Document:

Exhibit 10.1

 

COMPROMISE AGREEMENT

AND GENERAL RELEASE

 

This Compromise Agreement and General Release
(Agreement) is made and entered into between Thomas Edward White (hereinafter
referred to as “White”) and Agilent Technologies, Inc. (“Agilent US”) and Agilent
Technologies UK Ltd. (“Agilent UK”), collectively referred to as “Agilent.”

 

WHEREAS

 

The consolidation of the Operations Support
Solutions Group into Agilent’s Electronic Measurements Group has resulted in
the Employee’s current position becoming redundant. The purpose of this
Agreement is to resolve all claims arising from White’s employment with Agilent
UK and the termination of it on terms that are satisfactory both to Agilent and
to White. Therefore, Agilent and White agree as follows:

 

1.               In exchange for the promises set forth
in this Agreement, Agilent agrees as follows:

 

a.               Effective as of the close of business on
March 31, 2007, White’s employment by Agilent UK will be terminated. At such
time, all benefits and sums otherwise due will be computed in accordance with
Agilent UK’s standard procedures and applicable benefit or other plan
documents, except as may otherwise be provided in the letter agreement dated May
9, 2006 (“Letter Agreement,” Exhibit A,
incorporated herein by reference). Amounts, if any, determined to be due will
be mailed to White’s address as reflected in Agilent UK’s records.

 

From May 1st 2006 to March 31st 2007 White will
be on “garden leave” and will not be required to carry out his normal day to
day duties. However, in order to assist in the transition of White’s former
duties and responsibilities he will seek to promptly answer questions regarding
matters assigned to him prior to 1st May 2006 or in relation to
other operational issues of which he has knowledge. It is not anticipated that
White will be required to attend the office to answer such enquiries but White
will attend Agilent’s offices if reasonably required and upon reasonable
notice.

 

b.              Within thirty (30) days after March 31st
2007, Agilent UK shall deliver to White a lump sum payment in the gross amount
of GBP 271,912 less required deductions for tax and national insurance, which
is equal to twelve (12)  months of White’s
monthly base pay.

 

c.               Provided that White  does not terminate his employment with Agilent
prior to March 31, 2007, he may, at his option and from that date or any
subsequent date elect to receive  all
retirement related benefits from Agilent UK, subject to the

 

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rules of any relevant plan or scheme.

 

d.              Except as otherwise stated in the Letter
Agreement, White is entitled to exercise employee benefit conversion privileges
upon the same terms and conditions as would be available to any other
voluntarily terminating employee of Agilent UK.

 

2.               In exchange
for the promises set forth in this Agreement and the related Letter Agreement,
White agrees as follows:

 

a.               To sign and deliver to Agilent the
letter of resignation (Exhibit B) simultaneously
with the signing of this Agreement and thereafter to make no claim inconsistent
therewith in any proceeding of any kind.

 

b.              To sign and deliver such other letters of
resignation as Agilent may request to effect White’s resignation as a director
or officer of any company associated with Agilent.

 

c.               White acknowledges that he is the
recipient of confidential and proprietary business information, and that he
will not use or disclose such information except as may be permitted by Agilent
or required by law. White believes that he has already executed a document known
as the Agreement Regarding Confidential Information and Proprietary
Developments (“ARCIPD”) attached as Exhibit C and
acknowledges that he is bound by such agreement. However, for the avoidance of
doubt he will execute a further document in the same form as that attached to Exhibit C  and
incorporated herein by. White acknowledges that these confidentiality
obligations survive the termination of his employment. Nothing in this
Agreement supersedes or renders the terms and conditions of any agreements or understandings
relating to his obligations of confidentiality toward Agilent unenforceable or
void. White acknowledges that Agilent
will have heightened concern regarding his obligations of confidentiality
should he become employed by any of the companies (including their respective
subsidiaries and associated companies) listed in Exhibit D, all of whom are competitors of Agilent. Because of
such concerns and in consideration of Agilent’s agreement to pay White an
additional payment of £2,000 (subject to deduction of tax and National
Insurance contributions) if White’s employment by Agilent UK terminates at
White’s election,  prior to March 31,
2007, White agrees not to work for, accept employment from, provide services to
or in any way engage in activities directly or indirectly which sell, support
or promote any such listed competitor’s business, products or services in any
country in the world where Agilent or any associated company has competing
business interests for a period of six months immediately following such
termination or until March 31, 2007, whichever occurs first.

 

d.              To attend a
Functional Exit Interview on or before March 31, 2007 at which time all company
property and identification will be turned in and the appropriate personnel
documents will be executed. Thereafter, White agrees to do such other

 

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acts
as may be reasonably requested by Agilent in order to effectuate the terms of
this agreement. White agrees to remove all personal effects from his current
office within seven days of signing this agreement and in any event not later
than March 31, 2007.

 

e.               To not make any public statement or
statements to the press concerning Agilent, its business objectives, its
management practices, or other sensitive information without first receiving
Agilent’s written approval. White further agrees to take no action which would
cause Agilent or its employees or agents any embarrassment or humiliation or
otherwise cause or contribute to Agilent or any such person being held in
disrepute by the general public or by Agilent’s employees, clients, or
customers.

