Exhibit 10.14
EMPLOYMENT AGREEMENT
BETWEEN
TETON ENERGY CORPORATION
AND
Richard F. Bosher
(Employee)
          THIS EMPLOYMENT AGREEMENT(this “Agreement”), dated as of October 1,
2006, (the “Effective Date”) is entered into by and between Teton Energy
Corporation, a Delaware corporation (the “Company”), and Richard F. Bosher, an
individual with an address at 7222 East Buckingham Place. Highlands Ranch.
Colorado 80130, (the “Employee”) (collectively, the “Parties,” individually, a
“Party”).
W I T N E S S E T H:
          WHEREAS, the Board of Directors of the Company (the “Board”) has
requested and the Employee has agreed to serve the Company as Vice President
Business Development pursuant to the terms and conditions herein; and
          WHEREAS, the Board has determined that it is in the best interest of
the Company, its affiliates, and its stockholders to assure that the Company
will have the continued dedication of the Employee, notwithstanding the
possibility, threat, or occurrence of a Change in Control (as defined
Article Seven herein); and
          WHEREAS, the Board has determined that it is in the best interests of
the Company and its stockholders to indemnify the Employee for claims for
damages arising out of or relating to the performance of such services to the
Company in accordance with the terms and conditions set forth in this Agreement
and pursuant to Delaware law; and
          WHEREAS, as an inducement to serve and in consideration for such
services, the Company has agreed to indemnify the Employee for claims for
damages arising out of or relating to the performance of such services to the
Company in accordance with the terms and conditions set forth in a separate
agreement, which indemnification agreement is attached as an exhibit hereto and
is incorporated herein by reference; and
          WHEREAS, in order to accomplish these objectives and establish the
rights, duties and obligations of the Parties, which shall be generally stated
herein and which may be more fully stated in other agreements between the
Parties, including equity-based agreements, indemnity agreements, and other
employment or incentive related agreements as the Company or the Board may adopt
from time to time, the Board has caused the Company to enter into this
Agreement;

 

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          NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the Parties, intending to be legally
bound, hereby agree as follows:
ARTICLE ONE
DEFINITIONS
     1. Definitions. As used in this Agreement:
          1.1 The term “Accrued Obligations,” when used in the case of the
Employee’s death or disability shall mean the sum of (1) that portion Employee’s
Base Salary that was not previously paid to the Employee from the last payment
date through the Date of Termination, and (2) an amount equal six (6) months
salary at the level of the Employee’s Base Salary then in effect,
          1.2 The term “Automatic Extension” shall have the meaning set forth in
Section 2.2 herein.
          1.3 The term “Base Salary”, shall have the meaning set forth in
Section 3.1 herein.
          1.4 The term “Board” shall have the meaning set forth in the recitals.
          1.5 The term “Cause” shall have the meaning set forth in Section 4.3
herein.
          1.6 The term “Common Stock” shall mean the Common Stock, par value
$0.001, of the Company.
          1.7 The term “Compensation Committee” shall mean the Compensation
Committee of the Company.
          1.8 The term “Corporate Documents” shall mean the Company’s
Certificate of Incorporation, as amended and/or its Bylaws, as amended.
          1.9 The term “Effective Date” shall have the meaning set forth in the
preamble.
          1.10 The term “Good Reason” shall have the meaning set forth in
Section 4.4 herein.
          1.11 The term “Initial Term” shall have the meaning set forth in
Section 2.2 herein.
          1.12 The term “Severance Benefit” shall have the meaning set forth in
Section 4.8(a)(i) herein.
          1.13 The term “Without Cause” shall have the meaning set forth in
Section 4.3 herein.
          1.14 The term “Without Good Reason” shall have the meaning set forth
in Section 4.5 herein.

 

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ARTICLE TWO
POSITION & DUTIES
     2. Employment.
          2.1 Title. The Employee shall serve as the Vice President Business
Development of the Company and agrees to perform services for the Company and
such other affiliates of the Company, as described in Section 2 herein.
          2.2 Term. The Employee’s employment shall be for an initial term of
one (1) years (“Initial Term”), commencing on the Effective Date. The Employee’s
employment shall be automatically extended on the day after the first year
anniversary of the Effective Date (“Automatic Extension”), and on each second
anniversary date thereof, for additional one (1) year periods unless, with
respect to any such Automatic Extension, Employee’s employment is terminated by
either party during the 60-day period prior to such anniversary date as provided
in Article Four.
          2.3 Duties and Responsibilities. The Employee shall report to the CEO
and in his capacity as an officer of the Company shall perform such duties and
services as may be appropriate and as are assigned to him by the CEO. During the
term of this Agreement Employee shall, subject to the direction of the CEO of
the Company, oversee and direct the operations of the Company’s business
development efforts, and shall perform such duties as are customarily performed
by a Vice President Business Development of a company such as the Company or as
are otherwise delegated to him from time to time by the CEO or such other
matters and projects as may from time to time be reasonably assigned to him by
the CEO.
          2.4 Performance of Duties. During the term of the Agreement, except as
otherwise approved by the CEO or as provided below, the Employee agrees to
devote his full business time, effort, skill and attention to the affairs of the
Company and its subsidiaries, will use his best efforts to promote the interests
of the Company, and will discharge his responsibilities in a diligent and
faithful manner, consistent with sound business practices. The foregoing shall
not, however, preclude Employee from devoting reasonable time, attention and
energy in connection to serving as a director or a member of a committee of any
company or organization, if serving in such capacity does not involve any
conflict with the business of the Company or any subsidiary and such other
company or organization is not in competition, in any manner whatsoever, with
the business of the Company or any of its subsidiaries: provided that such
activities do not materially interfere with the performance of his duties and
services hereunder.
          2.5 Representations and Warranties of the Employee with Respect to
Conflicts, Past Employers and Corporate Opportunities. The Employee represents
and warrants that:
     (a) his employment by the Company will not conflict with any obligations
which he has to any other person, firm or entity;
     (b) he has not brought to the Company (during the period before the signing
of this Agreement) and he will not bring to the Company any materials or
documents of a former or present employer, or any confidential information or
property of any other person, firm or entity; and

