Exhibit 10.3
AGREEMENT
BETWEEN
TETON PETROLEUM COMPANY
AND
▇▇▇▇ ▇. ▇▇▇▇▇▇
(Executive)
This agreement, dated as of May 1, 2003 (the "Agreement"), is entered into
by and between Teton Petroleum Company, a Delaware corporation (the "Company"),
and ▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Executive") (collectively, the "Parties," individually, a
"Party").
Whereas, the Executive has been providing services for the Company under a
consulting agreement as its President and Chief Executive Officer; and
Whereas, the Parties desire to establish the rights, duties and obligations
of each, which shall be generally stated herein and which may be more fully
stated in other agreements between the parties, including stock option
agreements, restricted stock award agreements, and other employment or incentive
related agreements as the Company or its Board of Directors may adopt from time
to time;
Now, Therefore, in consideration of the promises, and for other good and
valuable consideration, the Company and Executive agree as follows:
ARTICLE ONE
EMPLOYMENT AGREEMENT
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1.1 Title and Duties.
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(i) Executive shall serve as the President and Chief Executive Officer
of the Company.
(ii) Executive's employment shall be for an initial term of three (3)
years, commencing from May 1, 2003. The term of this Agreement shall be
automatically extended on the day after the second year anniversary of the
date of this Agreement, and on each anniversary thereof, for an additional
two (2)-year periods unless, with respect to any such extension, either
party notifies the other in writing, not less than 60 days prior to any
anniversary hereof, that he or it, as the case may be, desires to terminate
this Agreement as of the end of its term.
(iii) Executive shall report to the Board of Directors (the "Board")
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 Board.
During the term of this Agreement, Executive shall, subject to the
direction of the Board of Directors of the Company, oversee and direct the
operations of the Company, and shall perform such duties as are customarily
performed by the President and CEO of a company such as the Company or as
are otherwise delegated to him from time to time by the Company's Board or
such other duties as may from time to time be assigned to him by the Board
of Directors.
(iv) During the term of this Agreement, except as otherwise approved
by the Board of Directors or as provided below, Executive shall devote
substantially all of his entire working time, attention and energy to the
business and affairs of the Company and in the advancement of the best
interests of the Company and its subsidiaries. The foregoing shall not,
however, preclude Executive from devoting reasonable time, attention and
energy in connection with the following activities, provided that such
activities do not materially interfere with the performance of his duties
and services hereunder: (a) 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;
(b) fulfilling speaking engagements; (c) engaging in charitable and
community activities; and (d) managing his personal business and
investments.
Specifically, during the entire term of this Agreement, including any
extension thereof, the Executive shall 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. In furtherance of the
foregoing:
(w) The Executive represents that his employment by the Company
will not conflict with any obligations which he has to any other
person, firm or entity. The Executive specifically represents that 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.
(x) Executive shall not, without disclosure to and approval of
the Board of Directors of the Company, 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 engaged in a business which is substantially similar to the
business of the Company except that ownership of not more than 2% of
the outstanding securities of any class of any publicly-held
corporation shall not be deemed a violation of this sub-paragraph
1.1(iv)(x). Executive and the Board agree that the list of activities
and interests attached as Exhibit A to this Agreement shall be
considered appropriately disclosed and approved.
(y) Executive shall promptly disclose to the directors of the
Company, in accordance with the Company's policies, full information
concerning any interests, direct or indirect, he holds (whether as a
principal, stockholder, lender, executive, director, officer, partner,
venturer, consultant or otherwise) in any business which, as
reasonably known to Executive, purchases or provides services or
products to, the Company or any of its subsidiaries, provided that the
Executive need not disclose any such interest resulting from ownership
of not more than 2% of the outstanding securities of any class of any
publicly held corporation.
(z) The Executive shall not disclose to any person or entity
(other than to the Company's Board of Directors or to others as
required, in his judgment, in the due performance of his duties under
this Agreement) any confidential or secret information with respect to
the business or affairs of the Company, or any of its subsidiaries or
affiliates.
Nothing in this Agreement shall be deemed to preclude the
Executive from participating in other business opportunities if and to
the extent that: (i) 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, (ii) the Executive's activities with respect to such
opportunities do not have a material adverse effect on the performance
of the Executive's duties hereunder, and (iii) the Executive's
activities with respect to such opportunity have been fully disclosed
in writing to the Company's Board of Directors.
1.2 Base Salary.
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Executive shall receive an initial annual base salary of $180,000, 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
Board annually for adequacy.
1.3 Cash Bonus.
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The Executive shall be eligible for any cash bonus component that may be
approved by the Board from time to time.
