EXECUTIVE SEVERANCE AND
MUTUAL RELEASE AGREEMENT
This Executive Severance and Mutual Release
Agreement (“Agreement”) is entered between Karl F.
Arleth (“Executive”) and Teton Energy Corporation
(“Employer” or the “Company”) and is in
consideration of the mutual undertakings set forth
below.
Executive has decided to resign, and Executive
and Employer mutually desire to end Executive’s employment.
In order to assist Executive in his transition, and acknowledge
past contributions, Employer has decided to offer Executive the
benefits described below. To clearly set forth the terms and
conditions of Executive’s departure from the Company, the
parties agree as follows:
1. The purpose of this Agreement is to set
forth the mutual understanding of the parties. This Agreement shall
supersede Executive’s September 1, 2006 Amended and
Restated Employment Agreement (the “Prior Agreement”)
with the Company, which shall be null and void as of May 29,
2009. This Agreement shall not be construed as an admission by
Employer that it acted wrongfully with respect to Executive, nor
shall it be construed as an admission by Executive of any
misconduct or impropriety.
2. Executive’s employment with
Employer shall end for all purposes on May 5, 2009
(“Separation Date”). Executive shall be entitled to a
severance payment equal to one year of his base salary ($225,000 as
of the Separation Date), which shall be payable over 24 months
in equal payments. Executive and the Company agree that this will
amount to a severance benefit of approximately $9,375 per month or
approximately $4,327 per pay period (assuming 50 additional pay
periods), subject to normal withholdings and benefit deductions
such as medical and dental.
3. Executive is entitled to $19,470 in
accrued vacation pay (“Accrued Vacation”). Executive
will be paid a ratable amount, subject to the reduction in
Paragraph 4 below, in equal installments over three pay
periods: on May 29, 2009, on June 12, 2009, and on
June 26, 2009. An explanation of the $19,470 is attached as
Schedule A to this Agreement.
4. Executive will be entitled to keep his
Term Life Insurance benefit, policy # T201492402, issued by Lincoln
Financial Group (the “Life Insurance Policy”).
Executive and Employer agree that Employer will have no further
claim as a beneficiary on the Life Insurance Policy effect as of
the Separation Date. As the entire premium for the Life Insurance
Policy was paid on February 6, 2009, the balance of unused
premium on the Life Insurance Policy that was not previously
included in Executive’s compensation and recognized by
Executive as income, or $3,000, shall be deducted from the Accrued
Vacation amount above, leaving a payment of $6,007
[$5,490.00 on 5/29. Will be made up over next 2 pay periods. /s/
KFA] per pay period due in respect of Accrued Vacation (when also
considered with the item in Paragraph 5 below).
5. Executive will be responsible for the
lease and rent due on his apartment located in Denver Colorado,
effective June 1, 2009. The parties acknowledge that Executive
personally paid $1,450 [$1,550.00 /s/ KFA] in respect of
May’s rent and will net this amount against any deduction in
respect of amounts in Paragraph 4 above.
6. The parties agree that the following
securities have vested and will remain subject to the terms of the
original agreements under which they were issued and are not
affected by this Agreement: 83,334 shares underlying warrants, with
an exercise price of $3.24 per share, expiring December 15,
2012; 410,338 shares underlying options, currently exercisable at
$3.48 per share, expiring April 9, 2013; and 300,000 shares
underlying options, currently exercisable at $3.60 per share,
expiring March 31, 2014.
7. In exchange for the benefits contained
in this Agreement, Executive releases and discharges Employer with
respect to all rights under the Prior Agreement. Executive shall be
entitled to participate in any award outstanding pursuant the
Company’s 2005 Long-term Incentive Plan (the
“LTIP”) as if he had been terminated without Cause as
that term is defined in the Prior agreement, in the LTIP, and the
award agreements thereunder. 1 This release includes but is not limited to any
claims under any federal, state, or local laws prohibiting
discrimination in employment, including Title VII, the Age
Discrimination in Employment Act, and the Americans with
Disabilities Act; based upon any employment agreement, severance
plan, compensation plan, or change in control agreement; based upon
any alleged legal restriction on Employer’s right to
terminate its employees; or based upon ERISA. This Agreement shall
not affect Executive’s entitlement to receive any 401(k),
stock option, or pension plan benefits that shall have vested as of
the Separation Date.
8. In exchange for the benefits contained
in this Agreement, Employer releases and discharges Executive from
any and all claims, actions, causes of action, rights, benefits,
compensation, or damages, including costs and attorneys’
fees, of whatever nature, whether known or unknown, suspected or
unsuspected, matured or unmatured, now existing or arising in the
future from any act, omission, event, occurrence, or non-occurrence
prior to the date Employer signs this Agreement arising out of or
in any way related to Executive’s employment with
Employer.
9. Employer agrees to indemnify Employee to
the fullest extent permitted by Employer’s Bylaws and that
certain indemnification agreement dated as of April 10, 2009,
which includes independent representation where appropriate.
Nothing in this Agreement shall modify, or be interpreted to
modify, the application or applicability of any law, document, or
authority relating to indemnification.
10. Executive agrees that he will not make
any disparaging or untruthful remarks about or concerning Employer,
its officers,
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