 

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     (c) he will not, without disclosure to and approval of the Board, directly
or indirectly, assist or have an active interest in (whether as a principal,
stockholder, lender, employee, officer, director, partner, venturer, consultant
or otherwise) in any person, firm, partnership, association, corporation or
business organization, entity or enterprise that competes with or is egaged in a
business which is substantially similar to the business of the Company except
that ownership of not more than two percent (2%) of the outstanding securities
of any class of any publicly held entity shall not be deemed a violation of this
Section 2.5; provided, further, that any investment specifically listed on
Schedule A shall not be deemed a violation of this Section 2.5.
     2.6 Activities and Interests with Companies Doing Business with the
Company. In addition to those activities and interests of Employee disclosed on
Schedule A attached hereto, Employee shall promptly disclose to the Board, in
accordance with the Company’s policies, full information concerning any
interests, direct or indirect, he holds (whether as a principal, stockholder,
lender, Employee, director, officer, partner, venturer, consultant or otherwise)
in any business which, as reasonably known to Employee, purchases or provides
services or products to, the Company or any of its subsidiaries, provided that
the Employee need not disclose any such interest resulting from ownership of not
more than two (2%) of the outstanding securities of any class of any publicly
held entity.
     2.7 Other Business Opportunities. Nothing in this Agreement shall be deemed
to preclude the Employee from participating in other business opportunities if
and to the extent that: (a) such business opportunities are not directly
competitive with, similar to the business of the Company, or would otherwise be
deemed to constitute an opportunity appropriate for the Company, (b) the
Employee’s activities with respect to such opportunities do not have a material
adverse effect on the performance of the Employee’s duties hereunder, and
(c) the Employee’s activities with respect to such opportunity have been fully
disclosed in writing to the Board.
     2.8 Reporting Location. For purposes of this Agreement, the Employee’s
reporting location shall be Denver, Colorado, which shall include the
metropolitan area within a 40 mile radius from the Company’s current office.

 

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ARTICLE THREE
COMPENSATION
     3. Compensation.
          3.1 Base Salary. Employee shall receive an initial annual base salary
of One Hundred Fifty Thousand Dollars ($150,000.00), payable bi-monthly in
arrears (the “Base Salary”) and subject to all federal, state, and municipal
withholding requirements. The Base Salary shall be reviewed by the CEO annually
for any increase.
          3.2 Cash Bonus. The Employee shall be eligible for a cash bonus equal
to an amount of up to thirty percent (30%) of his Base Salary in 2006 and up to
one hundred percent (100%) of his Base Salary for each fiscal year thereafter
(annualized for any fiscal year consisting of less than 12 full months or with
respect to which the Employee has been employed by the Company for less than
twelve (12) full months. Each Cash Bonus shall be paid no later than the end of
the third month of the fiscal year next following the fiscal year in respect of
which the Cash Bonus is awarded, unless the Employee shall elect to defer the
receipt of such Cash Bonus that may be approved by the Board from time to time.
          3.3 Equity-Based Compensation. The Employee shall be entitled to
participate in all equity-based compensation plans offered by the Company and as
determined by the Board of Directors. The Employee understands that as of the
date of this Agreement, the only equity-based plan offered by the Company is the
2005 Long-term Incentive Plan. Pursuant to the terms of this Agreement, the
Employee shall be entitled to a grant of 50,000 performance share units, for
base objectives and 100,000 performance share units for stretch objectives,
which grant will be governed by the parameters and objectives according to the
2006 objectives established by the Company’s Board of directors. The Employee
will be provided with a separate grant notice that describes the vesting and
various operational aspects of the 2005 Long-term Incentive Plan.
          Notwithstanding any other provision of this Agreement, effective
August 10, 2006, the Employee shall be entitled to a grant of 15,000 restricted
shares of Teton common stock, which shall vest over a period of three years and
be subject to a restricted stock agreement in a form substantially similar to
the form of agreement in Exhibit B.
     Upon a Change of Control, all equity-based compensation will be treated in
the same manner as if Employee’s employment was terminated by the Company
Without Cause.
          3.4 Participation In Benefit Plans.
     (a) Retirement Plans. Employee shall be entitled to participate, without
any waiting or eligibility periods, in all qualified retirement plans provided
to other employee officers and other key employees.
     (b) Taxes. The Company shall pay, on a grossed-up basis for federal, state,
and local income taxes, the amount of any excise tax payable by Employee as a
result of any payments triggered by this Agreement, or other compensation
agreements between Employee and the Company, or any of its subsidiaries and any
income tax payable by Employee as a result of any payments in Common Stock
triggered by this Agreement or other compensation agreements between Employee
and the Company, or any of its subsidiaries, except as might otherwise be
provided such benefit plan.