 

3.               In exchange for Agilent’s doing the acts
described in this Agreement, White on behalf of himself, his heirs, estate,
executors, administrators, successors and assigns does fully release,
discharge, and agree to hold harmless Agilent, its officers, agents, employees,
attorneys, subsidiaries, affiliated companies, successors and assigns from all
actions, causes of action, claims, judgments, obligations, damages,
liabilities, costs, or expense of whatsoever kind and character which he may
have as of the date of execution of this Agreement, including
but not limited to:

 

a.               any
claims relating to employment discrimination on account of race, religion, sex,
age, national origin, creed, disability, sexual orientation, or any other
basis, whether or not arising under the Federal Civil Rights Acts, the Age
Discrimination in Employment Act, California Fair Employment and Housing Act,
the Rehabilitation Act of 1973, the Americans With Disabilities Act, any
amendments to the foregoing laws, or any other country, federal, state, county,
municipal, or other law, statute, regulation or order relating to employment
discrimination;

 

b.              any
claims relating to pay or leave of absence arising under the Fair Labor
Standards Act, the Family Medical Leave Act, any claims relating to Section 806
of the Sarbanes-Oxley Act of 2002, and any similar laws enacted in the United
States or the United Kingdom;

 

c.               any
claims for reemployment, salary, wages, bonuses, vacation pay, stock options,
acquired rights, appreciation from stock options, stock appreciation rights,
benefits or other compensation of any kind;

 

d.              any
claims relating to, arising out of, or connected with his employment with
Agilent, whether or not the same be based upon any alleged violation of public
policy; compliance (or lack thereof) with any internal Agilent policy,
procedure, practice, or guideline; or any oral, written, express, and/or
implied employment contract or agreement, or the breach of any term thereof,
including but not limited to, any implied covenant of good faith and fair

 

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dealing; or
any federal, state, county or municipal law, statute, regulation, or order
whether or not relating to labor or employment; and

 

e.               any
claims relating to, arising out of, or connected with any other matter or event
occurring prior to the execution of this Agreement whether or not brought
before any judicial, administrative, or other tribunal. SAVE THAT any claims
for latent personal injury are excluded from this agreement and this agreement
does not affect White’s accrued pension rights.

 

4.               In entering into this Agreement and save
as expressly excluded above, the parties have intended that this Agreement be a
full and final settlement of all matters, whether or not presently disputed,
that could have arisen between them as of the date this Agreement is signed
including for the avoidance of doubt any claims which Agilent may have against
White. This Agreement and compliance with this Agreement does not constitute an
admission of liability by Agilent.

 

5.               White hereby agrees not to make or
pursue any application or claim in an Employment Tribunal alleging unfair
dismissal, breach of contract, claim to a redundancy payment, unauthorized
deduction from wages or a claim of wrongful dismissal or some other ground
actionable in law. White warrants that all complaints of which he is aware have
been disclosed to Agilent prior to the date of this Agreement and are subject
to the terms hereof.

 

6.               White understands and
expressly agrees that this Agreement extends to all claims of every nature and
kind whatsoever, known or unknown, suspected or unsuspected, past or present
and all rights under Section 1542 of the California Civil Code and/or any
similar statute or law of any other jurisdiction are expressly waived. Section
1542 reads as follows:

 

A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor.

 

7.               It is expressly agreed that the claims
released pursuant to this Agreement include all claims against individual
employees of Agilent, whether or not such employees were acting within the
course and scope of their employment.

 

8.               White represents and warrants that he
has not assigned any such claim or authorized any other person or entity to
assert such claim on White’s behalf. Further, White agrees that under this
Agreement he waives any claim for damages incurred at any time in the future
because of alleged continuing effects of past wrongful conduct involving any
such claims and any right to sue for injunctive relief against the alleged
continuing effects of past wrongful conduct involving such claims.

 

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9.               Agilent will pay White’s reasonable
legal costs incurred in or arising out of this agreement, subject to a limit of
£1,500 plus VAT.

 

10.         White understands and agrees that, as a
condition of this Agreement, he is not entitled to any employment (including
employment as an independent contractor or otherwise) with Agilent, its
subsidiaries or related companies, or any successor, and he hereby waives any
right, or alleged right, of employment or re-employment with Agilent. White
further agrees not to apply for employment with Agilent in the future and not
to institute or join any action, lawsuit or proceeding against Agilent, its
subsidiaries, related companies or successors for any failure to employ him. In
the event White should secure such employment, it is agreed that such
employment is voidable without cause in the sole discretion of Agilent. Within
five (5) years after terminating his employment, should White become employed
by another company which Agilent merges with or acquires after the date of this
Agreement, White may continue such employment only if Agilent makes offers of
employment to all employees of the acquired or merged company.

 

11.         White agrees that the terms, amount and fact
of settlement shall be confidential until and only to the extent that Agilent
US needs to make any required disclosure of any agreements between Agilent and
him as a part of Agilent’s  U.S.
Securities Exchange Commission reporting requirements. White agrees that he
will not disclose the existence or contents of this Agreement or any past or
future related discussions or documentation to anyone other than his spouse
and/or personal advisors until Agilent US makes any required disclosure of this
Agreement as part of its U.S. Securities Exchange Commission reporting
requirements.

 

12.         At Agilent’s request and expense, White will
cooperate fully in connection with any legal matter, proceeding or action
relating to Agilent.

