EMPLOYMENT AGREEMENT BETWEEN TETON ENERGY CORPORATION AND Richard F. Bosher (Employee)
Exhibit 10.14
BETWEEN
TETON ENERGY CORPORATION
AND
Xxxxxxx
X. Xxxxxx
(Employee)
(Employee)
THIS
EMPLOYMENT AGREEMENT(this “Agreement”), dated as of
October 1, 2006, (the “Effective Date”) is
entered into by and between Teton Energy Corporation, a Delaware corporation (the “Company”), and
Xxxxxxx X. Xxxxxx, an individual with an address at 0000 Xxxx Xxxxxxxxxx Xxxxx. Highlands Ranch. Colorado
80130, (the “Employee”) (collectively, the “Parties,” individually, a “Party”).
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the “Board”) has requested and the Employee has
agreed to serve the Company as Vice President Business Development pursuant to the
terms and conditions herein; and
WHEREAS, the Board has determined that it is in the best interest
of the Company, its affiliates, and its stockholders to assure that the Company will have the
continued dedication of the Employee, notwithstanding the possibility, threat, or occurrence of a
Change in Control (as defined Article Seven herein); and
WHEREAS, the Board has determined that it is in the best interests of the Company and its
stockholders to indemnify the Employee for claims for damages arising out of or relating to the
performance of such services to the Company in accordance with the terms and conditions set forth
in this Agreement and pursuant to Delaware law; and
WHEREAS, as an inducement to serve and in consideration for such services, the Company has agreed
to indemnify the Employee for claims for damages arising out of or relating to the performance of
such services to the Company in accordance with the terms and conditions set forth in a separate
agreement, which indemnification agreement is attached as an exhibit hereto and is incorporated herein by reference; and
WHEREAS, in order to accomplish these objectives and establish the rights, duties and obligations
of the Parties, which shall be generally stated herein and which may be more fully stated in other
agreements between the Parties, including equity-based agreements, indemnity agreements, and other
employment or incentive related agreements as the Company or the Board may adopt from time to time,
the Board has caused the Company to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set
forth herein, the Parties, intending to be legally bound, hereby agree as follows:
ARTICLE ONE
DEFINITIONS
1. Definitions. As used in this Agreement:
1.1 The term “Accrued Obligations,” when used in the case of the Employee’s death or
disability shall mean the sum of (1) that portion Employee’s Base Salary that was not
previously paid to the Employee from the last payment date through the Date of Termination, and (2)
an amount equal six (6) months salary at the level of the Employee’s Base Salary then in effect,
1.2 The term “Automatic Extension” shall have the meaning set forth in Section 2.2
herein.
1.3 The term “Base Salary”, shall have the meaning set forth in Section 3.1 herein.
1.4 The term “Board” shall have the meaning set forth in the recitals.
1.5 The term “Cause” shall have the meaning set forth in Section 4.3 herein.
1.6 The term “Common Stock” shall mean the Common Stock, par value $0.001, of the
Company.
1.7 The term “Compensation Committee” shall mean the Compensation Committee of the
Company.
1.8 The term “Corporate Documents” shall mean the Company’s Certificate of Incorporation,
as amended and/or its Bylaws, as amended.
1.9 The term “Effective Date” shall have the meaning set forth in the preamble.
1.10 The term “Good Reason” shall have the meaning set forth in Section 4.4 herein.
1.11 The term “Initial Term” shall have the meaning set forth in Section 2.2 herein.
1.12 The term “Severance Benefit” shall have the meaning set forth in Section 4.8(a)(i)
herein.
1.13 The term “Without Cause” shall have the meaning set forth in Section 4.3 herein.
1.14 The term “Without Good Reason” shall have the meaning set forth in Section 4.5
herein.
ARTICLE TWO
POSITION & DUTIES
2. Employment.
2.1
Title. The Employee shall serve as the Vice President Business
Development of the Company and agrees to perform services for the Company and such other affiliates of
the Company, as described in Section 2 herein.
2.2 Term. The Employee’s employment shall be for an initial term of one (1) years
(“Initial Term”), commencing on the Effective Date. The Employee’s employment shall be
automatically extended on the day after the first year anniversary of the Effective Date
(“Automatic Extension”), and on each second anniversary date thereof, for additional one (1) year
periods unless, with respect to any such Automatic Extension, Employee’s employment is terminated
by either party during the 60-day period prior to such anniversary date as provided in Article
Four.
2.3 Duties and Responsibilities. The Employee shall report to the CEO and in his capacity
as an officer of the Company shall perform such duties and services as may be appropriate and
as are assigned to him by the CEO. During the term of this Agreement Employee shall, subject
to the direction of the CEO of the Company, oversee and direct the operations of the Company’s
business development efforts, and shall perform such duties as are customarily performed by a
Vice President Business Development of a company such as the Company or as are
otherwise delegated to him from time to time by the CEO or such other matters and projects as
may from time to time be reasonably assigned to him by the CEO.