 

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     (c) Life Insurance. The Employee shall be entitled to life insurance on
terms consistent with that provided to other senior Employees of the Company as
may be authorized by the Board from time to time.
     (d) Employee Benefit Plans and Insurance. The Employee shall have the right
to participate in employee benefit plans and insurance programs of the Company
that the Company may sponsor from time to time and to receive customary Company
benefits, if those benefits are so offered. Nothing herein shall obligate the
Employee to accept such benefits if and when they are offered.
     (e) Vacation.
     (i) The Employee shall be entitled to four (4) weeks of vacation per
calendar year, which vacation level shall be reviewed by the CEO from time to
time. No more than 1.5 times (1.5x) Employee’s authorized annual vacation
allocation may be accrued, at any given time. In the event that Employee has
reached his maximum authorized vacation allocation, accrual will not re-commence
until Employee uses some of his paid vacation credit and thereby brings the
balance below his maximum. Accrued paid vacation credit forfeited because of an
excess balance can not be retroactively reapplied.
     (ii) Pay will only be provided for any unused, accrued paid vacation credit
at the time of Employee’s separation from the business by the Company due to a
reduction in force, by Employee upon retirement, or upon the death of an
employee, provided that Employee has been a regular full-time employee for three
calendar months prior to such event. Termination of employment for Cause by the
Company, or Employee’s resignation, will result in the forfeiture of any unused
paid vacation credit.
     (f) Paid Holidays. The Employee shall be entitled to such paid holidays as
are generally available to all employees. As of the date of this Agreement, the
Company’s employees are permitted to observe ten (10) paid holidays.
     3.5 Business-related Expense. Employee shall be entitled to reimbursement
within a reasonable time for all properly documented and approved expenses for
travel. The Company shall reimburse business expenses of Employee directly
related to Company business, including, but not limited to airfare, lodging,
meals, travel expenses, medical expenses while traveling not covered by
insurance, business entertainment, expenses associated with entertaining
business persons, local expenses to governments or governmental officials,
tariffs applicable taxes outside of the United states, special expenses
associated with travel to certain countries, supplemental life insurance or
supplemental insurance of any kind of special insurance rates or charges for
travel outside the United state (unless such insurance is being provided by the
Company), rental cars and insurance for rental cars and any other expenses of
travel that are reasonable in nature or that have been otherwise pre-approved.
Employee shall be governed by the travel and entertainment policy in effect at
the Company.
     3.6 Severance Benefit. In the event that Employee’s employment is
terminated, other than for Cause, Employee shall receive compensation pursuant
to Section 4.8 herein.
     3.7 Payroll Procedures and Policies. All payments required to be made by
the Company to the Employee pursuant to this Article Three shall be paid on a
regular basis in accordance with the Company’s normal payroll procedures and
policies.

 

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ARTICLE FOUR
TERMINATION OF EMPLOYMENT
     4.1 Death. The Employee’s employment shall terminate automatically upon the
Employee’s death during the Employment Term.
     4.2 Disability. If the Company determines in good faith that the Disability
(as defined below) of the Employee has occurred during the Employment Term, the
Company may give the Employee notice of its intention to terminate the
Employee’s employment. In such event, the Employee’s employment hereunder shall
terminate effective on the 30th day after receipt of such notice by the Employee
(the “Disability Effective Date”); provided, that, within the 30 -day period
after such receipt, the Employee shall not have returned to full-time
performance of the Employee’s duties. For purposes of this Agreement,
“Disability” shall mean the absence of the Employee from the Employee’s duties
hereunder on a full-time basis for an aggregate of 180 days within any given
period of 270 consecutive days (in addition to any statutorily required leave of
absence and any leave of absence approved by the Company) as a result of the
incapacity of the Employee, despite any reasonable accommodation required by
law, due to bodily injury or disease or any other mental or physical illness,
which will, in the opinion of a physician selected by the Company or its
insurers and acceptable to the Employee or the Employee’s legal representative,
be permanent and continuous during the remainder of the Employee’s life.
     4.3 Termination by Company.
     (a) Termination for Cause.
The Company may terminate the Employee’s employment hereunder for Cause (as
defined below). For purposes of this Agreement, “Cause” shall mean:
     (i) the willful and continued failure of the Employee to perform
substantially the Employee’s duties hereunder (other than any such failure
resulting from bodily injury or disease or any other incapacity due to mental or
physical illness) after a written demand for substantial performance is
delivered to the Employee by the Board or the Chief Employee Officer of the
Company, which specifically identifies the manner in which the Board or the
Chief Employee Officer of the Company believes the Employee has not
substantially performed the Employee’s duties; or
     (ii) the willful engaging by the Employee in illegal conduct or gross
misconduct that is materially and demonstrably detrimental to the Company and/or
its affiliated companies, monetarily or otherwise.
     For purposes of this provision, no act, or failure to act, on the part of
the Employee shall be considered “willful” unless done, or omitted to be done,
by the Employee in bad faith or without reasonable belief that the Employee’s
action or omission was in the best interests of the Company. Any act, or failure
to act, based upon authority given pursuant to a resolution duly adopted by the
Board, upon the instructions of the Chief Employee Officer or another senior
officer of Company, or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Employee in good
faith and in the best interests of the Company and its affiliated companies. The
cessation of employment of the Employee shall not be