 

13.         The terms of this Agreement are intended by
the parties as a final expression of their agreement with respect to such terms
as are included in this Agreement and may not be contradicted by evidence of
any prior or contemporaneous agreement. The parties further intend that this
Agreement constitutes the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial or
other proceeding, if any, involving this Agreement. No modification of this
Agreement will be effective unless in writing and signed by both parties
hereto.

 

14.         It is further expressly agreed and understood
that White has not relied upon any advice from Agilent and/or its attorneys
whatsoever as to the taxability, whether pursuant to federal, state, or local
income tax statutes or regulations or otherwise, of the payments made hereunder
and that White will be solely liable for all tax obligations, if any, arising
from payment of the sums specified herein and shall hold Agilent harmless from
any tax obligations arising from said payment, PROVIDING THAT before making any
payment to a relevant authority Agilent shall promptly notify White of any
enquiry, investigation or demand of which it is aware and give

 

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White a reasonable opportunity of responding to it at his own expense.

 

15.         Should any provision of this Agreement be
declared or determined by any court of competent jurisdiction to be wholly or
partially illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining parts, terms, or provisions shall not be
affected thereby, and said illegal, unenforceable, or invalid part, term or
provision shall be deemed not to be a part of this Agreement.

 

16.         This Agreement will be governed by and
construed in accordance with the laws of England and Wales.

 

White states that he has received independent legal advice from a
relevant independent adviser, namely 
Nigel Tillott (the “independent legal adviser”) as to the terms of this
Agreement and, in particular, its effect upon White’s ability to pursue a
complaint before an Employment Tribunal or Court. There was in force, at the
time the advice was received, a contract of insurance or an indemnity provided
for members of a profession or professional body covering the risk of claims by
the employee in respect of loss arising in consequence of that advice.

 

White further states that he has carefully read this Agreement, that
this Agreement is the product of negotiation between his independent legal
adviser and Agilent’s counsel, that he has had ample time to reflect upon and
consider its consequences, that he fully understands its final and binding
effect, that the only promises made to him to sign this Agreement are those
stated above and that he is signing this Agreement voluntarily.

 

The conditions regulating Compromise Agreements or Contracts under
section 203(3) of the Employment Rights Act 1996, any Acts or regulations
replacing or amending any of the same and any other Acts or regulations
governing such Agreements or Contracts are satisfied by this Agreement.

 

 

ACCEPTED AND AGREED:

 

AGILENT TECHNOLOGIES, INC.

 

	
  By:

  	
  /s/ Jean Halloran

  	
   

  	
   

  	
  /s/ Thomas Edward White

  	
   

  
	
  Name:

  	
  Jean Halloran

  	
   

  	
   

  	
  Name: Thomas Edward White

  
	
  Title:

  	
  Senior VP, Human Resources

  	
   

  	
   

  	
  Date:

  	
  10th May ‘06

  	
   

  
	
  Date:

  	
  May 9, 2006

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AGILENT TECHNOLOGIES UK LTD

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Yvonne Mackie

  	
   

  	
   

  	
  /s/ Nigel Tillott

  	
   

  
									

 

6

 

	
  Name:

  	
  Yvonne Mackie

  	
   

  	
   

  	
  Name:

  	
  Nigel Tillott [Independent

  
	
   

  	
   

  	
   

  	
  Legal Adviser]

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
  Partner, Davies and Partners

  
	
   

  	
   

  	
   

  	
  Rowan House, Barnett Way,

  
	
   

  	
   

  	
   

  	
  Barnwood, Gloucester, GL4

  
	
   

  	
   

  	
   

  	
  3RT, England

  
	
  Date:

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
								

 

7Exhibit 10.1

 

Teton Energy Corporation

2005 Long Term Incentive Plan

Administration – 2005 Awards

 

1.               PURPOSE

 

The
purpose of the Teton Energy Corporation (the “Company”) 2005 Long Term Incentive
Plan (the “Plan”), as set forth in the Plan, as amended from time to time, is
to give the Company a competitive advantage in attracting, retaining and
motivating officers, employees, directors, and certain consultants and advisors
through a long term incentive plan providing stock and performance-based awards
linked to shareholder value. The expectation is that the Company will be able to
provide incentives and rewards to Board Members, Executive Management, Key
Employees, and key consultants or operating partners, who are expected to
contribute to the financial results, revenue and profits, growth, and increase
in value of the Company, and to enhance the Company’s ability to attract and
retain persons who will make such contributions. By meeting these objectives,
the Plan is intended to benefit the interests of the Company’s shareholders.

 

This
Plan Administration document is intended to implement the rules consistent with
the Plan with respect to the issuances of Performance Share Units, as defined
below.

 

2.               DEFINITIONS

 

Unless
the context clearly indicates to the contrary or otherwise is in conflict with
applicable provisions of the Plan, the following words and terms have the
meanings set forth below:

 

(a)                                  Asset Sale. A sale or other disposition of
all or substantially all of the assets of the Company or a Primary Operating
Subsidiary.

 

(b)                                 Award. A grant to a Participant of a
specified number of Performance Share Units.

 

(c)                                  Award Date. The first day of the month in
which the Award is made; provided, however, that the Award Date of the first
Awards granted pursuant to Section 5 to the initial Participants after the
Effective Date will be July 1, 2005.

 

(d)                                 Board. The Board of Directors of the Company.

 

(e)                                  Board Member. A member of the Board who is
not then also an employee of the Company.

 

(f)                                    Change of Control. See Plan.