1.4 Options.
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Executive shall receive options, including incentive stock options under
the Internal Revenue Code of 1986, as amended, and non-qualified stock options,
to purchase Common Stock (valued as authorized in the Company's Stock Option
Plan), based on assessment by the Board or its Compensation Committee, of both
corporate and personal performance. Upon a change in control, as defined in
paragraph 3.1 herein, all stock options, stock appreciation rights, and other
equity-based compensation will be treated in the same manner as if Executive's
employment were terminated by the Company not for cause under paragraph 1.6(ii)
herein.
1.5 Severance Benefit.
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At any time on or after a change in control of the Company, as defined in
paragraph 3.1, if Executive's employment is terminated, other than for cause,
the provisions of paragraph 1.6(ii) herein shall apply.
1.6 Termination.
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As provided in this section, this Agreement may be terminated (a) by the
Company for Cause or without Cause, (b) may be terminated by Executive for Good
Reason or no reason, (c) upon the death or disability of the Executive, or (d)
upon the natural expiration of the term of this Agreement with no extension.
(i) For Cause. This Agreement may be terminated by the Company for
Cause by written notice to Executive, specifying the event relied upon for
such termination, within thirty (30) days of such event. "Cause" shall be
defined solely as (a) Executive's defalcation or misappropriation of funds
or property of the Company, or the commission of any other illegal act in
the course of his employment with the Company which, in the reasonable
judgment of the Board of Directors, has a material adverse financial effect
on the Company or on Executive's ongoing abilities to carry out his duties
under this Agreement; (b) Executive's conviction of a felony or of any
crime involving moral turpitude, and affirmance of such conviction
following the exhaustion of any appeals; (c) chronic unapproved absenteeism
(other than for a temporary or permanent Disability), which remains uncured
following thirty (30) days after written notice of such alleged Cause by
the Board of Directors; or (d) any material and substantial breach by
Executive of other terms and conditions of this Agreement, which, in the
reasonable judgment of the Board of Directors, has a material adverse
financial effect on the Company or on Executive's ongoing abilities to
carry out his duties under this Agreement and which remains uncured
following thirty (30) days after written notice of such alleged Cause by
the Board of Directors.
(ii) Without Cause. The termination by Company of Executive's
employment for any reason other than those specified in the preceding
paragraph 1.6(i) shall be deemed to be a termination of his employment
Without Cause, following which (a) Company will pay Executive in a sum of
24 months severance, which may be payable in a lump sum or in equal monthly
installments, at the Company's option; (b) all stock options, stock
appreciation rights and restricted stock shall immediately vest; (c) all
stock options and stock appreciation rights shall be payable in Common
Stock; and (d) the Company shall pay, on a grossed-up basis (as determined
in the same manner as under paragraph 1.7 hereof) the amount of any excise
and income taxes payable by Executive as a result of any payments in Common
Stock triggered by this Agreement, or other agreements between Executive
and the Company, or any of its subsidiaries.
(iii) Reduction of Duties, etc. Executive may terminate this Agreement
for Good Reason at any time during Executive's employment, without the
Company's prior written consent, (a) in the event of any material adverse
change in or reduction by the Company of Executive's functions, duties or
responsibilities, (b) Executive is asked to move from his current primary
residence and does not desire to do so, (c) any removal of Executive from,
or any failure of the Board or the shareholders, as the case may be, to
re-elect Executive or to nominate him for election by the shareholders to,
any of the positions contemplated by this Agreement, or (d) other material
breach of this Agreement by the Company, by written notice to the Company
specifying the event relied upon for such termination, within ninety (90)
days after such event. Such termination will have the same effect as a
termination Without Cause by the Company as set forth in paragraph 1.6(ii).
(iv) Change in Control. In the event of a change in control, which
change in control occurs after January 1, 2005, Executive may terminate
this Agreement (a) immediately before or after such change in control, for
whatever reason, and regardless of the consequences of such change in
control to Executive, (b) during the first twelve (12) months after such
change in control, if Executive in his sole discretion concludes that his
continued employment is not acceptable to him, or (c) during the first
twenty-four (24) months after such change in control, if Executive in his
sole discretion, concludes that his duties, responsibilities or authorities
have materially changed. In such event such termination shall have the same
effect as if Executive were terminated without cause as set forth in
paragraph 1.6(ii).