2.4 Performance of Duties. During the term of the Agreement, except as otherwise approved
by the CEO or as provided below, the Employee agrees to devote his full business time, effort,
skill and attention to the affairs of the Company and its subsidiaries, will use his best
efforts to promote the interests of the Company, and will discharge his responsibilities in a
diligent and faithful manner, consistent with sound business practices. The foregoing shall
not, however, preclude Employee from devoting reasonable time, attention and energy in
connection to serving as a director or a member of a committee of any
company or organization, if serving in such capacity does not
involve any conflict with the business of the Company or any
subsidiary and such other company or organization is not in
competition, in any manner whatsoever, with the business of the
Company or any of its subsidiaries: provided that such activities do not materially
interfere with the performance of his duties and services hereunder.
2.5 Representations and Warranties of the Employee with Respect to Conflicts, Past
Employers and Corporate Opportunities. The Employee represents and warrants that:
(a) his employment by the Company will not conflict with any obligations which he has to any
other person, firm or entity;
(b) he has not brought to the Company (during the period before the signing of this Agreement)
and he will not bring to the Company any materials or documents of a former or present employer, or
any confidential information or property of any other person, firm or entity; and
(c) he will not, without disclosure to and approval of the Board, directly or indirectly,
assist or have an active interest in (whether as a principal, stockholder, lender, employee,
officer, director, partner, venturer, consultant or otherwise) in any person, firm, partnership,
association, corporation or business organization, entity or enterprise that competes with or is
egaged in a business which is substantially similar to the business of the Company except that
ownership of not more than two percent (2%) of the outstanding securities of any class of any
publicly held entity shall not be deemed a violation of this Section 2.5; provided, further, that
any investment specifically listed on Schedule A shall not be deemed a violation of this Section
2.5.
2.6 Activities and Interests with Companies Doing Business with the Company. In
addition to those activities and interests of Employee disclosed on Schedule A attached
hereto, Employee shall promptly disclose to the Board, in accordance with the Company’s policies,
full information concerning any interests, direct or indirect, he holds (whether as a principal,
stockholder, lender, Employee, director, officer, partner, venturer, consultant or otherwise) in
any business which, as reasonably known to Employee, purchases or provides services or products to,
the Company or any of its subsidiaries, provided that the Employee need not disclose any such
interest resulting from ownership of not more than two (2%) of the outstanding securities of any
class of any publicly held entity.
2.7 Other Business Opportunities. Nothing in this Agreement shall be deemed to
preclude the Employee from participating in other business opportunities if and to the extent that:
(a) such business opportunities are not directly competitive with, similar to the business of the
Company, or would otherwise be deemed to constitute an opportunity appropriate for the Company, (b)
the Employee’s activities with respect to such opportunities do not have a material adverse effect
on the performance of the Employee’s duties hereunder, and (c) the Employee’s activities with
respect to such opportunity have been fully disclosed in writing to the Board.
2.8 Reporting Location. For purposes of this Agreement, the Employee’s reporting
location shall be Denver, Colorado, which shall include the metropolitan area within a 40 mile
radius from the Company’s current office.
ARTICLE THREE
COMPENSATION
3. Compensation.
3.1 Base Salary. Employee shall receive an initial annual base salary of One Hundred
Fifty Thousand Dollars ($150,000.00), payable bi-monthly in arrears (the “Base Salary”) and subject
to all federal, state, and municipal withholding requirements. The Base Salary shall be reviewed by
the CEO annually for any increase.
3.2 Cash Bonus. The Employee shall be eligible for a cash bonus equal to an amount of
up to thirty percent (30%) of his Base Salary in 2006 and up to one hundred percent (100%) of his
Base Salary for each fiscal year thereafter (annualized for any fiscal year consisting of less than
12 full months or with respect to which the Employee has been employed by the Company for less than
twelve (12) full months. Each Cash Bonus shall be paid no later than the end of the third month of
the fiscal year next following the fiscal year in respect of which the Cash Bonus is awarded,
unless the Employee shall elect to defer the receipt of such Cash Bonus that may be approved by the
Board from time to time.
3.3 Equity-Based Compensation. The Employee shall be entitled to participate in all
equity-based compensation plans offered by the Company and as determined by the Board of Directors.
The Employee understands that as of the date of this Agreement, the only equity-based plan offered
by the Company is the 2005 Long-term Incentive Plan. Pursuant to the terms of this Agreement, the
Employee shall be entitled to a grant of 50,000 performance share units, for base objectives and
100,000 performance share units for stretch objectives, which grant will be governed by the
parameters and objectives according to the 2006 objectives established by the Company’s Board of
directors. The Employee will be provided with a separate grant notice that describes the vesting
and various operational aspects of the 2005 Long-term Incentive Plan.
Notwithstanding any other provision of this Agreement, effective August 10, 2006, the Employee
shall be entitled to a grant of 15,000 restricted shares of Teton common stock, which shall vest
over a period of three years and be subject to a restricted stock agreement in a form substantially
similar to the form of agreement in Exhibit B.
Upon a Change of Control, all equity-based compensation will be treated in the same manner as
if Employee’s employment was terminated by the Company Without Cause.
