Exhibit 10.1
AGREEMENT
BETWEEN
TETON PETROLEUM COMPANY
AND
H. XXXXXX XXXXXX
(Consultant)
This agreement, dated as of March 1, 2005 (the "Agreement"), is entered
into by and between Teton Petroleum Company, a Delaware corporation (the
"Company"), and H. Xxxxxx Xxxxxx ("Consultant") (collectively, the "Parties,"
individually, a "Party").
Whereas, the Consultant's previous contract covered his services for the
Company as its Chairman; and
Whereas, Consultant is now serving in the role of Consultant; 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 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 Consultant agree as follows:
ARTICLE ONE
AGREEMENT
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1.1 Title and Duties.
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(i) Consultant shall serve as a consultant to the Company.
(ii) Consultant's term shall continue the term of his original
contract as Chairman for an initial term of one (1) year, which term
commences on March 1, 2005. The term of this Agreement shall be
automatically extended on the day after the 12-month anniversary of the
commencement of the term of this Agreement for an additional one (1)-year
period 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) Consultant shall report to the Chief Executive Officer ("CEO")
or Board of Directors (the "Board") of the Company and in his capacity as
Consultant shall perform such duties and services as may be appropriate and
as are assigned to him by the CEO or the Board. During the term of this
Agreement, Consultant shall, subject to the direction of the CEO, perform
such duties and functions as shall be requested by the CEO from
time-to-time.
(iv) During the term of this Agreement, except as otherwise approved
by the CEO, Consultant shall devote such amount of his entire working time,
attention and energy to assigned tasks of the Company and in the
advancement of the best interests of the Company and its subsidiaries as
shall be required. The foregoing shall not, however, preclude Consultant
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 Consultant shall devote the business time, effort,
skill and attention to the affairs of the Company and its subsidiaries as
required, 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 Consultant represents that his arrangement by the Company
will not conflict with any obligations which he has to any other
person, firm or entity. The Consultant 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 partnership, firm or
similar entity with which he may be affiliated, or any confidential
information or property of any other person, firm or entity.
(x) Consultant 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). Consultant 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) Consultant 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, Chairman, director, officer, partner,
venturer, consultant or otherwise) in any business which, as
reasonably known to Consultant, purchases or provides services or
products to, the Company or any of its subsidiaries, provided that the
Consultant 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. For purposes of this
Agreement, the Company and Consultant agree that the directors and
officers questionnaire completed by Consultant while Chairman and
submitted to the Company on or about October 15, 2004, shall be
considered adequate initial disclosure for purposes of this provision.
(z) The Consultant 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 Consultant
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
Consultant's activities with respect to such opportunities do not have a
material adverse effect on the performance of the Consultant's duties
hereunder, and (iii) the Consultant's activities with respect to such
opportunity have been fully disclosed in writing to the Company's Board of
Directors.
1.2 Base Compensation.
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Consultant shall continue to receive base compensation of $200,000,
consistent with his previous contract, payable bi-monthly in arrears (the
"Base Compensation") and subject to all federal, state, and municipal
withholding requirements.
1.3 Bonus.
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The Consultant shall be eligible for any bonus that may be approved by
the Board from time to time for extraordinary services rendered provided
that such compensation is deemed not to violate any provision of state or
federal law and provided that the Board believes that such compensation is
in the best interests of the shareholders.
1.4 Options.
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Options previously issued to Consultant while an employee will
continue to be valid and in force and effect. Upon a change in control1,
all stock options, stock appreciation rights, and other equity-based
compensation will be treated in the same manner as if Consultant's
relationship had been terminated by the Company not for cause under
paragraph 1.6(b) herein.
1.5 Severance Benefit.
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If Consultant's relationship 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 Consultant
voluntarily, (c) upon the death or disability of the Consultant, 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 Consultant, specifying the event relied
upon for such termination, within thirty (30) days of such event.
"Cause" shall be defined solely as (a) Consultant's defalcation or
misappropriation of funds or property of the Company, or the
commission of any other illegal act in the course of his relationship
with the Company which, in the reasonable judgment of the Board of
Directors, has a material adverse financial effect on the Company or
on Consultant's ongoing abilities to carry out his duties under this
Agreement; (b) Consultant'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 Consultant 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 Consultant'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 Consultant's
relationship for any reason other than those specified in the
preceding paragraph 1.6(i) shall be deemed to be a termination of his
relationship Without Cause, following which (a) Company will pay
Consultant a sum of 12 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 Consultant as a result of any payments in Common Stock
triggered by this Agreement, or other agreements between Consultant
and the Company, or any of its subsidiaries.
(iii) Death or Disability. In the event of Consultant's death
during his relationship hereunder, his Base Compensation shall be paid
to his estate or legally appointed representative through the end of
the month in which it occurs. If Consultant 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, Consultant's relationship shall
terminate, with no further payments of Base Compensation as of the end
of such six months or such twelve-month period. Upon Consultant's
death or disability all vesting schedules, performance goals or other
restrictions applicable to Consultant's stock options, stock
appreciation rights, deferred compensation, life insurance,
retirement, or other benefits provided herein or in other agreements
between Consultant and the Company, or any of its subsidiaries, then
in effect, shall be deemed satisfied. In the event of the Consultant's
death, the Consultant's spouse or estate shall receive the
Consultant's Teton stock options for the remainder of their term.