 

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deemed to be for Cause unless and until there shall have been delivered to the
Employee a copy of a resolution duly adopted by the affirmative vote of not less
than two-thirds of the entire membership of the Board then in office at a
meeting of the Board called and held for such purpose (after reasonable notice
is provided to the Employee and the Employee is given an opportunity, together
with counsel, to be heard before the Board) finding that, in the good faith
opinion of the Board, the Employee is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.
     (iii) the Employee’s conviction of, or plea of nolo contendere to, any
felony of theft, fraud, embezzlement or violent crime.
     (b) Termination without Cause.
     All terminations by the Company that are not for Cause, or on the occasion
of the Employee death or disability, or that are not terminated during the
60-day period prior to any anniversary date as provided in Section 2.2 or
Section 4.5, shall be considered Without Cause.
     4.4 Termination by Employee. The Employee may terminate the Employee’s
employment hereunder (x) at any time during the Employment Term for Good Reason
(as defined below) or (y) during the Window Period (as defined below) Without
Good Reason. For purposes of this Agreement, the “Window Period” shall mean the
30-day period immediately following the first anniversary of the Effective Date,
and “Good Reason” shall mean any of the following (without the Employee’s
express written consent):
     (a) The assignment to the Employee of any duties inconsistent in any
respect with the Employee’s position (including status, offices, titles and
reporting requirements), duties, functions, responsibilities or authority as
contemplated by Section 2.3 of this Agreement, or any other action by the
Company that results in a diminution in such position, duties, functions,
responsibilities or authority, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Employee;
     (b) Any failure by the Company to comply with any of the provisions of
Section 2.3 of this Agreement, other than an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Employee;
     (c) The Company’s requiring the Employee to be based at any office or
location other than as provided in Section 2.8 of this Agreement or the
Company’s requiring the Employee to travel on the Company’s or its affiliated
companies’ business to a substantially greater extent than during the three-year
period immediately preceding the Effective Date;
     (d) Any failure by the Company to comply with and satisfy Section 8.1 of
this Agreement; or
     (e) Any purported termination by the Company of the Employee’s employment
hereunder otherwise than as expressly permitted by this Agreement, and for
purposes of this Agreement, no such purported termination shall be effective.

 

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For purposes of this Section 4.4, any good faith determination of “Good Reason”
made by the Employee shall be conclusive.
     4.5 Termination without Prejudice. The Company or Employee may terminate
this Agreement at any time during the 60-day period prior to the Automatic
Extension.
     4.6 Notice of Termination. Any termination of the Employee’s employment
hereunder by the Company or by the Employee (other than a termination pursuant
to Section 4.1) shall be communicated by a Notice of Termination (as defined
below) to the other party hereto. For purposes of this Agreement, a “Notice of
Termination” shall mean a notice which (a) indicates the specific termination
provision in this Agreement relied upon, (b) in the case of a termination for
Disability, Cause or Good Reason, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee’s
employment under the provision so indicated, and (c) specifies the Date of
Termination (as defined in Section 4.7 below); provided, however, that
notwithstanding any provision in this Agreement to the contrary, a Notice of
Termination given in connection with a termination for Good Reason shall be
given by the Employee within a reasonable period of time, not to exceed
120 days, following the occurrence of the event giving rise to such right of
termination. The failure by the Company or the Employee to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Disability, Cause or Good Reason shall not waive any right of the Company or the
Employee hereunder or preclude the Company or the Employee from asserting such
fact or circumstance in enforcing the Company’s or the Employee’s rights
hereunder.
     4.7 Date of Termination. For purposes of this Agreement, the “Date of
Termination” shall mean the effective date of termination of the Employee’s
employment hereunder, which date shall be (a) if the Employee’s employment is
terminated by the Employee’s death, the date of the Employee’s death, (b) if the
Employee’s employment is terminated because of the Employee’s Disability, the
Disability Effective Date, (c) if the Employee’s employment is terminated by the
Company (or applicable affiliated company) for Cause or by the Employee for Good
Reason, the date on which the Notice of Termination is given, (d) if the
Employee’s employment is terminated pursuant to Section 2.2, the date on which
the Employment Term ends pursuant to Section 2.2 due to a party’s delivery of a
Notice of Termination thereunder, and (e) if the Employee’s employment is
terminated for any other reason, the date specified in the Notice of
Termination, which date shall in no event be earlier than the date such notice
is given; provided, however, that if within 30 days after any Notice of
Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected).
     4.8 Obligations of the Company upon Termination.
     (a) Good Reason or During the Window Period; Other Than for Cause, Death or
Disability. If, during the Employment Term, the Company (or applicable
affiliated company) shall terminate the Employee’s employment hereunder other
than for Cause or Disability or the Employee’s shall terminate the Employee’s
employment either for Good Reason or Without Good Reason during the Window
Period:
     (i) the Company shall pay to the Employee (either in a lump sum or on in
equal monthly installments over a six-month period after the Date of
Termination, at the Company’s option) the sum of (1) the that portion Employee’s
Base Salary that was not previously paid to the Employee from the last payment
date through the Date of Termination, and (2) an amount equal six months salary
at the level of the Employee’s