(v) Death or Disability. In the event of Executive's death during his
employment hereunder, his base salary shall be paid to his estate or
legally appointed representative through the end of the month in which it
occurs. If Executive becomes physically or mentally disabled so as to
become unable, for a period of more than six consecutive months or for
shorter periods aggregating at least six months during any twelve-month
period, to perform his duties hereunder on a substantially full-time basis,
Executive's employment shall terminate, with no further payments of base
salary as of the end of such six months or such twelve-month period. Upon
Executive's death or disability all vesting schedules, performance goals or
other restrictions applicable to Executive's stock options, stock
appreciation rights, deferred compensation, life insurance, retirement, or
other benefits provided herein or in other agreements between Executive and
the Company, or any of its subsidiaries, then in effect, shall be deemed
satisfied. In the event of the Executive's death, the Executive's spouse or
estate shall receive the Executive's Teton stock options for the remainder
of their term. Executive's bonus for such year shall be prorated through
the end of the month in which his death occurs or the date of termination
in the event of his disability.
(vi) Termination by Executive without Good Reason. Upon a written
notice stating the effective date 30 days prior to the stated effective
date, Executive may terminate this Agreement and resign from Executive's
employment hereunder without any Good Reason. In the event that Executive
terminates his employment without Good Reason, then he shall be entitled to
Executive's then Base Salary paid as of the effective date of termination;
any earned but unpaid Bonus for the preceding fiscal year; and any
unreimbursed business expenses or dues described in this Agreement.
(vii) Continuation of Payments During Disputes. The Parties recognize
that in the event of any dispute as to Executive's entitlement to
continuing compensation under any of the provisions of this Agreement, the
Company's economic position is greatly stronger than that of Executive, and
that Executive would suffer substantial and continuing injury should the
Company cease payment of compensation due to Executive hereunder in the
case of a termination which the Company contends is for cause, or if the
Company disputes Executive's entitlement to invoke his right to terminate
his employment under paragraph 1.6(iii) or (iv). Accordingly, the Parties
have agreed that (a) in the case of any termination which the Company
contends is for cause, but Executive claims is not for cause, or (b) in the
case of any termination by Executive under paragraph 1.6(iii) or paragraph
1.6(iv), the Company shall continue to pay all compensation due to
Executive 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 (x) the termination was for Cause, or (y)
such termination by Executive was not authorized under paragraph 1.6(iii),
or paragraph 1.6(iv), 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
Executive shall not include any legal fees or other loss, costs, or
expenses incurred by the Company, notwithstanding paragraph 2.8 hereof.
This provision is made by the Parties for the purpose of compensating
Executive for the loss he would suffer in the case of an unfounded
discontinuation of compensation, and to encourage fairness and equitable
dealing between the Parties in the event of dispute.
1.7 Benefits.
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(i) Executive shall be entitled to participate, without any waiting or
eligibility periods, in all qualified retirement plans provided to other
executive officers and other key employees.
(ii) The Company shall pay, on a grossed-up basis for federal, state,
and local income taxes, the amount of any excise tax payable by Executive
as a result of any payments triggered by this Agreement, or other
compensation agreements between Executive and the Company, or any of its
subsidiaries.
(iii) Subsequent to the Company's raising in the aggregate financing
of at least $10,000,000 and acquiring an operating asset(s) generating at
least $10,000,000 in annual revenue, the Company shall provide term life
insurance coverage on Executive's life providing at least $1.0 million in
death benefits payable to Executive's designated beneficiaries. At
Executive's election, such policy shall be transferable to Executive, or
his designee, after any termination of employment hereunder.
(iv) Executive 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 Executive to accept
such benefits if and when they are offered.
(v) Executive shall be entitled to take such vacations, with pay, as
are customary among other chief executive officers of organizations of
similar size and nature. Beginning in 2004, Executive shall be entitled to
four (4) weeks per calendar year, which vacation level shall be reviewed by
the compensation committee of the Company's Board from time to time. No
more than 1.5 times (1.5x) Executive's authorized annual vacation
allocation may be accrued, at any given time. In the event that Executive
has reached his maximum authorized vacation allocation, accrual will not
re-commence until Executive 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.
Pay will only be provided for any unused, accrued paid vacation credit
at the time of Executive's separation from the business by the Company due
to a reduction in force, by Executive upon retirement, or upon the death of
an employee, provided that Executive has been a regular full-time employee
for three calendar months prior to such event. Termination of employment
for Cause by the Company, or Executive's resignation, will result in the
forfeiture of any unused paid vacation credit.
(vi) The Company shall provide, in its articles of incorporation and
its bylaws, in a form reasonably satisfactory to Executive, for his
indemnification to the maximum extent permissible by law.