(iv) Voluntary Termination by Consultant. Upon 30 days written
notice, Consultant may terminate this Agreement and resign from
Consultant's duties hereunder without any reason. In the event that
Consultant terminates his relationship without any reason, then he
shall be entitled to Consultant's then Base Compensation paid as of
the effective date of termination; any earned but unpaid Bonus; 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 Consultant's
entitlement to continuing compensation under any of the provisions of
this Agreement, the Company's economic position is greatly stronger
than that of Consultant, and that Consultant would suffer substantial
and continuing injury should the Company cease payment of compensation
due to Consultant hereunder in the case of a termination which the
Company contends is for cause. Accordingly, the Parties have agreed
that in the case of any termination which the Company contends is for
cause, but Consultant claims is not for cause, the Company shall
continue to pay all compensation due to Consultant 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, 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 Consultant 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 Consultant 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) Consultant shall be entitled to continue to participate in
all qualified retirement plans to which he was entitled to participate
in under his prior contract for as long as this Agreement is in
effect.
(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
Consultant as a result of any payments triggered by this Agreement, or
other compensation agreements between Consultant and the Company, or
any of its subsidiaries.
(iii) Consultant shall have the continuing right to participate
in employee benefit plans and insurance programs of the Company that
the Company sponsors if those benefits were offered on the day before
the effective date of this Agreement. Nothing herein shall obligate
Consultant to continue to accept such benefits.
(vi) 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 Consultant for the premiums associated with Consultant's
current health insurance plan, if applicable. In the event that
Consultant 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 Consultant declines to participate in the Company-sponsored
plan.
1.8 Expense Reimbursement. Consultant shall be entitled to
reimbursement within a reasonable time for all properly documented and
approved expenses for travel. Teton shall reimburse business expenses of
Consultant 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. Consultant shall be governed by the
travel and entertainment policy in effect at the Company.
1.9 Other. This Agreement shall not affect any benefits that may be
established by the Board from time to time or may have been previously
granted to Consultant in connection with any employment agreement.
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 Consultant, this Agreement
and any other agreements between Consultant 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. For so long as Consultant serves as a director of
the Company, Delaware law shall govern with respect to the provisions
governing indemnification of Consultant in his capacity as a director only.
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
NON-COMPETETITION & CONFIDENTIALITY
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3.1 Non-Competition. In consideration of the entering into this
Agreement by the Company and Consultant's receipt of the compensation and
other benefits associated with this agreement, 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 Consultant's
relationship with the Company (and previous employ by the Company) such
secret or confidential information may become known to Consultant, 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, Consultant agrees to the following:
(a) Consultant shall not use or disclose at any time during
Consultant's relationship 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 Consultant's relationship with the Company and for so
long as Consultant receives any benefit (including any severance
benefit) provided under this Agreement in respect of the termination
of his relationship, Consultant shall not be engaged as an officer or
Consultant 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
Consultant 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 Consultant shall be judged in relation
to his most recent annual Base Compensation to determine whether
Consultant 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) Consultant agrees to receive confidential, proprietary and
other information of the Company in confidence, and not, directly or
indirectly, during the term of is relationship or any time after his
relationship is terminated for any reason to disclose or furnish to
others, assist others in the application of or use for Consultant'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, Consultant also agrees not
to disclose, furnish to others, assist others in the application of,
or use for Consultant'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,
Consultant, during the term of his relationship, 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.
Consultant also agrees that he will not, directly or indirectly,
during the term of his relationship or within one (1) year after
termination of his relationship for any reason, in any manner,
encourage, persuade, or induce any other employee of the Company to
terminate his relationship, 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.
3.2 Confidentiality. Consultant 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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The following is the form of indemnification that will be available to
consultant in his capacity as a director of the Company on the same terms and
conditions as are available to other directors of the Company.