3.4 Participation In Benefit Plans.
(a) Retirement Plans. Employee shall be entitled to participate, without any waiting
or eligibility periods, in all qualified retirement plans provided to other employee officers and
other key employees.
(b) Taxes. The Company shall pay, on a grossed-up basis for federal, state, and local
income taxes, the amount of any excise tax payable by Employee as a result of any payments
triggered by this Agreement, or other compensation agreements between Employee and the Company, or
any of its subsidiaries and any income tax payable by Employee as a result of any payments in
Common Stock triggered by this Agreement or other compensation agreements between Employee and the
Company, or any of its subsidiaries, except as might otherwise be provided such benefit plan.
(c) Life Insurance. The Employee shall be entitled to life insurance on terms
consistent with that provided to other senior Employees of the Company as may be authorized by the
Board from time to time.
(d) Employee Benefit Plans and Insurance. The Employee shall have the right to
participate in employee benefit plans and insurance programs of the Company that the Company may
sponsor from time to time and to receive customary Company benefits, if those benefits are so
offered. Nothing herein shall obligate the Employee to accept such benefits if and when they are
offered.
(e) Vacation.
(i) The Employee shall be entitled to four (4) weeks of vacation per calendar year, which
vacation level shall be reviewed by the CEO from time to time. No more than 1.5 times (1.5x)
Employee’s authorized annual vacation allocation may be accrued, at any given time. In the event
that Employee has reached his maximum authorized vacation allocation, accrual will not re-commence
until Employee uses some of his paid vacation credit and thereby brings the balance below his
maximum. Accrued paid vacation credit forfeited because of an excess balance can not be
retroactively reapplied.
(ii) Pay will only be provided for any unused, accrued paid vacation credit at the time of
Employee’s separation from the business by the Company due to a reduction in force, by Employee
upon retirement, or upon the death of an employee, provided that Employee has been a regular
full-time employee for three calendar months prior to such event. Termination of employment for
Cause by the Company, or Employee’s resignation, will result in the forfeiture of any unused paid
vacation credit.
(f) Paid Holidays. The Employee shall be entitled to such paid holidays as are
generally available to all employees. As of the date of this Agreement, the Company’s employees are
permitted to observe ten (10) paid holidays.
3.5
Business-related Expense. Employee shall be entitled to reimbursement within a reasonable
time for all properly documented and approved expenses for travel. The Company shall reimburse
business expenses of Employee directly related to Company business,
including, but not limited to
airfare, lodging, meals, travel expenses, medical expenses while traveling not covered by
insurance, business entertainment, expenses associated with entertaining business persons, local
expenses to governments or governmental officials, tariffs applicable taxes outside of the United states,
special expenses associated with travel to certain countries,
supplemental life insurance or supplemental insurance of any kind of special insurance rates or charges for travel outside the United
state (unless such insurance is being provided by the Company),
rental cars and insurance for rental cars and any other expenses
of travel that are reasonable in nature or that have been otherwise pre-approved. Employee shall be
governed by the travel and entertainment policy in effect at the
Company.
3.6 Severance Benefit. In the event that Employee’s employment is terminated, other
than for Cause, Employee shall receive compensation pursuant to Section 4.8 herein.
3.7 Payroll Procedures and Policies. All payments required to be made by the Company
to the Employee pursuant to this Article Three shall be paid on a regular basis in accordance with
the Company’s normal payroll procedures and policies.
ARTICLE FOUR
TERMINATION OF EMPLOYMENT
4.1 Death. The Employee’s employment shall terminate automatically upon the Employee’s
death during the Employment Term.
4.2 Disability. If the Company determines in good faith that the Disability (as
defined below) of the Employee has occurred during the Employment Term, the Company may give the
Employee notice of its intention to terminate the Employee’s employment. In such event, the
Employee’s employment hereunder shall terminate effective on the 30th day after receipt of such
notice by the Employee (the “Disability Effective Date”);
provided, that, within the 30 -day period after such receipt, the Employee shall not have returned to full-time performance
of the Employee’s duties. For purposes of this Agreement, “Disability” shall mean the absence of
the Employee from the Employee’s duties hereunder on a full-time basis for an aggregate of 180 days
within any given period of 270 consecutive days (in addition to any statutorily required leave of
absence and any leave of absence approved by the Company) as a result of the incapacity of the
Employee, despite any reasonable accommodation required by law, due to bodily injury or disease or
any other mental or physical illness, which will, in the opinion of a physician selected by the
Company or its insurers and acceptable to the Employee or the Employee’s legal representative, be
permanent and continuous during the remainder of the Employee’s life.
4.3 Termination by Company.
(a) Termination for Cause.
The Company may terminate the Employee’s employment hereunder for Cause (as defined below). For
purposes of this Agreement, “Cause” shall mean:
(i) the willful and continued failure of the Employee to perform substantially the Employee’s
duties hereunder (other than any such failure resulting from bodily injury or disease or any other
incapacity due to mental or physical illness) after a written demand for substantial performance is
delivered to the Employee by the Board or the Chief Employee Officer of the Company, which
specifically identifies the manner in which the Board or the Chief Employee Officer of the Company
believes the Employee has not substantially performed the Employee’s duties; or
(ii) the willful engaging by the Employee in illegal conduct or gross misconduct that is
materially and demonstrably detrimental to the Company and/or its affiliated companies,
monetarily or otherwise.