(vii) After it has raised in the aggregate at least $10,000,000 in a
subsequent financing, the Company shall use its best efforts to establish a
health insurance plan. In the interim, the Company shall reimburse
Executive for the premiums associated with Executive's current health
insurance plan, if applicable. In the event that Executive elects not to
participate in the Company's health plan, he shall be entitled to an
appropriate gross up in his compensation for so long as Executive declines
to participate in the Company-sponsored plan.
(viii) In the event that Executive is required to move from his
primary residence, then Executive shall be provided with relocation
assistance as provided below:
(a) The Company will pay the costs, for Executive and his family,
of house-hunting trips and the cost of transporting Executive, his
spouse, furniture, household effects, and vehicles, to the area in
which the Company will be headquartered.
(b) The Company shall pay Executive's travel, temporary living
expenses, including housing, whether hotel or apartment, and meals,
during the period prior to Executive's move to the city in which the
Company will be headquartered.
(c) The Company acknowledges that, as of the date of this
Agreement, Executive's primary residence is in Silverthorne, Colorado.
In order to induce Executive to remain in the Company's employ, the
Company agrees to pay the expenses associated with the lease on
Executive's Denver apartment, which expenses shall be coterminous with
Executive's Base Salary.
1.8 Expense Reimbursement. Executive shall be entitled to reimbursement
within a reasonable time for all properly documented and approved expenses for
travel. Teton shall reimburse business expenses of Executive related to Teton
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 the US, special expenses associated with travel to certain countries,
supplemental life insurance or supplemental insurance of any kind or special
insurance rates or charges for travel in Russia or other countries (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. Executive shall be governed by the travel
and entertainment policy in effect at the Company.
ARTICLE TWO
MISCELLANEOUS
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2.1 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
Executive, this Agreement and any other agreements between Executive and the
Company or any of its subsidiaries, in the same manner and to the same extent as
the Company.
2.2 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 provisions governing indemnification of Executive.
2.3 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to constitute an original. Each such counterpart shall
become effective when one counterpart has been signed by each Party thereto.
2.4 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.
2.5 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.
2.6 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.
2.7 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.
2.8 Attorneys' 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).
2.9 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.
2.10 Remedies Cumulative. All remedies provided in this Agreement, by law
or otherwise, shall be cumulative and not alternative.
2.11 Amendment. This Agreement may be amended only by a writing signed by
all of the Parties hereto.
2.12 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.
2.13 Survival. This Agreement shall constitute a binding obligation of the
Company and any successor thereto.
ARTICLE THREE
CHANGE IN CONTROL
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3.1 Definition. For purposes of this Agreement and any other agreement
between Executive and the Company, or any of its subsidiaries, a "change in
control" shall be deemed to have occurred if (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 25% or more of any class of voting securities of the
Company's then outstanding securities; or (ii) during any period of twenty-four
(24) consecutive months, individuals who at the beginning of such period were
members of the Board cease for any reason to constitute at least a majority of
the Board unless the election, or the nomination for election by the Company's
shareholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period; or (iii) the stockholders of the Company approve a definitive agreement
(A) for a merger or other business combination of the Company with or into
another corporation pursuant to which the Company will not survive or will
survive only as a subsidiary of another corporation, (B) for the sale or other
disposition of all or substantially all of the assets of the Company, other than
a sale or other disposition of all or substantially all of the assets of the
Company that was in existence or had been announced prior to the effective date
of this Agreement, even if its ultimate closing does not occur until after the
effective date of this Agreement, (C) for the merger of another corporation into
the Company if, as a result of such merger, less than sixty percent (60%) of the
outstanding voting securities of the Company shall be owned, immediately after
such merger, by the owners of the voting shares of the Company outstanding
immediately prior to such merger, or (D) any combination of the foregoing.
ARTICLE FOUR
NON-COMPETETITION & CONFIDENTIALITY
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4.1 Non-Competition. In consideration of employment by the Company and
Executive's receipt of the salary and other benefits associated with Executive's
employment, and in acknowledgment that (i) the Company is engaged in oil and gas
business, (ii) maintains secret and confidential information, (iii) during the
course of Executive's employment by the Company such secret or confidential
information may become known to Executive, and (iv) 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, Executive
agrees to the following:
(a) Executive shall not use or disclose at any time during Executive's
employment with the Company, or at any time thereafter, any trade secret or
proprietary or confidential information of the Company or any of its
affiliates.