In consideration of the other mutual promises and agreements contained
herein, the following indemnification provisions shall apply to Consultants
services as a director only, 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 Consultant's Agreement the Company and Consultant
do hereby agree as follows:
1. Agreement to Serve. Consultant agrees to serve or continue to serve as a
director or officer of the Company for so long as Consultant is duly elected or
appointed or until such time as Consultant tenders Consultant's resignation or
Consultant'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
Consultant 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
Consultant in accordance with the provisions of this Paragraph 3 if Consultant
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 Consultant'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 Consultant or on his behalf in
connection with such Proceeding, if Consultant acted in good faith and in a
manner which Consultant 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 Consultant did not act in good faith and in a manner which
Consultant 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 Consultant in accordance with the provisions of this
Paragraph 4 if Consultant 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 Consultant'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 Consultant or on his behalf in
connection with such Proceeding, if Consultant acted in good faith and in a
manner which Consultant 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
Consultant 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,
Consultant 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
Consultant did not act in good faith and in a manner which Consultant 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 Consultant in connection with a Proceeding (or part thereof)
initiated by Consultant 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 Consultant to the extent Consultant
is reimbursed from the proceeds of insurance, and in the event the Company makes
any indemnification payments to Consultant and Consultant is subsequently
reimbursed from the proceeds of insurance, Consultant 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 Consultant has been
successful, on the merits or otherwise, in defense of any Proceeding or in
defense of any claim, issue or matter therein, Consultant 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 Consultant,
(ii) an adjudication that Consultant was liable to the Company, (iii) a plea of
guilty or nolo contendere by Consultant, (iv) an adjudication that Consultant
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 Consultant had reasonable cause to
believe his conduct was unlawful, Consultant 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, Consultant 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 Consultant. After notice from the Company to
Consultant of its election so to assume such defense, the Company shall not be
liable to Consultant for any legal or other expenses subsequently incurred by
Consultant in connection with such claim, other than as provided below in this
Paragraph 7. Consultant 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 Consultant unless (i) the relationship of counsel by
Consultant has been authorized by the Company, (ii) counsel to Consultant shall
have reasonably concluded that there may be a conflict of interest or position
on any significant issue between the Company and Consultant 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 Consultant 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 Consultant, to assume the defense of any
claim brought by or in the right of the Company or as to which counsel for
Consultant shall have reasonably made the conclusion provided for in clause (ii)
above. The Company shall not be required to indemnify Consultant 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 Consultant without Consultant's
written consent. Neither the Company nor Consultant 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 Consultant 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 Consultant 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 Consultant 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 Consultant to repay all
amounts so advanced in the event that it shall ultimately be determined that
Consultant 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 Consultant 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,
Consultant shall submit to the Company a written request, including in such
request such documentation and information as is reasonably available to
Consultant and is reasonably necessary to determine whether and to what extent
Consultant 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
Consultant, unless with respect to requests under Paragraphs 3, 4 or 8 the
Company determines within such 30-day period that such Consultant 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 Consultant)
who shall, within said 30-day period, provide a written opinion to the Board as
to whether Consultant 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 Consultant 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 Consultant is
not permitted to be so indemnified, the Company shall be entitled to be
reimbursed by Consultant (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid. If Consultant 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 Consultant may be
indemnified under this Agreement or otherwise, any determination made by the
independent legal counsel that Consultant is not permitted to be indemnified
shall not be binding, and Consultant 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 Consultant is not permitted
to be indemnified in whole or in part, Consultant 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 Consultant 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 Consultant
has met the applicable standard of conduct, nor an actual determination by the
Company pursuant to Paragraph 9 that Consultant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Consultant has not met the applicable standard of conduct. Consultant'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 Consultant 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 Consultant for the portion of such Expenses, judgments, fines,
penalties or amounts paid in settlement to which Consultant 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 Consultant, 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 Consultant is a director or
officer of the Company, and shall continue thereafter so long as Consultant
shall be subject to any possible claim or proceeding by reason of Consultant's
service in such capacity. Consultant's rights under this Agreement shall inure
to the benefit of Consultant'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 Consultant prompt notice thereof and to hold harmless and indemnify
Consultant 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 Consultant 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 Consultant 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 Consultant 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
Consultant 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 Consultant institutes any legal
action to enforce Consultant's legal rights hereunder, or to recover damages for
breach of this Agreement, Consultant, if Consultant prevails in whole or in
part, shall be entitled to recover from the Company reasonable attorneys' fees
and disbursements incurred by Consultant with respect to the claims or matters
on which Consultant 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, Consultant shall stand in the same position under this
Agreement as Consultant 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 Consultant 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 Consultant, to:
X.X. Xxx 000000
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
(b) if to the Company, to:
Teton Petroleum Company
0000 Xxxxxxxx
Xxxxxx, XX 00000
Attn: Chairman, Compensation Committee
or to such other address as may have been furnished to Consultant by the Company
or to the Company by Consultant, 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 Consultant's rights under Delaware law or the Company's Corporate
Documents.
All prior employment agreements are considered null and void and are
incorporated herein.
[Signatures follow on next Page]
IN WITNESS WHEREOF, the parties have set their hands and seals hereunto on
the date first above written.
---------------------------- ----------------------------
Teton Petroleum Company Consultant
By: Xxxx X. Xxxxxx
Its: President & CEO
ACKNOWLEDGED AND AGREED
----------------------------
Teton Petroleum Company
By: Xxxxx X. Xxxxxxxx
Its: Chairman, Compensation Committee
EXHIBIT A
List of Outside Activities
H. Xxxxxx Xxxxxx
Date Hired
or
Company/Project Nature of Commenced Annual Time Commitment,
Name Business Involvement Position Compensation (time away from office)
------------------------------------------------------------------------------------------------------------------
Dated: March 1, 2005
-------------
Initials: Consultant: _____ Company: ______
1 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.
