Steve J.
Godfrey
(Executive)
THIS EMPLOYMENT AGREEMENT (this “Agreement”),
dated as of March 31, 2008, (the “Effective
Date”) is entered into by and between Teton Energy
Corporation, a Delaware corporation (the “Company”),
and Steve J. Godfrey, an individual with an address at 6993 S.
Prescott Street, Littleton, Colorado 80120, (the
“Executive”) (collectively, the “Parties,”
individually, a “Party”).
WHEREAS,
Employee has substantial experience in the Company’s business
and is currently the Company’s Vice President of Operations;
and
WHEREAS,
the parties desire to clarify certain portions of this Agreement
and to modify certain of the benefits and obligations provided
hereunder; 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 Executive,
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 Executive 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 Executive 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:
1.
Definitions . As used in this Agreement:
1.1
The term “Accrued Obligations,” when used in the case
of the Executive’s death or disability shall mean the sum
of (1) that portion of Executive’s Base Salary
that was not previously paid to the Executive from the last payment
date through the Date of Termination, and (2) an amount equal
to twelve (12) months salary at the level of the
Executive’s Base Salary then in effect, and (3) all
equity-based awards that vest pursuant to the terms of each plan
under which they were awarded.
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 “Cash Bonus” shall mean the annual cash
incentive awarded to Executive each year and approved by the
Compensation Committee as identified more fully in Section 3.2
herein.
1.6
The term “Cause” shall have the meaning set forth in
Section 4.3 herein.
1.7
The term “Common Stock” shall mean the Common Stock,
par value $0.001, of the Company.
1.8
The term “Compensation Committee” shall mean the
Compensation Committee of the Board of Directors of the
Company.
1.9
The term “Corporate Documents” shall mean the
Company’s Certificate of Incorporation, as amended and/or its
Bylaws, as amended.
1.10
The term “Effective Date” shall have the meaning set
forth in the preamble.
1.11
The term “Good Reason” shall have the meaning set forth
in Section 4.4 herein.
1.12
The term “Initial Term” shall have the meaning set
forth in Section 2.2 herein.
1.13
The term “Severance Benefit” shall have the meaning set
forth in Section 4.7(a)(i) herein.
1.14
The term “Target Cash Bonus” shall mean the targeted
bonus for the Executive in a specific or current fiscal year as
identified more fully in Section 3.2 herein.
1.15
The term “Without Cause” shall have the meaning set
forth in Section 4.3 herein.
1.16
The term “Without Good Reason” shall have the meaning
set forth in Section 4.5 herein.
2.1
Title . The Executive shall serve as the Vice President of
Operations 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 Executive’s employment shall be for an
initial term of one (1) year (“Initial Term”),
commencing on the Effective Date. The Executive’s employment
shall be automatically extended on the day after the anniversary of
the Effective Date (“Automatic Extension”), and on each
anniversary date thereof, for an additional one (1) year
periods; provided, however , that the outstanding term at
any time shall never be greater than one (1) year.
2.3
Duties and Responsibilities . The Executive shall report to
the COO and in his capacity as an officer of the Company shall
perform such duties and services as may be appropriate for an
executive and as are assigned to him by the COO. During the term of
this Agreement Executive shall, subject to the direction of the COO
of the Company, oversee and direct such assigned operations of the
Company and shall perform such duties as are customarily performed
by a Vice President of Operations of an oil and gas exploration
company such as the Company or as are otherwise delegated to him
from time to time by the COO or such other matters and projects as
may from time to time be reasonably assigned to him by the
COO.
2.4
Performance of Duties . During the term of the Agreement,
except as otherwise approved by the COO or as provided below, the
Executive 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 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;
(d) managing his
personal business and investments; and
(e) any other
activity approved of by the Board. For purposes of this Agreement,
any activity specifically listed on Schedule A shall be
considered as having been approved by the Board.
2.5
Representations and Warranties of the Executive with Respect to
Conflicts, Past Employers and Corporate Opportunities . The
Executive 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, nor will he knowingly
bring 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 engaged in a business
which is substantially similar to the business of the Company:
provided, however , 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
Executive disclosed on Schedule A attached hereto,
Executive 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, 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 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 Executive 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 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
(c) the Executive’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
Executive’s reporting location shall be Denver, Colorado,
which shall include the metropolitan area within a 40-mile radius
from the Company’s current office.
3.1
Base Salary . Executive shall receive an annual base salary
of Two Hundred Five Thousand Dollars ($205,000.00), payable
according to the Company’s normal payroll policies and
procedures, as in effect from time to time (the “Base
Salary”) and subject to all federal, state, and municipal
withholding requirements. The Base Salary shall be reviewed by the
COO, with input from the CEO, annually for any increase.