(b) During Executive's employment with the Company and for so long as
Executive receives any severance benefit provided under this agreement in
respect of the termination of his employment, Executive shall not be
engaged as an officer or executive of, or in any way be associated in a
management or ownership capacity with any corporation, partnership or other
enterprise or venture which conducts a business which is in direct
competition with the business of the Company; provided, however, that
Executive may own not more than 2% of the outstanding securities, or
equivalent equity interests, of any class of any corporation or firm which
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 Executive shall be judged in relation to his most recent
annual base salary to determine whether Executive is continuing to receive
a Severance Benefit 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.
(c) Executive agrees to receive confidential, proprietary and other
information of the Company in confidence, and not, directly or indirectly,
during the term of is employment or any time after his employment is
terminated for any reason to disclose or furnish to others, assist others
in the application of or use for Executive's own gain, such information,
including, but not limited to, the Company's customer, supplier,
distributor and investor lists, trade secrets, methods of conducting or
obtaining business. Furthermore, whether or not such information comprises
proprietary information, trade secrets, or confidential information,
Executive also agrees not to disclose, furnish to others, assist others in
the application of, or use for Executive's own gain, either any information
within the categories of information herein above specifically listed,
including the identity of any customers and/or investors of the Company, or
any other information relating to the Company s business not made available
by the Company to the public or in the public domain.
(d) To assist in carrying out the intent of this section, Executive,
during the term of his employment, agrees to refrain from engaging on his
own behalf or on behalf of any third party in the oil and gas industry in
the former Soviet Union, or to perform services in this field of activity.
Executive 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.
4.2 Confidentiality. Executive shall execute, if he has not already done so
prior to the execution of this Agreement, the Company's confidentiality
agreement covering employees, which confidentiality agreement shall become an
integral component of this Agreement.
ARTICLE V
INDEMNIFICATION
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In consideration of the other mutual promises and agreements contained
herein, Executive shall be covered under the following indemnification
agreement, in addition to any other indemnification that may be available under
relevant law or corporate agreements:
WHEREAS, it is essential to the Company to retain and attract as directors
and officers the most capable persons available, and
WHEREAS, the substantial increase in corporate litigation subjects
directors and officers to expensive litigation risks, and
WHEREAS, the Company's Amended and Restated Certificate of Incorporation,
as amended and/or its Amended Bylaws, as amended (the "Corporate Documents")
provides for indemnification of officers and directors and further provides that
indemnification of agents of the Company by the Company is authorized through
agreements with such agents in certain circumstances and with certain
limitations, and
NOW THEREFORE, as part of Executive's Agreement the Company and Executive
do hereby agree as follows:
1. Agreement to Serve. Executive agrees to serve or continue to serve as a
director or officer of the Company for so long as Executive is duly elected or
appointed or until such time as Executive tenders Executive's resignation or
Executive's status as a director or officer is terminated.
2. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened, pending or
completed action, suit, arbitration, alternative dispute resolution
proceeding, administrative hearing or other proceeding, whether brought by
or in the right of the Company or otherwise and whether of a civil,
criminal, administrative or investigative nature, and any appeal therefrom.
(b) The term "Corporate Status" shall mean the status of a person who
is or was a director or officer of the Company, or is or was serving, or
has agreed to serve, at the request of the Company, as a director, officer,
partner, trustee, member, employee or agent of another Company,
partnership, joint venture, trust, limited liability company or other
enterprise.
(c) The term "Expenses" shall include, without limitation, reasonable
attorneys' fees, retainers, court costs, transcript costs, fees and
expenses of experts, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees and other
disbursements or expenses of the types customarily incurred in connection
with investigations, judicial or administrative proceedings or appeals, but
shall not include the amount of judgments, fines or penalties against
Executive or amounts paid in settlement in connection with such matters.
(d) References to "other enterprise" shall include employee benefit
plans; references to "fines" shall include any excise tax assessed with
respect to any employee benefit plan; references to "serving at the request
of the Company" shall include any service as a director, officer, employee
or agent of the Company that imposes duties on, or involves services by,
such director, officer, employee, or agent with respect to an employee
benefit plan, its participants, or beneficiaries; and a person who acted in
good faith and in a manner such person reasonably believed to be in the
interests of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best
interests of the Company" as referred to in this Agreement.
(e) The term "Change of Control" shall mean the same as that term is
used and defined in Article III of this Agreement.