For purposes of this provision, no act, or failure to act, on the part of the Employee
shall be considered “willful” unless done,
or omitted to be done, by the Employee in bad faith or without reasonable belief that the
Employee’s action or omission was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the Board, upon the
instructions of the Chief Employee Officer or another senior officer of Company, or based upon
the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by the Employee in good faith and in the best interests of the Company and its
affiliated companies. The cessation of employment of the Employee shall not be
deemed to be for Cause unless and until there shall have been delivered to the Employee a
copy of a resolution duly adopted by the affirmative vote of not less than two-thirds of the
entire membership of the Board then in office at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Employee and the Employee is given an
opportunity, together with counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the Employee is guilty of the conduct described in subparagraph (i)
or (ii) above, and specifying the particulars thereof in detail.
(iii) the Employee’s conviction of, or plea of nolo contendere to, any felony of theft, fraud,
embezzlement or violent crime.
(b) Termination without Cause.
All terminations by the Company that are not for Cause, or on the occasion of the Employee death or
disability, or that are not terminated during the 60-day period prior to any anniversary date as
provided in Section 2.2 or Section 4.5, shall be considered Without Cause.
4.4 Termination by Employee. The Employee may terminate the Employee’s employment
hereunder (x) at any time during the Employment Term for Good Reason (as defined below) or (y)
during the Window Period (as defined below) Without Good Reason. For purposes of this Agreement,
the “Window Period” shall mean the 30-day period immediately following the first anniversary of the
Effective Date, and “Good Reason” shall mean any of the following (without the Employee’s express
written consent):
(a) The assignment to the Employee of any duties inconsistent in any respect with the
Employee’s position (including status, offices, titles and reporting requirements), duties,
functions, responsibilities or authority as contemplated by Section 2.3 of this Agreement, or any
other action by the Company that results in a diminution in such position, duties, functions,
responsibilities or authority, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Employee;
(b) Any failure by the Company to comply with any of the provisions of Section 2.3 of this
Agreement, other than an isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given by the Employee;
(c) The Company’s requiring the Employee to be based at any office or location other than as
provided in Section 2.8 of this Agreement or the Company’s requiring the Employee to travel on the
Company’s or its affiliated companies’ business to a substantially greater extent than during the
three-year period immediately preceding the Effective Date;
(d) Any failure by the Company to comply with and satisfy Section 8.1 of this Agreement; or
(e) Any purported termination by the Company of the Employee’s employment hereunder otherwise
than as expressly permitted by this Agreement, and for purposes of this Agreement, no such
purported termination shall be effective.
For purposes of this Section 4.4, any good faith determination of “Good Reason” made by the
Employee shall be conclusive.
4.5 Termination without Prejudice. The Company or Employee may terminate this
Agreement at any time during the 60-day period prior to the Automatic Extension.
4.6 Notice of Termination. Any termination of the Employee’s employment hereunder by
the Company or by the Employee (other than a termination pursuant to Section 4.1) shall be
communicated by a Notice of Termination (as defined below) to the other party hereto. For purposes
of this Agreement, a “Notice of Termination” shall mean a notice which (a) indicates the specific
termination provision in this Agreement relied upon, (b) in the case of a termination for
Disability, Cause or Good Reason, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee’s employment under the provision so
indicated, and (c) specifies the Date of Termination (as defined in Section 4.7 below); provided,
however, that notwithstanding any provision in this Agreement to the contrary, a Notice of
Termination given in connection with a termination for Good Reason shall be given by the Employee
within a reasonable period of time, not to exceed 120 days, following the occurrence of the event
giving rise to such right of termination. The failure by the Company or the Employee to set forth
in the Notice of Termination any fact or circumstance which contributes to a showing of Disability,
Cause or Good Reason shall not waive any right of the Company or the Employee hereunder or preclude
the Company or the Employee from asserting such fact or circumstance in enforcing the Company’s or
the Employee’s rights hereunder.
4.7 Date of Termination. For purposes of this Agreement, the “Date of Termination”
shall mean the effective date of termination of the Employee’s employment hereunder, which date
shall be (a) if the Employee’s employment is terminated by the Employee’s death, the date of the
Employee’s death, (b) if the Employee’s employment is terminated because of the Employee’s
Disability, the Disability Effective Date, (c) if the Employee’s employment is terminated by the
Company (or applicable affiliated company) for Cause or by the Employee for Good Reason, the date
on which the Notice of Termination is given, (d) if the Employee’s employment is terminated
pursuant to Section 2.2, the date on which the Employment Term ends pursuant to Section 2.2 due to
a party’s delivery of a Notice of Termination thereunder, and (e) if the Employee’s employment is
terminated for any other reason, the date specified in the Notice of Termination, which date shall
in no event be earlier than the date such notice is given; provided, however, that if within 30
days after any Notice of Termination is given, the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally determined, either by mutual written agreement of
the parties or by a final judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected).