 

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Base Salary then in effect, (such six months amount is hereinafter referred to
as the “Severance Amount”);
     (ii) all stock options, stock appreciation rights, and restricted stock
shall immediately vest;
     (iii) all stock options and stock appreciation rights shall be payable in
Common Stock;
     (iv) all performance share units that would vest in the course of any
fiscal year shall vest on a pro rata basis; and
     (v) the Company shall pay, on a grossed-up basis (as determined in the same
manner as under Section 3.4(b) herein) the amount of any excise and income taxes
payable by Employee as a result of any payments in Common Stock triggered by
this Agreement, or other agreements between Employee and the Company, or any of
its subsidiaries.
To the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Employee any other amounts or benefits required to be paid or
provided or which the Employee is eligible to receive under any plan, program,
policy, practice or arrangement or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits hereinafter referred to as
the “Other Benefits”).
     (b) Death. If the Employee’s employment is terminated by reason of the
Employee’s death during the Employment Term, this Agreement shall terminate
without further compensation obligations to the Employee’s legal representatives
under this Agreement, other than for (i) payment of Accrued Obligations (which
shall be paid to the Employee’s estate or beneficiary, as applicable, in a lump
sum in cash within 90 days of the Date of Termination) and the timely payment or
settlement of any other amount pursuant the Other Benefits and (ii) treatment of
all other compensation under existing plans as provided by the terms and rules
of those plans.
     (c) Disability. If the Employee’s employment is terminated by reason of the
Employee’s Disability during the Employment Term, this Agreement shall terminate
without further compensation obligations to the Employee, other than for
(i) payment of Accrued Obligations (which shall be paid to the Employee in a
lump sum in cash within 90 days of the Date of Termination) and the timely
payment or settlement of any other amount pursuant to the Other Benefits and
(ii) treatment of all other compensation under existing plans as provided by the
terms and rules of those plans.
     (d) Cause; Other than for Good Reason or During the Window Period. If the
Employee’s employment is terminated for Cause during the Employment Term, this
Agreement shall terminate without further compensation obligations to the
Employee other than the obligation to pay to the Employee Base Salary through
the Date of Termination plus the amount of any compensation previously deferred
by the Employee, in each case to the extent theretofore unpaid. If the Employee
voluntarily terminates the Employee’s employment during the Employment Term,
excluding a termination either for (i) Good Reason or (ii) Without Good Reason
during the Window Period, this Agreement shall terminate without further
compensation obligations to the Employee, other than for the that portion
Employee’s Base Salary that was not previously paid to the

 

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Employee from the last payment date through the effective date of the Employee’s
voluntary termination and the timely payment or provision of the Other Benefits,
as provided in any applicable plan, and the Employee shall have no further
obligations nor liability to Company. In such case, any amounts owed to the
Employee shall be paid to the Employee in a lump sum in cash within 90 days of
the Date of Termination subject to applicable laws and regulations.
4.9 Continuation of Payments During Disputes. The Parties agree that in the case
of:
     (a) termination which the Company contends is for Cause, but Employee
claims is not for Cause; or
     (b) termination by Employee under Section 4.4 herein.
the Company shall continue to pay all compensation due to Employee hereunder
until the resolution of such dispute, but the Company shall be entitled to
repayment of all sums so paid, if it ultimately shall be determined by a court
of competent jurisdiction, in a final non-appealable decision, that the
termination was for Cause or such termination by Employee was not authorized
under Section 4.4 herein, and all sums so repaid shall bear interest at the
prime rate as published in The Wall Street Journal on the date on which such
court makes such determination. Any such reimbursement of payments by Employee
shall not include any legal fees or other loss, costs, or expenses incurred by
the Company, notwithstanding any provision of the Indemnification Agreement,
which is attached as Exhibit A and is considered a part of this Agreement.
ARTICLE FIVE
INDEMNIFICATION
     5. Indemnification. The Employee shall be indemnified and held harmless
pursuant to the terms and conditions set forth in the Indemnification Agreement
substantially in the form attached as Exhibit A hereto.
ARTICLE SIX
CONFIDENTIALITY
6. Confidentially; Non-Competition; and Non-Solicitation.
     6.1 Confidentiality. In consideration of employment by the Company and
Employee’s receipt of the salary and other benefits associated with Employee’s
employment, and in acknowledgment that (a) the Company is engaged in the oil and
gas business, (b) maintains secret and confidential information, (c) during the
course of Employee’s employment by the Company such secret or confidential
information may become known to Employee, and (d) full protection of the
Company’s business makes it essential that no employee appropriate for his or
her own use, or disclose such secret or confidential information, Employee
agrees that during the time of Employee’s employment and for a period of one
(1) year following the termination of Employee’s employment with the Company,
Employee agrees to hold in strict confidence and shall not, directly or
indirectly, disclose or reveal to any person, or use for his own personal
benefit or for the benefit of anyone else, any trade secrets, confidential