 

(g)                                 Closing. The consummation of a Substantive
Transaction.

 

(h)                                 Committee. The Compensation Committee of the
Board.

 

(i)                                     Common Stock. The common capital stock of the
Company.

 

(j)                                     Company. Teton Energy Corporation, a
corporation incorporated under the laws of the state of Delaware.

 

(k)                                  Disability. See Plan.

 

(l)                                     Effective Date. The later of date on which
the Plan is approved by the Shareholders or July 1, 2005.

 

 

(m)                               Executive Management. The Company’s Chief
Executive Officer (“CEO”), Chief Financial Officer (“CFO”), and, if applicable,
Chief Operating Officer (“COO”), and any other officer or executive of the
Company that the Committee designates as Executive Management.

 

(n)                                 GAAP. Generally accepted accounting
principles in effect in the United States.

 

(o)                                 Key Employee. An employee of the Company,
other than Executive Management, who is considered to hold responsibilities
critical to the success of the Company, as determined by the CEO and approved
by the Committee.

 

(p)                                 Market Value. The “Market Value” of a
Substantive Transaction will be the total consideration paid or payable
directly or indirectly to the Company and/or its Shareholders (including
holders of options or other stock rights) in connection with or in anticipation
of the Substantive Transaction, regardless of how allocated or the form of
consideration. The total consideration will include the value of any retained
or acquired interest in the Company or its successor or the right to acquire
such an interest. In the event that all or a portion of the total consideration
includes capital stock, securities, or other property (other than installment
notes), total consideration will include the fair market value of those
non-cash items, as determined by the Board in good faith and on a reasonable
basis.

 

(q)                                 Market Value Payout. The payment that a
Participant is entitled to receive pursuant to Section 7(b).

 

(r)                                    Milestone Attainment Payout. A payment that a
Participant is entitled to receive pursuant to Section 7(a).

 

(s)                                  Net Proceeds. With respect to a Substantive
Transaction, the Market Value (i) reduced by the out-of-pocket expenses payable
by the Company or any of its Subsidiaries, including, without limitation,
investment banking fees and expenses, brokerage commissions, finder’s fees, and
legal and accounting fees and expenses, that are directly attributable to the
Substantive Transaction; (ii) reduced by the Performance Period Index; and
(iii) increased by any dividend paid during that period on Common Stock and
preferred stock and by any redemption or other distribution with respect to
Common stock or preferred stock.

 

(t)                                    Participant. Each member of the Board of
Directors who is granted an Award under the terms of the Plan; each member of
Executive Management who is as selected by the Committee to receive an Award
under the Plan; and any Key Employee; and any consultant or operating partners
who or which is selected by the Committee to receive an Award under the Plan.

 

(u)                                 Pendency. With respect to a Substantive
Transaction, the period between the execution of a definitive agreement
regarding the Substantive Transaction and its Closing.

 

(v)                                 Performance Measurement. A Performance
Measurement shall be that factor or those factors which the Committee
reasonably believes will best contribute to a favorable assessment of the
Company’s valuation in the market and achievement of which will provide
shareholders with the highest return upon a Substantive Transaction. The
Committee shall set the Performance Measurement annually

 

2

 

upon
the granting of each Award and shall reassess the Performance Measurement prior
to each Award Date.

 

(w)                               Performance Period Index. With respect to the
Unit Value of a Performance Share Unit, initially, December 31, 2004, and
thereafter the last day of the fiscal year preceding the fiscal year in which
the Award Date for that Performance Share Unit occurs.

 

(x)                                   Performance Share Unit. A unit awarded to a
Participant by the Committee pursuant to the Plan, which serves as the basis to
calculate any Milestone Attainment Payout or Market Value Payout due to the
Participant under the terms of the Plan.

 

(y)                                 Performance Share Unit Award Agreement. An
agreement between the Company and a Participant that defines, among other
things, performance measurements and objectives necessary to vest Performance
Share Units.

 

(z)                                   Primary Operating Subsidiary. Any Subsidiary
through which the Company conducts a substantial portion of its business
activities.

 

(aa)                            Probable Reserves. Areas which are unproven but presumed
capable of production because of geological inference, for instance, proximity
to proven reserves in the same reservoir.

 

(bb)                          Proved Not
Developed (Behind-Pipe) Reserves.
Estimates of the amount of crude oil or natural gas recoverable by recompleting
existing wells (“PDNP”).

 

(cc)                            Proved Developed
Reserves. Estimates of what is
recoverable from existing wells with existing facilities from open, producing
payzones (“PDP”).

 

(dd)                          Proved Reserves. Estimates of the amount of oil or natural
gas believed to be recoverable from known reservoirs under existing economic
and operating conditions.

 

(ee)                            Proved Undeveloped Reserves. Estimates of what is recoverable through new
wells on undrilled acreage, deepening existing wells, or secondary recovery
methods (“PUD”).

 

(ff)                                Reserves. That portion of the identified resource
from which a usable mineral and energy commodity can be economically and
legally extracted at the time of determination.

 

(gg)                          Retirement. The termination of a Participant’s
employment with the Company or a Participant’s Board membership, other than for
Cause, on or after the date as of which the Participant has reached age fifty-five
(55). For purposes of determining a Participant’s years of service, breaks in
service of less than one (1) full year will be disregarded.