3.2
Cash Bonus . The Executive shall be eligible for a Cash
Bonus equal to an amount of up to seventy-five percent (75%) of his
Base Salary for each fiscal year he is employed by the Company (pro
rata for any fiscal year consisting of less than 12 full months or
with respect to which the Executive has been employed by the
Company for less than twelve (12) full months). Each Cash
Bonus shall be paid no later than the 75 th day of the fiscal year next following the fiscal
year in respect of which the Cash Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Cash Bonus that
may be approved by the Board or CEO from time to time.
3.3
Equity-Based Compensation . The Executive shall be entitled
to participate in all equity-based compensation plans offered by
the Company to the same extent as provided to other executives of
the Company and as determined by the Board of Directors.
(a) The Executive
understands that as of the date of this Agreement, the only
stock-based plan offered by the Company is the 2005 Long-Term
Incentive Plan.
(b) Upon a Change
of Control, all equity-based compensation will be deemed to have
vested as of the Change of Control Effective Date (as defined
Section 7.1 herein).
3.4
Participation In Benefit Plans .
(a) Retirement
Plans . 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.
(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
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 and any income tax payable by Executive
as a result of any payments in Common Stock triggered by this
Agreement or other compensation agreements between Executive and
the Company, or any of its subsidiaries, except as might otherwise
be provided by such benefit plan.
(c) Employee
Benefit Plans and Insurance . The 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 to other executives of the Company. Nothing herein
shall obligate the Executive to accept such benefits if and when
they are offered.
(i) The Executive
shall be entitled to five (5) weeks of vacation per calendar
year, which vacation level shall be reviewed by the COO 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 cannot be retroactively
reapplied.
(ii) 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.
(e) Paid
Holidays. The Executive 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.
(f)
Reimbursement of Expenses . Executive 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 Executive 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 or special insurance rates or charges for travel outside
the United States (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.
3.5
Relocation Expenses . In the event that Executive is
required to move from his primary residence and consents to such
move, then Executive shall be provided with relocation assistance
as provided below:
(a) Housing and
Temporary Lodging . The Company will pay the costs for the
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, in the event that the Company shall move its
corporate headquarters from the Denver, Colorado metropolitan area.
In addition, the Company will pay the cost of 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.
3.6
Severance Benefit. In the event that Executive’s
employment is terminated, other than for Cause, Executive shall
receive compensation pursuant to Section 4.7
herein.
3.7
Payroll Procedures and Policies . All payments required to
be made by the Company to the Executive pursuant to this
Article Three shall be paid on a regular basis in accordance
with the Company’s normal payroll procedures and policies as
then in effect.
TERMINATION OF
EMPLOYMENT
4.1
Death . The Executive’s employment shall terminate
automatically upon the Executive’s death during the
Employment Term.
4.2
Disability . If the Company determines in good faith that
the Disability (as defined below) of the Executive has occurred
during the Employment Term, the Company may give the Executive
notice of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment
hereunder shall terminate effective on the 30
th day after receipt of such notice by the
Executive (the “Disability Effective Date”);
provided , that , within the 30-day period after such
receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties. For purposes of this
Agreement, “Disability” shall mean the absence of the
Executive from the Executive’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 Executive, 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 Executive or the Executive’s legal
representative, be permanent and continuous during the remainder of
the Executive’s life.
4.3
Termination by Company .
(a) Termination
for Cause.
The Company may
terminate the Executive’s employment hereunder for Cause (as
defined below). For purposes of this Agreement, “Cause”
shall mean:
(i) the willful
and continued failure of the Executive to perform substantially the
Executive’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 Executive by the Board,
the Chief Executive Officer, or the Chief Operating Officer of the
Company, which specifically identifies the manner in which the
Board, Chief Executive Officer, Chief Operating Officer, of the
Company believes the Executive has not substantially performed the
Executive’s duties; or
(ii) the willful
engaging by the Executive 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
Executive shall be considered “willful” unless done, or
omitted to be done, by the Executive in bad faith or without
reasonable belief that the Executive’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 Executive Officer,
the Chief Operating 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
Executive in good faith and in the best interests of the Company
and its affiliated companies. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until
there shall have been
delivered to
the Executive 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 Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, the Executive
is guilty of the conduct described in subparagraph (i) or
(ii) above, and specifying the particulars thereof in
detail.
(iii) the
Executive’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, shall be considered Without
Cause.
4.4
Termination by Executive . The Executive may terminate the
Executive’s employment hereunder at any time during the
Employment Term for Good Reason (as defined below). For purposes of
this Agreement, “Good Reason” shall mean any of the
following (without the Executive’s express written
consent):
(a) The assignment
to the Executive of any duties inconsistent in any respect with the
Executive’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
Executive;
(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
Executive;
(c) The
Company’s requiring the Executive to be based at any office
or location other than as provided in Section 2.8 of this
Agreement or the Company’s re
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