 

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dealings, or other confidential or proprietary information of any kind, nature,
or description (whether or not acquired, learned, obtained, or developed by
Employee alone or in conjunction with others) belonging to or concerning the
Company or any of its subsidiaries, except (i) with the prior written consent of
the Company duly authorized by its Board, (ii) in the course of the proper
performance of Employee’s duties hereunder, (iii) for information (x) that
becomes generally available to the public other than as a result of unauthorized
disclosure by Employee or his affiliates or (y) that becomes available to
Employee on a nonconfidential basis from a source other than the Company or its
subsidiaries who is not bound by a duty of confidentiality, or other
contractual, legal, or fiduciary obligation, to the Company, or (iv) as required
by applicable law or legal process.
     6.2 Non-Competition. During Employee’s employment with the Company and for
so long as Employee receives any Severance Benefit or is receiving any Severance
Amount provided under this agreement in respect of the termination of his
employment, Employee shall not be engaged as an officer or Employee of, or in
any way be associated in a management or ownership capacity with any
corporation, company, partnership or other enterprise or venture which conducts
a business which is in direct competition with the business of the Company;
provided, however, that Employee may own not more than two percent (2%) of the
outstanding securities, or equivalent equity interests, of any class of any
corporation, company, partnership, or either enterprise that is in direct
competition with the business of the Company, which securities are listed on a
national securities exchange or traded in the over-the-counter market. For
purposes of this Agreement, a lump sum payment equivalent made to Employee shall
be judged in relation to his most recent annual base salary to determine whether
Employee is continuing to receive a Severance Benefit or Severance Amount and
shall be measured from the date such payment is received. It is expressly agreed
that the remedy at law for breach of this covenant is inadequate and that
injunctive relief shall be available to prevent the breach thereof.
     6.3 Non-Solicitation. Employee also agrees that he will not, directly or
indirectly, during the term of his employment or within one (1) year after
termination of his employment for any reason, in any manner, encourage,
persuade, or induce any other employee of the Company to terminate his
employment, or any person or entity engaged by the Company to represent it to
terminate that relationship without the express written approval of the Company.
It is expressly agreed that the remedy at law for breach of this covenant is
inadequate and that injunctive relief shall be available to prevent the breach
thereof.
ARTICLE SEVEN
CHANGE OF CONTROL
7. Certain Definitions.
          7.1 Change of Control Effective Date. The “Change of Control Effective
Date” shall mean the first date during the Change of Control Period (as defined
in Section 7.2) on which a Change of Control occurs. Notwithstanding anything in
this Agreement to the contrary, if a Change of Control occurs and if the
Employee’s employment with the Company (or applicable affiliated company) is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Employee that such termination of employment
(i) was at the request of a third party who has taken steps reasonably
calculated to effect a Change of Control or (ii) otherwise arose in connection
with or anticipation of a Change of Control, then for all purposes of this
Agreement the “Change of Control Effective Date” shall mean the date immediately
prior to the date of such termination of employment.

 