3. Indemnification in Third-Party Proceedings. The Company shall indemnify
Executive in accordance with the provisions of this Paragraph 3 if Executive was
or is a party to or threatened to be made a party to or otherwise involved in
any Proceeding (other than a Proceeding by or in the right of the Company to
procure a judgment in its favor) by reason of Executive's Corporate Status or by
reason of any action alleged to have been taken or omitted in connection
therewith, against all Expenses, judgments, fines, penalties, liabilities or
losses and, to the extent permitted by law, amounts paid or to be paid in
settlement actually and reasonably incurred by Executive or on his behalf in
connection with such Proceeding, if Executive acted in good faith and in a
manner which Executive reasonably believed to be in, or not opposed to, the best
interests of the Company and, with respect to of any criminal Proceeding, had no
reasonable cause to believe that his conduct was unlawful. The termination of
any Proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Executive did not act in good faith and in a manner which Executive reasonably
believed to be in, or not opposed to, the best interests of the Company, and,
with respect to any criminal Proceeding, had reasonable cause to believe that
his conduct was unlawful.
4. Indemnification in Proceedings by or in the Right of the Company. The
Company shall indemnify Executive in accordance with the provisions of this
Paragraph 4 if Executive was or is a party to or threatened to be made a party
to or otherwise involved in any Proceeding by or in the right of the Company to
procure a judgment in its favor by reason of Executive's Corporate Status or by
reason of any action alleged to have been taken or omitted in connection
therewith, against all Expenses, judgments, fines, penalties, liabilities or
losses and, to the extent permitted by law, amounts paid or to be paid in
settlement actually and reasonably incurred by Executive or on his behalf in
connection with such Proceeding, if Executive acted in good faith and in a
manner which Executive reasonably believed to be in, or not opposed to, the best
interests of the Company, except that no indemnification shall be made under
this Paragraph 4 in respect of any claim, issue, or matter as to which Executive
shall have been adjudged to be liable to the Company, unless and only to the
extent that the Court of Chancery of Delaware or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of such liability but in view of all the circumstances of the case,
Executive is fairly and reasonably entitled to indemnity for such Expenses as
the Court of Chancery or such other court shall deem proper. The termination of
any Proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Executive did not act in good faith and in a manner which Executive reasonably
believed to be in, or not opposed to, the best interests of the Company, and,
with respect to any criminal Proceeding, had reasonable cause to believe that
his conduct was unlawful.
5. Exceptions to Right of Indemnification. Notwithstanding anything to the
contrary in this Agreement, except as set forth in Paragraph 10, the Company
shall not indemnify Executive in connection with a Proceeding (or part thereof)
initiated by Executive unless the initiation thereof was approved by the Board
of Directors of the Company. Notwithstanding anything to the contrary in this
Agreement, the Company shall not indemnify Executive to the extent Executive is
reimbursed from the proceeds of insurance, and in the event the Company makes
any indemnification payments to Executive and Executive is subsequently
reimbursed from the proceeds of insurance, Executive shall promptly refund such
indemnification payments to the Company to the extent of such insurance
reimbursement.
6. Indemnification of Expenses of Successful Party. Notwithstanding any
other provision of this Agreement, to the extent that Executive has been
successful, on the merits or otherwise, in defense of any Proceeding or in
defense of any claim, issue or matter therein, Executive shall be indemnified
against all Expenses incurred by him or on his behalf in connection therewith.
Without limiting the foregoing, if any Proceeding or any claim, issue or matter
therein is disposed of, on the merits or otherwise (including a disposition
without prejudice), without (i) the disposition being adverse to Executive, (ii)
an adjudication that Executive was liable to the Company, (iii) a plea of guilty
or nolo contendere by Executive, (iv) an adjudication that Executive did not act
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company, and (v) with respect to any criminal
proceeding, an adjudication that Executive had reasonable cause to believe his
conduct was unlawful, Executive shall be considered for the purposes hereof to
have been wholly successful with respect thereto.
7. Notification and Defense of Claim. As a condition precedent to his right
to be indemnified, Executive must notify the Company in writing as soon as
practicable of any Proceeding for which indemnity will or could be sought by him
and provide the Company with a copy of any summons, citation, subpoena,
complaint, indictment, information or other document relating to such Proceeding
with which he is served. With respect to any Proceeding of which the Company is
so notified, the Company will be entitled to participate therein at its own
expense and/or to assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to Executive. After notice from the Company to
Executive of its election so to assume such defense, the Company shall not be
liable to Executive for any legal or other expenses subsequently incurred by
Executive in connection with such claim, other than as provided below in this
Paragraph 7. Executive shall have the right to employ his own counsel in
connection with such claim, but the fees and expenses of such counsel incurred
after notice from the Company of its assumption of the defense thereof shall be
at the expense of Executive unless (i) the employment of counsel by Executive
has been authorized by the Company, (ii) counsel to Executive shall have
reasonably concluded that there may be a conflict of interest or position on any
significant issue between the Company and Executive in the conduct of the
defense of such action or (iii) the Company shall not in fact have employed
counsel to assume the defense of such action, in each of which cases the fees
and expenses of counsel for Executive shall be at the expense of the Company,
except as otherwise expressly provided by this Agreement. The Company shall not
be entitled, without the consent of Executive, to assume the defense of any
claim brought by or in the right of the Company or as to which counsel for
Executive shall have reasonably made the conclusion provided for in clause (ii)
above. The Company shall not be required to indemnify Executive under this
Agreement for any amounts paid in settlement of any Proceeding effected without
its written consent. The Company shall not settle any Proceeding in any manner
which would impose any penalty or limitation on Executive without Executive's
written consent. Neither the Company nor Executive will unreasonably withhold
their consent to any proposed settlement.