 

(hh)                          Shareholders. The persons or entities that
own, beneficially or of record, shares of Common Stock in the Company.

 

(ii)                                  Special Adjustment Item. Any item of income
or expense that, in accordance with GAAP, constitutes an extraordinary item.

 

(jj)                                  Subsidiary. A business entity that is
controlled by, or under common control with the Company, determined in
accordance with Regulation S-X, 17 CFR §210.1-02(n).

 

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(kk)                            Substantive Transaction. A sale, merger, or
other event or transaction that constitutes or results in a Change of Control.

 

(ll)                                  Term. The five-year period beginning July 1,
2005 and ending June 30, 2010.

 

(mm)                      Termination. With respect to a Participant,
(i) a termination of the Participant’s employment with the Company or the
Participant’s Board membership other than a Termination or for Cause, or (ii)
in the case of a Participant who is an employee of the Company, a termination
of the Participant’s employment with the Company that qualifies the Participant
for severance benefits under any applicable employment agreement.

 

(nn)                          Termination for Cause. With respect to a
Participant who has a written employment agreement with the Company, a termination
of that Participant’s employment with the Company for a reason that constitutes
cause under the terms of that employment agreement. With respect to a
Participant who does not have a written employment agreement with the Company, “Termination
for Cause” means  the termination of the
Participant’s employment with the Company or the Participant’s Board membership
due to, in addition to the elements defined in Section 2(e) of the Plan, (i)
the Participant’s willful and continued failure to substantially perform his or
her duties to the Company (other than any such failure resulting from the
Participant’s Disability) after a written demand for substantial performance is
delivered to the Participant by the Board or, in the case of an employee, the
CEO, which demand specifically identifies the manner in which the Board or the
CEO, as applicable, believes that the Participant has not substantially
performed his or her duties; or (ii) the Participant’s breach of any
confidentiality agreement with the Company or any of its Subsidiaries or any
other unauthorized disclosure by the Participant of confidential, proprietary
information of the Company or any of its Subsidiaries or affiliates; or (iii)
the conviction of the Participant for the commission of a felony including the
entry of a guilty or no contest plea (and all rights to appeal the conviction
have expired or have been fully exercised), or any willful or grossly negligent
action or inaction by the Participant that has a materially adverse effect on
the Company or any of its Subsidiaries, or if the Participant pleads guilty or
no contest to any charges of having committed any felony that involves
embezzlement, theft, bribery, a violation of the federal securities laws or
other federal laws or any other business related crime that is alleged to have
been committed against the Company, or the shareholders, as a group, or in
connection with the Participant’s performance of services to the Company.

 

(oo)                          Unit Value. The “Unit Value” of a Performance
Share Unit on a Valuation Date will be one share of common stock.

 

(pp)                          Valuation Date. The last day of each fiscal
year of the Company.

 

3.               PARTICIPANTS

 

Executive
Management, Key Employee Participants, consultants, and operating partners will
be selected by the Committee, as of the date specified in the document
evidencing their selection. The CEO of the Company will keep an updated list of
all Participants, which will be attached to the Plan as Schedule “A.”  All Board Members will be Participants as of
July 1, 2005 or, if later, the date they are first elected to the
Board.

 

4

 

4.               PERFORMANCE SHARE UNITS AVAILABLE

 

The
total number of Performance Share Units that may be awarded under the Plan in
respect of the 2005 Award is eight hundred thousand units (800,000), of which 160,000
will be allocated to the Board Members, and 400,000 will be allocable to
Executive Management and Key Employees, 160,000 will be allocated to
consultants or operating partners, and 80,000 will be held in reserve to
provide for adjustment or special circumstances in the opinion of the
Committee, with input from the CEO; provided, however, that the CEO may not
provide input with respect to his own compensation. In the event that the 80,000
Performance Share Units are not used in respect of special circumstances, they
will be divided pro rata among the remaining Participants. Allocated Performance
Share Units are in respect of both base objectives and stretch objectives. The
Committee will have no obligation to award all of the Performance Share Units
allocable to Executive Management and Key Employees, consultants, or operating
partners.

 

The
Performance Share Units allocable to the Board Members shall be allocated among
them equally and shall presume a Board with five outside, independent directors.
In the event that Board membership is not increased to five outside directors,
then any additional units shall be allocated among remaining participants on a
pro rata basis. In the event that a Participant leaves the qualifying
affiliation with the Company, then, notwithstanding Section 10, the Performance
Share Units awarded to that Participant may be awarded to other Participants. In
the case of a Board Member’s Termination for Cause, the Performance Share Units
of that Board Member will be awarded to the person filling that Board Member’s
vacancy on the Board. In the case of a Termination for Cause of an Executive
Management, Key Employee Participant, a terminated consultant, or terminated
operating partner, the Performance Share Units of that Participant may be
awarded by the Committee to other existing Participants or new Participants.

 

The
Committee shall also be empowered to issue from the 80,000 Performance Share
Units held for special situations to any individual (or group of individuals),
including directors, employees, or consultants for exceptional performance or significant
contribution that causes or otherwise effects a significant, demonstrable, and
verifiable increase in the Company’s equity value.

 

5.               GRANTS OF AWARDS

 

As
soon as practicable after the Effective Date and after each Valuation Date, the
Committee, in its sole discretion and in accordance with applicable provisions
of the Plan, will determine and grant Awards, if any, to Participants under the
Plan as of that Valuation Date in such number of Performance Share Units as
they may determine. Promptly after granting an Award to a Participant, the
Committee will notify the Participant of the number of Performance Share Units
included in the Award and the date as of which the Award is effective.