4.8 Obligations of the Company upon Termination.
(a) Good Reason or During the Window Period; Other Than for Cause, Death or
Disability. If, during the Employment Term, the Company (or applicable affiliated company)
shall terminate the Employee’s employment hereunder other than for Cause or Disability or the
Employee’s shall terminate the Employee’s employment either for Good Reason or Without Good Reason
during the Window Period:
(i) the Company shall pay to the Employee (either in a lump sum or on in equal monthly
installments over a six-month period after the Date of Termination, at
the Company’s option) the sum
of (1) the that portion Employee’s Base Salary that was not previously paid to the Employee from the
last payment date through the Date of Termination, and (2) an amount equal six months salary at the
level of the Employee’s
Base Salary then in effect, (such six months amount is hereinafter referred to as the “Severance
Amount”);
(ii) all stock options, stock appreciation rights, and restricted stock shall immediately
vest;
(iii) all stock options and stock appreciation rights shall be payable in Common Stock;
(iv) all performance share units that would vest in the course of any fiscal year shall vest
on a pro rata basis; and
(v) the Company shall pay, on a grossed-up basis (as determined in the same manner as under
Section 3.4(b) herein) the amount of any excise and income taxes payable by Employee as a
result of any payments in Common Stock triggered by this Agreement, or other agreements
between Employee and the Company, or any of its subsidiaries.
To the extent not theretofore paid or provided, the Company shall timely pay or provide to the
Employee any other amounts or benefits required to be paid or provided or which the Employee is
eligible to receive under any plan, program, policy, practice or arrangement or contract or
agreement of the Company and its affiliated companies (such other amounts and benefits hereinafter
referred to as the “Other Benefits”).
(b) Death. If the Employee’s employment is terminated by reason of the Employee’s
death during the Employment Term, this Agreement shall terminate without further compensation
obligations to the Employee’s legal representatives under this Agreement, other than for (i)
payment of Accrued Obligations (which shall be paid to the Employee’s estate or beneficiary, as
applicable, in a lump sum in cash within 90 days of the Date of Termination) and the timely payment
or settlement of any other amount pursuant the Other Benefits and (ii) treatment of all other
compensation under existing plans as provided by the terms and rules of those plans.
(c) Disability. If the Employee’s employment is terminated by reason of the Employee’s
Disability during the Employment Term, this Agreement shall terminate without further compensation
obligations to the Employee, other than for (i) payment of Accrued Obligations (which shall be paid
to the Employee in a lump sum in cash within 90 days of the Date of Termination) and the timely
payment or settlement of any other amount pursuant to the Other Benefits and (ii) treatment of all
other compensation under existing plans as provided by the terms and rules of those plans.
(d) Cause; Other than for Good Reason or During the Window Period. If the Employee’s
employment is terminated for Cause during the Employment Term, this Agreement shall terminate
without further compensation obligations to the Employee other than the obligation to pay to the
Employee Base Salary through the Date of Termination plus the amount of any compensation previously
deferred by the Employee, in each case to the extent theretofore unpaid. If the Employee
voluntarily terminates the Employee’s employment during the Employment Term, excluding a termination either for
(i) Good Reason or (ii) Without Good Reason during the Window Period, this Agreement shall
terminate without further compensation obligations to the Employee, other than for the that portion
Employee’s Base Salary that was not previously paid to the
Employee from the last payment date through the effective date of the Employee’s voluntary
termination and the timely payment or provision of the Other Benefits, as provided in any
applicable plan, and the Employee shall have no further obligations nor liability to Company. In
such case, any amounts owed to the Employee shall be paid to the Employee in a lump sum in cash
within 90 days of the Date of Termination subject to applicable laws and regulations.
4.9 Continuation of Payments During Disputes. The Parties agree that in the case of:
(a) termination which the Company contends is for Cause, but Employee claims is not for Cause;
or
(b)
termination by Employee under Section 4.4 herein.
the Company shall continue to pay all compensation due to Employee hereunder until the resolution
of such dispute, but the Company shall be entitled to repayment of all sums so paid, if it
ultimately shall be determined by a court of competent jurisdiction, in a final non-appealable
decision, that the termination was for Cause or such termination by Employee was not authorized
under Section 4.4 herein, and all sums so repaid shall bear interest at the prime rate as published
in The Wall Street Journal on the date on which such court makes such determination. Any such
reimbursement of payments by Employee shall not include any legal fees or other loss, costs, or
expenses incurred by the Company, notwithstanding any provision of the Indemnification Agreement,
which is attached as Exhibit A and is considered a part of this Agreement.
ARTICLE FIVE
INDEMNIFICATION
5. Indemnification. The Employee shall be indemnified and held harmless pursuant to
the terms and conditions set forth in the Indemnification Agreement substantially in the form
attached as Exhibit A hereto.