8. Advancement of Expenses. Subject to the provisions of Paragraph 9 below,
in the event that the Company does not assume the defense pursuant to Paragraph
7 of this Agreement of any Proceeding to which Executive was or is a party or is
threatened to be made a party by reason of his Corporate Status or by reason of
any action alleged to have been taken or omitted in connection therewith and of
which the Company receives notice under this Agreement, any Expenses incurred by
Executive or on his behalf in defending such Proceeding shall be paid by the
Company in advance of the final disposition of such Proceeding; provided,
however, that the payment of such Expenses incurred by Executive or on his
behalf in advance of the final disposition of such Proceeding shall be made only
upon receipt of an undertaking by or on behalf of Executive to repay all amounts
so advanced in the event that it shall ultimately be determined that Executive
is not entitled to be indemnified by the Company as authorized in this
Agreement. Such undertaking shall be accepted without reference to the financial
ability of Executive to make repayment.
9. Procedure for Indemnification. In order to obtain indemnification or
advancement of Expenses pursuant to Paragraphs 3, 4, 6 or 8 of this Agreement,
Executive shall submit to the Company a written request, including in such
request such documentation and information as is reasonably available to
Executive and is reasonably necessary to determine whether and to what extent
Executive is entitled to indemnification or advancement of Expenses. Any such
indemnification or advancement of Expenses shall be made promptly, and in any
event within 30 days after receipt by the Company of the written request of
Executive, unless with respect to requests under Paragraphs 3, 4 or 8 the
Company determines within such 30-day period that such Executive did not meet
the applicable standard of conduct for indemnification set forth in Paragraph 3
or 4, as the case may be. The Board of Directors of the Company shall either (a)
approve the indemnification and advancement of Expenses (i) by a majority vote
of the Directors of the Company consisting of persons who are not at that time
parties to the Proceeding ("Disinterested Directors"), whether or not a quorum;
or (ii) by a committee of Disinterested Directors designated by a majority vote
of Disinterested Directors, whether or not a quorum; or (b) designate
independent legal counsel (appointed by the Company and approved by Executive)
who shall, within said 30-day period, provide a written opinion to the Board as
to whether Executive has met the relevant standards of conduct for
indemnification and advancement of Expenses. The obligations of the Company
hereunder with respect to the payment of any Expenses, judgment, fine or penalty
shall be subject to the condition that the independent legal counsel shall not
have determined (in a written opinion) that Executive is not permitted to be
indemnified under the applicable standards of conduct for indemnification.
The obligation of the Company regarding the advancement of Expenses
pursuant to this Agreement shall be subject to the condition that, if, when and
to the extent that the independent legal counsel determines that Executive is
not permitted to be so indemnified, the Company shall be entitled to be
reimbursed by Executive (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid. If Executive has commenced legal proceedings
(either before or after the determination by independent legal counsel) in a
court of competent jurisdiction to secure a determination that Executive may be
indemnified under this Agreement or otherwise, any determination made by the
independent legal counsel that Executive is not permitted to be indemnified
shall not be binding, and Executive shall not be required to reimburse the
Company for any advancement of Expenses and shall continue to be entitled to the
advancement of Expenses until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been exhausted
or lapsed). If there has been no determination by the independent legal counsel
or if the independent legal counsel determines that Executive is not permitted
to be indemnified in whole or in part, Executive shall have the right to
commence litigation in any court in the states of Colorado or Delaware having
subject matter jurisdiction thereof and in which venue is proper seeking an
initial determination by the court or challenging any such determination by the
independent legal counsel or any aspect thereof, and the Company hereby consents
to service of process and to appear in any such proceeding.
