Exhibit 10.8


 


H. Howard Cooper


P.O. Box 774327


Steamboat Springs, CO 80477


 


October 6,
2005


 


Mr. James J. Woodcock


Chairman of the Board


Teton Energy Corporation


1600 Broadway, Suite 2400


Denver, CO 80202


 


Dear Jim:


 


It has been a
pleasure to serve Teton for many years and the time has come for me to
resign.  I hereby resign effective upon
Teton’s execution of this agreement.


 


(1)                                  Teton
shall pay me severance monthly in the amount of $16,667.00 per month, less  appropriate withholdings, from September 30,
2005 through September 30, 2006. 
The severance payments will end in the event I: (a) accept
reasonably equivalent employment with another company during the 12-month
period beginning on October 1, 2005; (b) am in material breach of
this agreement; or (c) the Board unanimously adopts a resolution that I
have materially breached this agreement or that I am in material breach of any
post-termination obligations (as identified in Section 2 below) under the
consulting agreement.


 


(2)                                  For
six months from the effective date of my resignation, I agree to provide to
Teton before offering to any other party the right to participate in any
opportunity I generate, or a third party generates and offers to me in writing,
to acquire an interest in oil and gas properties, or to participate in oil and
gas exploration activities, within the United States.  Teton shall have 10 business days after written
notification from me to elect, by written notice to me signed by its president,
to acquire all or part of the interest offered, in which event Teton shall be
deemed to have agreed to perform all obligations attributable to such
opportunity as described in the offering documents.  If Teton does not timely deliver such notice,
it being agreed that time is of the essence, I shall have no further obligation
to Teton with respect to such opportunity and may offer the available interest
to any third party; provided, if I offer to or accept from a third party terms
for such participation that are more favorable than those I offered to Teton, I
shall give Teton a right of first refusal to elect by written notice delivered
to me within ten business days to acquire the interest on such more favorable
terms.  My consulting agreement, dated February 22,
2005 (and as of March 1, 2005), is hereby terminated without cause when my
resignation as director is effective.  In
addition, all restrictions on my ability to engage in the oil and gas business
are hereby terminated, including without limitation the non-competition
provisions set forth in Section 3.1 of the consulting agreement, Section 4.1
of my previous employment agreement dated January 1, 2005 and Section 8.6
and 8.7 of my previous employment agreement dated May 1, 2002. Other than
as stated above, the provisions of my consulting agreement that expressly
survive termination shall continue in full force and effect.


 





















 


(3)                                  Teton
shall file an S-8, which S-8 shall include the shares of common stock
underlying my options and employee warrants (Schedule I attached), and
agrees not to withdraw or terminate the S-8 while my options or warrants are
outstanding.  This S-8 will be filed no
later than October 13, 2005.  Teton
agrees to provide me and my counsel with an opportunity to review and comment
on the S-8 prior to filing; provided, however, that I agree that in the event
changes that my counsel and I request result in a delay in the filing the S-8
that Teton shall be afforded such additional time to file the S-8 as elapsed
between the time my counsel was presented with a draft of the 8-K and the date
on which Teton and I agreed on any substantive changes to the document.  In addition, my counsel and I will agree to
provide such representations and comfort to Teton and Teton’s counsel regarding
the validity of the warrants issued on 10/01/00 and 12/16/02 and their
compliance with the rules applicable to Form S-8.  I agree to conduct sales of approximately
244,006 shares of Teton common stock between now and December 31, 2005
solely through C. K. Cooper & Company and I will not undertake the
sale of additional shares until January 1, 2006.  Furthermore, I agree that should the value of
Teton shares decline below $6.00 this year that I would forestall my current
plans to sell this year unless the shares value increased above $6.00
subsequently.  Lastly, in the event there
is any material change in my plans or the ability of C. K. Cooper &
Company to execute these transactions with negligible impact to the market,
that C. K. Cooper & Company shall promptly notify both parties, and be
authorized to stop all activities, until we again reach a mutual agreement
regarding the deposition of these shares and inform them of such new agreement.