ARTICLE SIX
CONFIDENTIALITY
6. Confidentially; Non-Competition; and Non-Solicitation.
6.1 Confidentiality. In consideration of employment by the Company and Employee’s
receipt of the salary and other benefits associated with Employee’s employment, and in
acknowledgment that (a) the Company is engaged in the oil and gas business, (b) maintains secret
and confidential information, (c) during the course of Employee’s
employment by the Company such secret or confidential information may become known to Employee, and
(d) full protection of the Company’s business makes it essential that no employee appropriate for
his or her own use, or disclose such secret or confidential information, Employee agrees that
during the time of Employee’s employment and for a period of one (1) year following the termination
of Employee’s employment with the Company, Employee agrees to hold in strict confidence and shall
not, directly or indirectly, disclose or reveal to any person, or use for his own personal benefit
or for the benefit of anyone else, any trade secrets, confidential
dealings, or other confidential or proprietary information of any kind, nature, or description
(whether or not acquired, learned, obtained, or developed by Employee alone or in conjunction with
others) belonging to or concerning the Company or any of its subsidiaries, except (i) with the
prior written consent of the Company duly authorized by its Board, (ii) in the course of the proper
performance of Employee’s duties hereunder, (iii) for information (x) that becomes generally
available to the public other than as a result of unauthorized disclosure by Employee or his
affiliates or (y) that becomes available to Employee on a nonconfidential basis from a source other
than the Company or its subsidiaries who is not bound by a duty of confidentiality, or other
contractual, legal, or fiduciary obligation, to the Company, or (iv) as required by applicable law
or legal process.
6.2 Non-Competition. During Employee’s employment with the Company and for so long as
Employee receives any Severance Benefit or is receiving any Severance Amount provided under this
agreement in respect of the termination of his employment, Employee shall not be engaged as an
officer or Employee of, or in any way be associated in a management or ownership capacity with any
corporation, company, partnership or other enterprise or venture which conducts a business which is
in direct competition with the business of the Company; provided, however, that Employee may own
not more than two percent (2%) of the outstanding securities, or equivalent equity interests, of
any class of any corporation, company, partnership, or either enterprise that is in direct
competition with the business of the Company, which securities are listed on a national securities
exchange or traded in the over-the-counter market. For purposes of this Agreement, a lump sum
payment equivalent made to Employee shall be judged in relation to his most recent annual base
salary to determine whether Employee is continuing to receive a Severance Benefit or Severance
Amount and shall be measured from the date such payment is received. It is expressly agreed that
the remedy at law for breach of this covenant is inadequate and that injunctive relief shall be
available to prevent the breach thereof.
6.3 Non-Solicitation. Employee also agrees that he will not, directly or indirectly,
during the term of his employment or within one (1) year after termination of his employment for
any reason, in any manner, encourage, persuade, or induce any other employee of the Company to
terminate his employment, or any person or entity engaged by the Company to represent it to
terminate that relationship without the express written approval of the Company. It is expressly
agreed that the remedy at law for breach of this covenant is inadequate and that injunctive relief
shall be available to prevent the breach thereof.
ARTICLE SEVEN
CHANGE OF CONTROL
7.
Certain Definitions.
7.1
Change of Control Effective Date. The “Change of Control Effective Date” shall mean
the first date during the Change of Control Period (as defined in Section 7.2) on which a
Change of Control occurs. Notwithstanding anything in this Agreement to the contrary, if a
Change of Control occurs and if the Employee’s employment with the Company (or applicable
affiliated company) is terminated prior to the date on which the Change of Control occurs, and
if it is reasonably demonstrated by the Employee that such termination of employment
(i) was at the request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with or anticipation
of a Change of Control, then for all purposes of this Agreement the “Change of Control
Effective Date” shall mean the date immediately prior to the date of such termination
of employment.
7.2
Change of Control Period. The “Change of Control Period” shall mean the period commencing
on the date of this Agreement and ending on the third anniversary of
such date; provided, however,
that commencing on the date one year after the date hereof, and on each annual anniversary of such
date (such date and each annual anniversary thereof herein referred to as the “Renewal Date”), the
Change of Control Period shall be automatically extended so as to terminate three years after such
Renewal Date, unless at least 60 days prior to the Renewal Date the Company shall give notice to
the Employee that the Change of Control Period shall not be so extended.