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          7.2 Change of Control Period. The “Change of Control Period” shall
mean the period commencing on the date of this Agreement and ending on the third
anniversary of such date; provided, however, that commencing on the date one
year after the date hereof, and on each annual anniversary of such date (such
date and each annual anniversary thereof herein referred to as the “Renewal
Date”), the Change of Control Period shall be automatically extended so as to
terminate three years after such Renewal Date, unless at least 60 days prior to
the Renewal Date the Company shall give notice to the Employee that the Change
of Control Period shall not be so extended.
          7.3 Change of Control. For purposes of this Agreement, a “Change of
Control” shall mean:
     (a) the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 15% or more of either (A) the then outstanding Common Shares the Company (the
“Outstanding Shares”) or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Voting Securities”); provided, however, that for
purposes of this Subsection 7.3(a) the following acquisitions shall not
constitute a Change of Control: (w) Company-sponsored recapitalization that is
approved by the Incumbent Board, as defined below; (x) a capital raise initiated
by the Company where the Incumbent Board remains for at least at least 548 days
after the closing date of the raise, or (y) an acquisition of another company or
asset(s) initiated by the Company and where the Company’s shareholders
immediately after the transaction own at least 51% of the equity of the combined
concern; or
     (b) individuals who, as of the date of this Agreement, constitute the
Company’s Board (the “Incumbent Board”) cease for any reason to constitute a
majority of such Board of Directors; provided, however, that any individual
becoming a director of the Company shareholders subsequent to the date hereof
whose election, or nomination for election by the Company’s shareholders was
approved by a vote of a majority of the directors of the Company then comprising
the Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Company Board; or
     (c) consummation of a reorganization, merger, amalgamation or consolidation
of the Company, with or without approval by the shareholders of the Company, in
each case, unless, following such reorganization, merger, amalgamation or
consolidation, (i) more than 50% of, respectively, the then outstanding shares
of common stock (or equivalent security) of the company resulting from such
reorganization, merger, amalgamation or consolidation and the combined voting
power of the then outstanding voting securities of such company entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Shares and Outstanding
Voting Securities immediately prior to such reorganization, merger, amalgamation
or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger, amalgamation or consolidation,
of the Outstanding Shares and Outstanding Voting Securities, as the case may be,
(ii) no Person (excluding a parent of the Company that may come into being after
the date of this Agreement through any transaction deliberately undertaken by
the Company after an

 

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affirmative vote of its Incumbent Directors and the Company shareholders), any
employee benefit plan (or related trust) of the Company or such company
resulting from such reorganization, merger, amalgamation or consolidation, and
any Person beneficially owning, immediately prior to such reorganization,
merger, amalgamation or consolidation, directly or indirectly, 15% or more of
the Outstanding Shares or Outstanding Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 15% or more of, respectively, the
then outstanding shares of common stock (or equivalent security) of the company
resulting from such reorganization, merger, amalgamation or consolidation or the
combined voting power of the then outstanding voting securities of such company
entitled to vote generally in the election of directors, and (ii) a majority of
the members of the board of directors of the company resulting from such
reorganization, merger, amalgamation or consolidation were members of the
Incumbent Board at the time of the execution of the initial agreement providing
for such reorganization, merger, amalgamation or consolidation; or
     (d) consummation of a sale or other disposition of all or substantially all
the assets of the Company, with or without approval by the shareholders of the
Company, other than to a corporation, with respect to which following such sale
or other disposition, (i) more than 50% of, respectively, the then outstanding
shares of common stock (or equivalent security) of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Shares and Outstanding Voting Securities immediately prior to such
sale or other disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other disposition, of the
Outstanding Shares and Outstanding Voting Securities, as the case may be,
(ii) no Person (excluding the Company, any employee benefit plan (or related
trust) of the Company or such corporation, and any Person beneficially owning,
immediately prior to such sale or other disposition, directly or indirectly, 15%
or more of the Outstanding Shares or Outstanding Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 15% or more of, respectively,
the then outstanding shares of common stock (or equivalent security) of such
corporation or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors, and (C) a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the execution of
the initial agreement or action of the Incumbent Board providing for such sale
or other disposition of assets of the Company; or
     (e) approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.
8.     Miscellaneous
                  8.1    Benefit.     This Agreement shall inure to the benefit
of and be binding upon each of the Parties, and their respective successors.
This Agreement shall not be assignable by any Party without the prior written
consent of the other Party. The Company shall require any successor, whether
direct or indirect,

 

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to all or substantially all the business and/or assets of the Company to
expressly assume and agree to perform, by instrument in a form reasonably
satisfactory to Employee, this Agreement and any other agreements between
Employee and the Company or any of its subsidiaries, in the same manner and to
the same extent as the Company.
     8.2 Governing Law. This Agreement shall be governed by, and construed in
accordance with the laws of the State of Colorado without resort to any
principle of conflict of laws that would require application of the laws of any
other jurisdiction; provided, however, that Delaware law shall govern with
respect to the Employee’s rights under a Change of Control under Article Seven
herein.
     8.3 Counterparts. This Agreement may be executed in counterparts and via
facsimile, each of which shall be deemed to constitute an original, but all of
which together shall constitute one and the same Agreement. Each such
counterpart shall become effective when one counterpart has been signed by each
Party thereto.
     8.4 Headings. The headings of the various articles and sections of this
Agreement are for convenience of reference only and shall not be deemed a part
of this Agreement or considered in construing the provisions thereof.
     8.5 Severability. Any term or provision of this Agreement that shall be
prohibited or declared invalid or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective only to the extent of such prohibition or
declaration, without invalidating the remaining terms and provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction, and if any term or provision of this Agreement is held by any
court of competent jurisdiction to be void, voidable, invalid or unenforceable
in any given circumstance or situation, then all other terms and provisions
hereof, being severable, shall remain in full force and effect in such
circumstance or situation, and such term or provision shall remain valid and in
effect in any other circumstances or situation.
     8.6 Construction. Use of the masculine pronoun herein shall be deemed to
refer to the feminine and neuter genders and the use of singular references
shall be deemed to include the plural and vice versa, as appropriate. No
inference in favor of or against any Party shall be drawn from the fact that
such Party or such Party’s counsel has drafted any portion of this Agreement.
     8.7 Equitable Remedies. The Parties hereto agree that, in the event of a
breach of this Agreement by either Party, the other Party, if not then in breach
of this Agreement, may be without an adequate remedy at law owing to the unique
nature of the contemplated relationship. In recognition thereof, in addition to
(and not in lieu of) any remedies at law that may be available to the
non-breaching Party, the non-breaching Party shall be entitled to obtain
equitable relief, including the remedies of specific performance and injunction,
in the event of a breach of this Agreement, by the Party in breach, and no
attempt on the part of the non-breaching Party to obtain such equitable relief
shall be deemed to constitute an election of remedies by the non-breaching Party
that would preclude the non-breaching Party from obtaining any remedies at law
to which it would otherwise be entitled.
     8.8 Attorney’s Fees. If any Party hereto shall bring an action at law or in
equity to enforce its rights under this Agreement, the prevailing Party in such
action shall be entitled to recover from the Party against whom enforcement is
sought its costs and expenses incurred in connection with such action (including
fees, disbursements and expenses of attorneys and costs of investigation). In
the event that Employee institutes any legal action to enforce Employee’s legal
rights hereunder, or to recover damages for breach of this Agreement, Employee,
if Employee prevails in whole or in part, shall be entitled to recover from the
Company reasonable attorneys’ fees and disbursements incurred by Employee with
respect to the claims or matters on which Employee has prevailed.