 


(4)                                  Teton,
prior to my resignation as a director will re-grant me NSOs (on the form
provided by you and attached hereto) to replace my ISOs originally granted on April 9,
2003 and March 31, 2004, and Teton hereby acknowledges the continued
validity of my options (and with the confirmation forms provided by you and
attached hereto) as listed on Schedule I hereto in accordance with the
option agreements and warrant agreements relating thereto and agrees to
cooperate fully and promptly with my option and warrant exercises and stock
sales.


 


(5)                                  Teton and H. Howard
Cooper, each on his or its own behalf and on behalf of his or its affiliates,
heirs, representatives and assigns, hereby fully and forever releases and
discharges the other as well as the other’s past and present affiliates,
officers, directors, employees, shareholders, independent contractors,
attorneys and agents, of and from any and all actions, causes of action,
claims, demands, costs and expenses, including attorneys’ fees, of every kind
and nature whatsoever, in law or in equity, whether now known or unknown, that
the releasing parties may now have, or claim at any future time to have,
against any released party based in whole or in part upon any act or omission
occurring on or before the effective date of this agreement, without regard to
present actual knowledge of such acts or omissions.  Notwithstanding the foregoing, however, this
agreement shall not release or otherwise limit or affect in any way H. Howard
Cooper’s rights to indemnification, defense and/or insurance coverage or Teton’s
or H. Howard Cooper’s rights under this agreement or rights under any other
continuing obligation of either of them, whether pursuant to contract,
certificate of incorporation, bylaws, insurance contract or otherwise.  In addition, Teton represents and warrants
that this agreement has been authorized by all necessary action of its Board of
Directors.  Any notice required under
this agreement shall be sent to the address set forth in this letter or such
other address that is subsequently provided to the other party in writing and
notice shall be deemed


 


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given on the soonest of when actually
received, the day sent via email or facsimile or two days after mailing.  The parties acknowledge that irreparable
injury would occur in the event any provision of this agreement is not performed
or is breached and therefore, in addition to any other remedy available, the
parties are entitled to an injunction to prevent breaches or to specifically
enforce the provisions of this agreement.


 


(6)                                  H.
Howard Cooper will refrain from making statements, written or oral, which
denigrate, disparage or defame the goodwill or reputation of Teton and its
officers, shareholders, partners, agents and former and current employees and
directors. Teton will refrain from making statements, written or oral, which
denigrate, disparage or defame H. Howard Cooper’s goodwill or reputation. There
is excepted from this provision all statements: 1) necessary to enforce this
agreement, 2) made truthfully as a result of any question required to be
answered by law, or 3) made truthfully by one party to this agreement in
response to any statement by the other party to this agreement that is
violative of this paragraph.  In
addition, H. Howard Cooper, together with his attorneys, advisors, family, and
other representatives, agree to refrain from interfering in the affairs of
Teton and Teton, together with its attorneys, advisors, and other
representatives agree to refrain from interfering in the affairs of H. Howard
Cooper.  A party shall not be deemed to
have interfered with the other party solely by virtue of its enforcing its
rights under this agreement.  In
addition, this provision shall not be deemed to limit Mr. Cooper’s rights
as a stockholder; provided, however, that any effort of Mr. Cooper to wage
a proxy fight, to act in concert with other shareholders or to cause other
shareholders to act with a view toward taking any action that may be reasonably
deemed by Teton to have been taken with a view toward effecting corporate
change or interfering with the affairs of Teton shall not be deemed be included
in Mr. Cooper’s rights as a shareholder.