7.3 Change of Control. For purposes of this Agreement, a “Change of Control” shall mean:
(a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 15% or more of either (A) the then outstanding Common
Shares the Company (the “Outstanding Shares”) or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Voting Securities”); provided, however, that for purposes of this
Subsection 7.3(a) the following acquisitions shall not constitute a Change of Control: (w)
Company-sponsored recapitalization that is approved by the Incumbent Board, as defined below; (x) a
capital raise initiated by the Company where the Incumbent Board remains for at least at least 548
days after the closing date of the raise, or (y) an acquisition of another company or asset(s)
initiated by the Company and where the Company’s shareholders immediately after the transaction own
at least 51% of the equity of the combined concern; or
(b) individuals who, as of the date of this Agreement, constitute the Company’s Board (the
“Incumbent Board”) cease for any reason to constitute a majority of such Board of Directors;
provided, however, that any individual becoming a director of the Company shareholders subsequent
to the date hereof whose election, or nomination for election by the Company’s shareholders was
approved by a vote of a majority of the directors of the Company then comprising the Incumbent
Board shall be considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Company Board; or
(c) consummation of a reorganization, merger, amalgamation or consolidation of the Company,
with or without approval by the shareholders of the Company, in each case, unless, following such
reorganization, merger, amalgamation or consolidation, (i) more than 50% of, respectively, the then
outstanding shares of common stock (or equivalent security) of the company resulting from such
reorganization, merger, amalgamation or consolidation and the combined voting power of the then
outstanding voting securities of such company entitled to vote
generally in the election of directors is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Shares and Outstanding Voting Securities immediately prior to such
reorganization, merger, amalgamation or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger, amalgamation or consolidation,
of the Outstanding Shares and Outstanding Voting Securities, as the case may be, (ii) no Person
(excluding a parent of the Company that may come into being after the date of this Agreement
through any transaction deliberately undertaken by the Company after an
affirmative vote of its Incumbent Directors and the Company shareholders), any employee benefit
plan (or related trust) of the Company or such company resulting from such reorganization, merger,
amalgamation or consolidation, and any Person beneficially owning, immediately prior to such
reorganization, merger, amalgamation or consolidation, directly or indirectly, 15% or more of the
Outstanding Shares or Outstanding Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 15% or more of, respectively, the then outstanding shares of common stock
(or equivalent security) of the company resulting from such reorganization, merger, amalgamation or
consolidation or the combined voting power of the then outstanding voting securities of such
company entitled to vote generally in the election of directors, and (ii) a majority of the members
of the board of directors of the company resulting from such reorganization, merger, amalgamation
or consolidation were members of the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger, amalgamation or consolidation; or
(d) consummation of a sale or other disposition of all or substantially all the assets of the
Company, with or without approval by the shareholders of the Company, other than to a corporation,
with respect to which following such sale or other disposition, (i) more than 50% of, respectively,
the then outstanding shares of common stock (or equivalent security) of such corporation and the
combined voting power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Shares and Outstanding Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership, immediately prior to such sale
or other disposition, of the Outstanding Shares and Outstanding Voting Securities, as the case may
be, (ii) no Person (excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation, and any Person beneficially owning, immediately prior to such sale or
other disposition, directly or indirectly, 15% or more of the Outstanding Shares or Outstanding
Voting Securities, as the case may be) beneficially owns, directly or indirectly, 15% or more of,
respectively, the then outstanding shares of common stock (or equivalent security) of such
corporation or the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors, and (C) a majority of the
members of the board of directors of such corporation were members of the Incumbent Board at the
time of the execution of the initial agreement or action of the Incumbent Board providing for such
sale or other disposition of assets of the Company; or
(e) approval by the shareholders of the Company of a complete liquidation or dissolution of
the Company.
8. Miscellaneous
8.1 Benefit. This Agreement shall
inure to the benefit of and be binding upon each of the Parties, and
their respective successors. This Agreement shall not be assignable
by any Party without the prior written consent of the other Party.
The Company shall require any successor, whether direct or
indirect,
to all or substantially all the business and/or assets of the Company to expressly assume and agree to
perform, by instrument in a form reasonably satisfactory to Employee, this Agreement and any other
agreements between Employee and the Company or any of its subsidiaries, in the same manner and to
the same extent as the Company.
8.2 Governing Law. This Agreement shall be governed by, and construed in accordance
with the laws of the State of Colorado without resort to any principle of conflict of laws that
would require application of the laws of any other jurisdiction; provided, however, that Delaware
law shall govern with respect to the Employee’s rights under a Change of Control under Article
Seven herein.
8.3 Counterparts. This Agreement may be executed in counterparts and via facsimile,
each of which shall be deemed to constitute an original, but all of which together shall constitute
one and the same Agreement. Each such counterpart shall become effective when one counterpart has
been signed by each Party thereto.
8.4 Headings. The headings of the various articles and sections of this Agreement are
for convenience of reference only and shall not be deemed a part of this Agreement or considered in
construing the provisions thereof.
8.5 Severability. Any term or provision of this Agreement that shall be prohibited or
declared invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or declaration, without invalidating the
remaining terms and provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction, and if any term or provision of this Agreement is held by any court of
competent jurisdiction to be void, voidable, invalid or unenforceable in any given circumstance or
situation, then all other terms and provisions hereof, being severable, shall remain in full force
and effect in such circumstance or situation, and such term or provision shall remain valid and in
effect in any other circumstances or situation.
8.6 Construction. Use of the masculine pronoun herein shall be deemed to refer to the
feminine and neuter genders and the use of singular references shall be deemed to include the
plural and vice versa, as appropriate. No inference in favor of or against any Party shall be drawn
from the fact that such Party or such Party’s counsel has drafted any portion of this Agreement.