 

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     8.9 No Waiver. No failure, delay or omission of or by any Party in
exercising any right, power or remedy upon any breach or default of any other
Party, or otherwise, shall impair any such rights, powers or remedies of the
Party not in breach or default, nor shall it be construed to be a waiver of any
such right, power or remedy, or an acquiescence in any similar breach or
default; nor shall any waiver of any single breach or default be deemed a waiver
of any other breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of any Party of
any provisions of this Agreement must be in writing and be executed by the
Parties and shall be effective only to the extent specifically set forth in such
writing.
     8.10 Remedies Cumulative. All remedies provided in this Agreement, by law
or otherwise, shall be cumulative and not alternative.
     8.11 Amendment. This Agreement may be amended only by a writing signed by
all of the Parties hereto.
     8.12 Entire Contract. This Agreement and the documents and instruments
referred to herein constitute the entire contract between the parties to this
Agreement and supersede all other understandings, written or oral, with respect
to the subject matter of this Agreement.
     8.13 Survival. This Agreement shall constitute a binding obligation of the
Company and any successor thereto. Notwithstanding any other provision in this
Agreement, the obligations under Articles 5 and 6 shall survive termination of
this Agreement.
     8.14 Savings Clause. Notwithstanding any other provision of this Agreement,
if the indemnification provisions in Exhibit A hereto or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Company shall nevertheless indemnify Employee as to Expenses, judgments,
fines, penalties and amounts paid in settlement with respect to any Proceeding
to the full extent permitted by any applicable portion of this Agreement that
shall not have been invalidated and to the fullest extent permitted by
applicable law.
     8.15 Modifications and Waivers. Notwithstanding any other provision of this
Agreement, the indemnification provisions in Exhibit A hereto and the Change of
Control provisions Article Seven herein, may be amended from time to time to
reflect changes in Delaware law or for other reasons.
     8.16 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been given (i) when
delivered by hand or (ii) if mailed by certified or registered mail with postage
prepaid, on the third day after the date on which it is so mailed:

  (a)   If to Employee:         Richard F. Bosher         7222 East Buckingham
Place         Highlands Ranch, Colorado 80130     (b)   If to the Company:      
  Tenton Energy Corporation         410 17th Street Suite 1850         Denver,
CO 80202         Attn: CEO

 

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or to such other address as may have been furnished to Employee by the Company
or to the Company by Employee, as the case may be.
     8.17 No Limitation. Notwithstanding any other provision of this Agreement,
for avoidance of doubt, the parties confirm that the foregoing does not apply to
or limit Employee’s rights under Delaware law or the Company’s Corporate
Documents.
     IN WITNESS WHEREOF, the parties have set their hands and seals hereunto on
the date first above written.

                  Teton Energy Corporation       EMPLOYEE
 
               
By:
  /s/ Karl F. Arleth       By:   /s/ Richard F. Bosher
 
               
Name:
  Karl F. Arleth       Name:   Richard F. Bosher
Title:
  President & CEO            

 

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Schedule A
Outside Activities
Richard F. Bosher

                              Date Hired                     or           Annual
Time Company or   Nature of   Commenced           Commitment, (time Project Name
  Business   Involvement   Position   Compensation   away from office)
TransZap, Inc.
  Oil & Gas   7/1/1999 to   VP Sales   None. Ownership of   None
 
  Software   8/30/2006       400,000 shares, plus    
 
              several options    
 
              for approx. 150,000    
 
              shares    
Ownership of
                   

      Dated: October 1, 2006
      Initials Employee:           KFS                          
Company:          KFA          

 

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Exhibit A
Indemnification Agreement

 

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Exhibit B
Form of Restricted Stock Agreement