10. Remedies. The right to indemnification or advancement of Expenses as
provided by this Agreement shall be enforceable by Executive in any court of
competent jurisdiction if the Company denies such request, in whole or in part,
or if no disposition thereof is made within the 30-day period referred to above
in Paragraph 9. Unless otherwise required by law, the burden of proving that
indemnification is not appropriate shall be on the Company. Neither the failure
of the Company to have made a determination prior to the commencement of such
action that indemnification is proper in the circumstances because Executive has
met the applicable standard of conduct, nor an actual determination by the
Company pursuant to Paragraph 9 that Executive has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Executive has not met the applicable standard of conduct. Executive's
expenses (of the type described in the definition of "Expenses" in Paragraph
2(c)) reasonably incurred in connection with successfully establishing his right
to indemnification, in whole or in part, in any such Proceeding shall also be
indemnified by the Company.
11. Partial Indemnification. If Executive is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of the
Expenses, judgments, fines, penalties or amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with any Proceeding
but not, however, for the total amount thereof, the Company shall nevertheless
indemnify Executive for the portion of such Expenses, judgments, fines,
penalties or amounts paid in settlement to which Executive is entitled.
12. Subrogation. In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Executive, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are reasonably necessary to enable the Company to bring suit to enforce such
rights.
13. Term of Indemnification. The Company's agreements and obligations under
this Agreement shall continue during the period Executive is a director or
officer of the Company, and shall continue thereafter so long as Executive shall
be subject to any possible claim or proceeding by reason of Executive's service
in such capacity. Executive's rights under this Agreement shall inure to the
benefit of Executive's heirs, executors, and administrators.
14. Officer and Director Liability Insurance. In the event the Company's
Directors and Officers Insurance terminates or the scope or amount of coverage
of the Company's Directors and Officers Insurance be reduced from the scope and
coverage in effect during the first year of the Agreement, the Company agrees to
give Executive prompt notice thereof and to hold harmless and indemnify
Executive to the fullest extent permitted pursuant to this Agreement and/or by
applicable law to the full extent of the coverage that is in effect during the
first year of this Agreement.
15. Indemnification Hereunder Not Exclusive. The indemnification and
advancement of Expenses provided by this Agreement shall not be deemed exclusive
of any other rights to which Executive may be entitled under the Corporate
Documents, any agreement, any vote of stockholders or disinterested directors,
the General Company Law of Delaware, any other law (common or statutory), or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding office for the Company. Nothing contained in this
Agreement shall be deemed to prohibit the Company from purchasing and
maintaining insurance, at its expense, to protect itself or Executive against
any expense, liability or loss incurred by it or him in any such capacity, or
arising out of his status as such, whether or not Executive would be indemnified
against such expense, liability or loss under this Agreement; provided that the
Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable hereunder if and to the extent that Executive has
otherwise actually received such payment under any insurance policy (whether
arising from an insurance policy provided to the Company, a subsidiary, a
parent, or any other insurance policy), contract, agreement or otherwise.
16. Attorneys' Fees. In the event that Executive institutes any legal
action to enforce Executive's legal rights hereunder, or to recover damages for
breach of this Agreement, Executive, if Executive prevails in whole or in part,
shall be entitled to recover from the Company reasonable attorneys' fees and
disbursements incurred by Executive with respect to the claims or matters on
which Executive has prevailed.
17. Merger, Consolidation, or Change of Control. In the event that the
Company shall be a constituent company in a consolidation or merger, whether the
Company is the resulting or surviving company or is absorbed, or if there is a
Change of Control, Executive shall stand in the same position under this
Agreement as Executive would have with respect to the Company if its separate
existence had continued or if there had been no Change of Control.
18. Savings Clause. Notwithstanding any other provision of this Agreement,
if the indemnification provisions under this Agreement or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Company shall nevertheless indemnify Executive 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.
19. Modification and Waiver. Notwithstanding any other provision of this
Agreement, the indemnification provisions in this Article V of this Agreement
may be amended from time to time to reflect changes in Delaware law or for other
reasons.
20. 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 Executive, to:
(b) if to the Company, to:
Teton Petroleum Company
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chairman, Compensation Committee
or to such other address as may have been furnished to Executive by the Company
or to the Company by Executive, as the case may be.
21. 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 Executive'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.
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Teton Petroleum Company Executive
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Director & Chairman,
Compensation Committee
EXHIBIT A
List of Outside Activities
▇▇▇▇ ▇. ▇▇▇▇▇▇
Date Hired
or
Company/Project Nature of Commenced Annual Time Commitment,
Name Business Involvement Position Compensation (time away from office)
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Dated: May 1, 2003
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Initials: Executive: _____ Company: ______