8.7 Equitable Remedies. The Parties hereto agree that, in the event of a breach of
this Agreement by either Party, the other Party, if not then in breach of this Agreement, may be
without an adequate remedy at law owing to the unique nature of the contemplated relationship. In
recognition thereof, in addition to (and not in lieu of) any remedies at law that may be available
to the non-breaching Party, the non-breaching Party shall be entitled to obtain equitable relief,
including the remedies of specific performance and injunction, in the event of a breach of this
Agreement, by the Party in breach, and no attempt on the part of the non-breaching Party to obtain such equitable relief shall be deemed
to constitute an election of remedies by the non-breaching Party that would preclude the
non-breaching Party from obtaining any remedies at law to which it would otherwise be entitled.
8.8 Attorney’s Fees. If any Party hereto shall bring an action at law or in equity to
enforce its rights under this Agreement, the prevailing Party in such action shall be entitled to
recover from the Party against whom enforcement is sought its costs and expenses incurred in
connection with such action (including fees, disbursements and expenses of attorneys and costs of
investigation). In the event that Employee institutes any legal action to enforce Employee’s legal
rights hereunder, or to recover damages for breach of this Agreement, Employee, if Employee
prevails in whole or in part, shall be entitled to recover from the Company reasonable attorneys’
fees and disbursements incurred by Employee with respect to the claims or matters on which Employee
has prevailed.
8.9 No Waiver. No failure, delay or omission of or by any Party in exercising any
right, power or remedy upon any breach or default of any other Party, or otherwise, shall impair
any such rights, powers or remedies of the Party not in breach or default, nor shall it be
construed to be a waiver of any such right, power or remedy, or an acquiescence in any similar
breach or default; nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any Party of any provisions of this Agreement must
be in writing and be executed by the Parties and shall be effective only to the extent specifically
set forth in such writing.
8.10 Remedies Cumulative. All remedies provided in this Agreement, by law or otherwise,
shall be cumulative and not alternative.
8.11 Amendment. This Agreement may be amended only by a writing signed by all of the
Parties hereto.
8.12 Entire Contract. This Agreement and the documents and instruments referred to
herein constitute the entire contract between the parties to this Agreement and supersede all other
understandings, written or oral, with respect to the subject matter of this Agreement.
8.13 Survival. This Agreement shall constitute a binding obligation of the Company and
any successor thereto. Notwithstanding any other provision in this Agreement, the obligations under
Articles 5 and 6 shall survive termination of this Agreement.
8.14 Savings Clause. Notwithstanding any other provision of this Agreement, if the
indemnification provisions in Exhibit A hereto or any portion thereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify
Employee as to Expenses, judgments, fines, penalties and amounts paid in settlement with respect to
any Proceeding to the full extent permitted by any applicable portion of this Agreement that shall
not have been invalidated and to the fullest extent permitted by applicable law.
8.15 Modifications and Waivers. Notwithstanding any other provision of this Agreement,
the indemnification provisions in Exhibit A hereto and the Change of Control provisions
Article Seven herein, may be amended from time to time to reflect changes in Delaware law or for
other reasons.
8.16 Notices. All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been given (i) when delivered by hand or (ii) if mailed
by certified or registered mail with postage prepaid, on the third day after the date on which it
is so mailed:
| (a) | If to Employee: | ||
| Xxxxxxx X. Xxxxxx | |||
| 0000 Xxxx Xxxxxxxxxx Xxxxx | |||
| Xxxxxxxxx Xxxxx, Xxxxxxxx 00000 | |||
| (b) | If to the Company: | ||
| Tenton Energy Corporation | |||
| 000 00xx Xxxxxx Xxxxx 0000 | |||
| Xxxxxx, XX 00000 | |||
| Attn: CEO |
or to such other address as may have been furnished to Employee by the Company or to the Company by
Employee, as the case may be.
8.17 No Limitation. Notwithstanding any other provision of this Agreement, for
avoidance of doubt, the parties confirm that the foregoing does not apply to or limit Employee’s
rights under Delaware law or the Company’s Corporate Documents.
IN WITNESS WHEREOF, the parties have set their hands and seals hereunto on the date first above
written.
| Teton Energy Corporation | EMPLOYEE | |||||||
By:
|
/s/ Xxxx X. Xxxxxx | By: | /s/ Xxxxxxx X. Xxxxxx | |||||
Name:
|
Xxxx X. Xxxxxx | Name: | Xxxxxxx X. Xxxxxx | |||||
Title:
|
President & CEO | |||||||
Schedule A
Outside Activities
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
| Date Hired | ||||||||||
| or | Annual Time | |||||||||
| Company or | Nature of | Commenced | Commitment, (time | |||||||
| Project Name | Business | Involvement | Position | Compensation | away from office) | |||||
TransZap,
Inc. |
Oil & Gas | 7/1/1999 to | VP Sales | None. Ownership of | None | |||||
| Software | 8/30/2006 | 400,000 shares, plus | ||||||||
| several options | ||||||||||
| for approx. 150,000 | ||||||||||
| shares | ||||||||||
Ownership of |
Dated: October 1, 2006
Initials Employee:
KFS
Company: KFA
Exhibit A
Indemnification Agreement
Indemnification Agreement
Exhibit B
Form of Restricted Stock Agreement
Form of Restricted Stock Agreement