 


(7)                                  Except as required by
law or regulation, or as necessary to enforce this agreement, none of the
parties hereto will disclose the terms of this Agreement, provided that H.
Howard Cooper may disclose such terms to his financial and legal advisors and
his spouse and Teton may disclose such terms to selected employees, advisors
and affiliates on a “need to know” basis, each of whom shall be instructed by
H. Howard Cooper and Teton, as the case may be, to maintain the terms of this
agreement in strict confidence in accordance with the terms hereof. This
provision shall not apply once Teton discloses the terms thereof in any public
filings required by the SEC or to the extent disclosed in any proxy statement.  I shall be afforded the right to review the
language used in any public disclosure regarding my resignation prior to
dissemination or filing.


 


(8)                                  H. Howard Cooper has
returned or will immediately return to Teton all Company Information  and Company Property (as defined below),
which he has in his possession, and agrees not to keep any copies of Company
Information. H. Howard Cooper affirms his obligation to keep all Company
Information confidential and not to disclose it to any third party in the
future. The term “Company Information” means: (i) confidential
information, including information received from third parties under
confidential conditions, and (ii) other technical, marketing, business or
financial information, or information relating to personnel or former personnel
of Teton, the use or disclosure of which might reasonably be construed to be
contrary to the interest of Teton; provided, however, that the term “Company
Information” shall not


 


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include any information that is or became or
becomes generally known or available to the public other than as a direct
result of a breach of this paragraph by H. Howard Cooper (or any action by H.
Howard Cooper prior to the effective date of this agreement) which would have
been a breach of H. Howard Cooper’s obligations to Teton in effect at such
time. H. Howard Cooper shall have the right to remove from the offices of Teton
any of his personal files that do not contain Company Information.  “Company Property” shall include all property
purchased by Teton on Mr. Cooper’s behalf or otherwise purchased by Teton
for Mr. Cooper’s use on behalf of Teton. 
Mr. Cooper shall have the right to retain any personal property not
deemed to be Company Property.


 


(9)                                  In any action arising
from or relating to this agreement, the party prevailing therein shall recover
from the other party all expenses incurred in connection with the action,
including reasonable attorneys’ fees.


 


If the foregoing is acceptable please have
Karl F. Arleth, as the Company’s President and CEO, sign in the space provided
below.


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ H. Howard Cooper

  	
   

  
	
   

  	
  H. Howard Cooper

  
	
   

  	
   

  
	
  AGREED:

  	
   

  
	
   

  	
   

  
	
  Teton Energy Corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Karl F. Arleth

  	
   

  	
   

  
	
   

  	
  Karl F. Arleth, President and CEO

  	
   

  
					



 


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Schedule I


 


	
  Grant/No. of Shares

  	
   

  	
  Exercise Price

  	
   

  	
  Grant Date

  	
   

  	
  Post Termination

  Exercise Period

  	
   

  
	
  NSO/28,735

  	
   

  	
  $

  	
  3.48

  	
   

  	
  5-23-05

  	
   

  	
  10-6-10

  	
   

  
	
  NSO/574,554

  	
   

  	
  $

  	
  3.48

  	
   

  	
  4-9-03

  	
   

  	
  10-6-10

  	
   

  
	
  NSO/27,777

  	
   

  	
  $

  	
  3.60

  	
   

  	
  5-23-05

  	
   

  	
  10-6-10

  	
   

  
	
  NSO/372,223

  	
   

  	
  $

  	
  3.60

  	
   

  	
  3-31-04

  	
   

  	
  10-6-10

  	
   

  
	
  Warrants/41,667

  	
   

  	
  $

  	
  4.80

  	
   

  	
  10-01-00

  	
   

  	
  10-31-05

  	
   

  
	
  Warrants/20,834

  	
   

  	
  $

  	
  9.00

  	
   

  	
  10-01-00

  	
   

  	
  10-31-05

  	
   

  
	
  Warrants/20,834

  	
   

  	
  $

  	
  12.00

  	
   

  	
  10-01-00

  	
   

  	
  10-31-05

  	
   

  
	
  Warrants/375,000

  	
   

  	
  $

  	
  3.24

  	
   

  	
  12-16-02

  	
   

  	
  12-15-12

  	
   

  



 


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