 

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6.               ACCOUNTS AND CREDITED AMOUNTS

 

(a)                                  Accounts. Each Participant will have a
bookkeeping account under the Plan, which will be used as a record of the
amounts credited to the Participant under the Plan. The amount to be credited
to the account of each Participant as of each Valuation Date (the “Credited
Amount”) will be the aggregate of the Unit Value, as of that Valuation Date, of
all of the Performance Share Units awarded to the Participant prior to that
Valuation Date.

 

(b)                                 Determination of Credited Amount. The
Credited Amount in each account as of each Valuation Date will be verified by
the Company’s CFO. Each such verification will be conclusive and binding on the
Company and each Participant.

 

(c)                                  Reports. Each Participant, while a
Participant, will be furnished with a written statement within one hundred and
twenty (120) days after the end of each fiscal year of the Company ending
within the Term. The statement will show the number of Performance Share Units
awarded to the Participant, the Unit Value of each such Performance Share Unit
(with a calculation, in reasonable detail, of the Unit Value), and the Credited
Amount in the Participant’s account, all as of the Valuation Date coincident
with the end of the fiscal year for which the statement is made.

 

7.               PAYMENTS

 

(a)                                  Milestone Attainment Payout.

 

1)                                      Provided the milestones established in
Performance Unit Award Agreement have been met, if the Closing of a Substantive
Transaction has not occurred on or before December 31, 2005, each Participant
will be paid his or her Credited Amount as of December 31, 2005, as soon as
practicable after the audited financial statements of the Company as of that
date and for the year then ended are available, but in no event later than March
15, 2006. If the Closing of a Substantive Transaction does occur on or before December
31, 2005, the first scheduled Milestone Attainment Payout will not be made.

 

2)                                      Provided the milestones established in
Performance Unit Award Agreement have been met, if the Closing of a Substantive
Transaction has not occurred on or before December 31, 2006, each Participant
will be paid his or her Credited Amount as of December 31, 2006, reduced by any
amount of previous Milestone Attainment Payment received by the Participant, as
soon as practicable after the audited financial statements of the Company as of
that date and for the year then ended are available, but in no event later than
March 15, 2007. If the Closing of a Substantive Transaction does occur on or
before December 31, 2006, the second scheduled Milestone Attainment Payout will
not be made.

 

3)                                      Provided the milestones established in
Performance Unit Award Agreement have been met, if the Closing of a Substantive
Transaction has not occurred on or before December 31, 2007, each Participant
will be paid his or her Credited Amount as of December 31, 2007, reduced by

 

6

 

any
amount of previous Milestone Attainment Payments received by the Participant,
as soon as practicable after the audited financial statements of the Company as
of that date and for the year then ended are available, but in no event later
than March 15, 2008. If the Closing of a Substantive Transaction does occur on
or before December 31, 2007, the third scheduled Milestone Attainment Payout
will not be made.

 

(b)                                 Market Value Payout.

 

1)                                      If the Closing of a Substantive Transaction
occurs on or prior to December 31, 2005, each Participant will be paid, within twenty-five
(25) days after the Closing of the Substantive Transaction, the amount derived
by multiplying the number of Performance Share Units credited to that
Participant’s account by the price of the stock as valued at the Closing. In
the event that the Substantive Transaction results in Shareholders’ receiving
stock of the acquiring corporation, then each Participant shall receive stock
of the acquiring corporation on the same terms as the Shareholders assuming a distribution
of shares based on the number of Performance Share Units credited to that
Participant’s account immediately prior to such Substantive Transaction.

 

2)                                      If a Substantive Transaction has not occurred
on or before December 31, 2005, but the Closing of a Substantive Transaction
occurs on or before December 31, 2006, each Participant will be paid, within twenty-five
(25) days after the Closing of the Substantive Transaction, the amount derived
by multiplying the number of units credited to that Participant’s account by
the price of the stock as valued at the Closing. In the event that the
Substantive Transaction results in Shareholders’ receiving stock of the
acquiring corporation, then each Participant shall receive stock of the
acquiring corporation on the same terms as the Shareholders assuming a
distribution of shares based on the number of Performance Share Units credited
to that Participant’s account immediately prior to such Substantive Transaction.

 

3)                                      If a Substantive Transaction has not occurred
on or before December 31, 2006, but the Closing of a Substantive Transaction
occurs on or before December 31, 2007, each Participant will be paid, within
twenty-five (25) days after the Closing of the Substantive Transaction, the
amount derived by multiplying the number of units credited to that Participant’s
account by the price of the stock as valued at the Closing. In the event that
the Substantive Transaction results in Shareholders’ receiving stock of the
acquiring corporation, then each Participant shall receive stock of the
acquiring corporation on the same terms as the Shareholders assuming a
distribution of shares based on the number of Performance Share Units credited
to that Participant’s account immediately prior to such Substantive Transaction.

 

7

 

8.               VESTING

 

(a)                                  General Rule.

