbitration Notice is communicated. All claims or controversies
shall be resolved by a panel of three arbitrators selected in accordance
with the applicable commercial arbitration rules. Either party may request
that the arbitration proceedings be stenographically recorded or
videographically recorded by a certified reporter. The arbitrators shall
issue a written decision with respect to all claims or controversies
submitted under this section within thirty days after the completion of the
arbitration hearing. The parties are entitled to be represented by legal
counsel at any arbitration hearing, and each party shall be responsible for
its own attorneys' fees. The parties agree that the arbitrators shall have
the authority to tax the costs of arbitration proceedings against the
non-prevailing party; otherwise the parties agree to pay1/2each of the
costs of the arbitration proceedings.
17.4 The parties agree that either party may specifically enforce this
section, and submission to arbitration may be completed by any court of
competent jurisdiction. The parties further acknowledge and agree that the
decision of the arbitrators may be specifically enforced by either party
ion any court of competent jurisdiction.
17.5 The parties acknowledge and agree that notwithstanding the
provisions of this section, nothing in its Agreement shall be construed to
require the arbitration of any claim arising out of or relating to the
non-disclosure, non-competition, or non-solicitation of employees
provisions set forth in this Agreement. These provisions shall be
enforceable by any court of competent jurisdiction and shall not be subject
to arbitration under this section. Further, the parties agree that nothing
in this Agreement shall be construed to require the arbitration of any
claim or controversy arising out of a claim for unemployment compensation
or a claim for worker's compensation.
18. Legal Consultation. The parties acknowledge and agree that both parties
have been afforded a reasonable opportunity to review this Agreement with legal
counsel prior to executing the Agreement.
19. Governing Law - Venue. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF COLORADO (WITHOUT REGARD
TO ITS RULES OF CONFLICTS OF LAWS). VENUE FOR ANY ACTION BROUGHT IN CONNECTION
WITH THIS AGREEMENT SHALL BE PROPER ONLY IN THE COUNTY OF ROUTT, COLORADO.
20. Litigation Expenses. If for any reason a dispute between the parties
results in litigation or the use of any other alternative dispute resolution
procedure, the prevailing party shall be entitled to an award of reasonable
attorneys' fees, costs, and expenses.
21. Remedies for Breach. The parties acknowledge that breach of Section 8
of this Agreement by the Employee will result in immediate, substantial, and
irreparable harm to the Company. The parties therefore agree that the Company
shall have, in addition to any remedy available to it at law or in equity, the
right to enforce the terms of Section 8 of this Agreement by the remedy of
specific performance or injunction upon proper application to a court of
competent jurisdiction. Employee agrees that the Company does not need to post a
bond to obtain an injunction and waives the Employee's rights to require such a
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TETON PETROLEUM COMPANY
H. Xxxxxx Xxxxxx, President
H. Xxxxxx Xxxxxx