 

Vesting
of grants shall be in accordance with the parameters established by the Plan. Notwithstanding
any implication to the contrary, except as provided in Sections 8(b) and (c)
below, no Participant will have the right to receive (i) a Milestone Attainment
Payout unless he or she is an employee of the Company, a Board Member, or a
consultant (or operating partner) actively providing services to the Company as
of the last day of the period with respect to which the Equity Payout is made,
or (ii) a Market Value Payout unless he or she is an employee of the Company, a
Board Member, or a consultant actively providing services to the Company on the
date of the Closing of the Substantive Transaction that gives rise to the
Market Value Payout. Except as provided in Section 9, each Participant who is
employed by the Company, or is a Board Member, or who is a consultant (or
operating partner) and providing routine services to the Company as of the
applicable date specified above with respect to a Milestone Attainment Payout
or a Market Value Payout will be entitled to the payout even though he or she
may cease to be an employee or Board Member prior to the date on which the
payout is actually made.

 

(b)                                 Special Exception. In the event that, prior
to the last day of the period with respect to which a Milestone Attainment
Payout is made, a Participant terminates employment with or service to the
Company or Board Membership due to a Termination or his or her death,
Disability, or Retirement, the Participant (or his or her beneficiary, in the
case of death) will be entitled to receive a partial Milestone Attainment
Payout for that period. The amount of the partial Milestone Attainment Payout
will be based upon the combination of (i) the Participant’s Credited Amount as
of the termination of his or her employment or Board membership, and (ii) (A)
the additional Credited Amount that would have been credited to the Participant
for that fiscal year had he or she not terminated until after the end of the applicable
performance period, multiplied by (B) a fraction, the numerator of which is the
number of full months in the applicable performance period during which the
Participant was an employee of the Company or a Board Member and the
denominator of which is equal to the total number of months in the applicable
period. The partial Milestone Attainment Payout shall be made at the time
regular Milestone Attainment Payouts for the applicable performance period are
made to other Participants pursuant to Section 6. In the event that, during the
Pendency of a Substantive Transaction for which a Closing subsequently occurs,
a Participant terminates employment with the Company or Board Membership due to
a Termination or his or her death, Disability, or Retirement, then in lieu of
the partial Milestone Attainment Payout described above, the Participant (or
his or her beneficiary in the case of death) will be entitled to a Market Value
Payout. The amount of the Market Value Payout will be based on the Performance
Share Units awarded to the Participant prior to his or her termination and will
be equal to the amount of the Market Value Payout the Participant would have
received if he or she had not terminated until after the Closing. The Market
Value Payout will be made at the time regular Market Value Payouts are made to
other Participants pursuant to Section 6.

 

8

 

(c)                                  In the event the Plan terminates, all Participants
who are then employees or consultants of the Company or Board Members will
become entitled to a partial Milestone Attainment Payout, the amount of which
will be based upon the combination of (i) the Participant’s Credited Amount as
of the Plan termination date, and (ii) (A) the additional Credited Amount that
would have been credited to the Participant for the fiscal year if the Plan had
not terminated, (B) multiplied by a fraction, the numerator of which is the
number of full months from the beginning of the applicable Milestone Attainment
Payout period during which the Plan terminated until the effective date of the
Plan termination and the denominator of which is equal to the total number of
months in the applicable period. If the Plan is terminated during the Pendency
of a Substantive Transaction or in anticipation of a Substantive Transaction
that is under serious consideration, then in the event that a Closing occurs
with respect to that Substantive Transaction, in lieu of the partial Milestone
Attainment Payout described in the preceding sentence, the Participants who are
employees of the Company, Board Members, engaged consultants, or active
operating partners on the date that Board action is taken to terminate the Plan
will receive the Market Value Payout they would have received under Section 6
had the Plan not terminated. The Market Value Payout will be made within twenty-five
(25) days of the Closing of the Substantive Transaction.

 

9.               TERMINATION OF
RIGHTS

 

Notwithstanding any other implication to the contrary in the Plan, no
Participant will be entitled to any Milestone Attainment Payout or Market Value
Payout if the Participant’s employment with the Company or membership on the
Board has been terminated for Cause (or the consultant has been termination for
reasons suggestive of cause had such consultant been an employee, or such
operating partner’s contract with the Company has been terminated). In the
event a Participant has merely been charged by a governmental authority with
committing any such crime, or the Participant has been convicted of the crime
but all rights to appeal the conviction have not expired and have not been
fully exercised, at the time any Milestone Attainment Payout or Market Value
Payout is payable, the Company may pay the amount of the payment into an
interest-bearing escrow account, and the amount, plus any interest earned on it
will be paid to (A) the Participant upon the earlier to occur (1) of the
Participant having been acquitted of the charges,  (2) the charges having been dismissed, or (3)
the conviction having been reversed on appeal, and (B) to the Company upon the
Participant (1) having been convicted of the charges, and all rights to appeal
the conviction having expired or having been fully exercised, or (2) having
entered a plea of guilty or “no contest” to the charges.

 

10.         ADJUSTMENTS

 

Notwithstanding
any implication to the contrary in the Plan, if any calculation of a Milestone
Attainment Payout or Unit Value is made as of a Valuation Date other than the last
day of any fiscal year of the Company, the calculation shall be subject to
recalculation and appropriate adjustment in the event the preparation of the
audited financial statements of the Company and its Subsidiaries for the fiscal
year reveals that the initially reported Performance Measurements are required
under GAAP to be adjusted.

 

9

 

11.         MISCELLANEOUS

 

(a)                                  Assignments. A Participant’s rights and
interest under the Plan in any Performance Share Units or the appreciation of
the Unit Value of Performance Share Units may not be assigned or transferred
except by will or by the laws of descent or distribution.

 

(b)                                 No Rights Implied. No employee of the
Company, Board Member, or other person shall have any claim or right to be
granted an Award under the Plan. Neither the Plan nor any action taken under
the Plan will be construed as giving an employee of the Company or Board Member
any right to be retained in the employment or Board membership of the Company.

 

(c)                                  Withholding. Payments from the Plan
constitute compensation, and the Company will have the right to deduct from all
payments any federal, state, or local taxes required by law to be withheld with
respect to those payments.

 

(d)                                 Status of Rights. Performance Share Units
will be used solely as a device for the measurement and determination of the
amount to be paid to Participants as provided in the Plan. Performance Share
Units will not constitute, or be treated as, the property or a trust fund of
any kind of any Participant. All amounts at any time attributable to Performance
Share Units will be and remain the sole property of the Company, and all
Participants’ rights under the Plan are limited to the rights to receive
distributions as provided in the Plan. The Plan creates only a contractual
obligation to each Participant on the part of the Company. No Participant will
have any rights against the Company with respect to the benefits under the Plan
except as a general unsecured creditor of the Company. No Participant will be
entitled to the payment of any dividend or any interest, except as specifically
provided to the contrary in the Plan, with respect to any amount to which the
Participant is otherwise entitled under the Plan. The rights with respect to
all Performance Share Units that have not been awarded as of the occurrence of
a Change of Control, or the expiration of the Term, will revert to the Company.

 

(e)                                  Effect on Other Benefits. The appreciation in
the Unit Value of the Performance Share Units awarded under the Plan to each
Participant will not be deemed salary or other compensation to the Participant
for the purpose of computing benefits to which the Participant may be entitled
under any retirement or other benefit plan maintained by the Company or under
any other arrangement for the benefit of the Participant.

 

(f)                                    Severability. The invalidity or
unenforceability of any provision of the Plan will not affect the validity or
enforceability of any other provision or any other portion of that provision.

 

(g)                                 Conflict Resolution. This plan of
administration and the rights conferred on Participants hereunder are subject
to all terms and conditions of the Plan, as the same may be amended from time
to time, as well as any such other rules and regulations (whether herein or in
any other document) as the Committee may adopt for administration of the Plan. It
is expressly understood that the Committee is authorized to administer,
construe, and make all determinations 

 

10

 

necessary
or appropriate to the administration of the Plan and this plan of
administration, all of which shall be binding on the participant. Any
inconsistency between this plan of administration and the Plan shall be
resolved in favor of the Plan.

 

(h)                                 Governing Law. The Plan will be construed in
accordance with, and governed by, the laws of the State of Colorado with
respect to contracts made effective and to be performed wholly within that
state.

 

(i)                                     Headings. The headings and captions of the
sections and subsections of the Plan are provided for convenience of reference
only and will not in any way affect the meaning or interpretation of any
provision of the Plan.

 

12.         BENEFICIARIES

 

Each
Participant will be required to sign a form provided by the Company by which
the Participant will designate a beneficiary or beneficiaries to receive the
amount that the Participant is entitled to receive under the Plan in the event
of the Participant’s death. In the event all designated beneficiaries predecease
the Participant, then the Participant’s beneficiaries, in the priority of order
listed, will be the following:

 

(a)                                  The trustee then existing of any inter vivos
(living) trust (including any amendment to the trust up to the time of the
Participant’s death) established by the Participant for the benefit of the
Participant’s surviving spouse and/or issue, provided the Participant’s
surviving spouse, if any, is either a signatory to the trust instructions, or
acknowledges, in a writing to the Committee, the surviving spouse’s approval of
the trust;

 

(b)                                 The Participant’s surviving spouse, if any;

 

(c)                                  The Participant’s lawful living issue
(including adopted issue) who survive the Participant, with each such issue’s
beneficial interest to be determined by right of representation; and

 

(d)                                 The Participant’s estate.

 

13.         TERMINATION AND AMENDMENT OF PLAN

 

No
Awards may be made after the grants made for 2010, unless such grant is in
respect of a new Participant who was not in the Company’s employ or otherwise
affiliated with the Company on the Valuation Date for 2010. The Committee may
at any time, and from time to time, amend, alter, or suspend the Plan in whole
or in part; provided, however, no such alteration, amendment, or suspension
may, without the consent of the Participant to whom any Award has been granted,
reduce the Participant’s Credited Amount as of the date of the amendment, or
materially adversely affect the Participant’s right to receive a benefit based
on that Credited Amount. Subject to the provisions of Section 8(c), the
Company, by action of the Board, may terminate the Plan any time. The Plan will
terminate automatically upon the Closing of a Substantive Transaction, subject
to the consummation of the transactions contemplated hereby.

 

11

 

IN WITNESS WHEREOF, Teton Energy Corporation, by
resolutions duly adopted by its Compensation, has caused the Administration of
the Long-Term Incentive Plan, which plan was approved by its shareholders on
June 28, 2005, to be executed by its duly authorized officer this 28th
day of June, 2005.

 

	
   

  	
  TETON ENERGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Chairman

  	
   

  

 

 

	
   

  	
  ATTEST:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Secretary

  	
   

  

 

12

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