Document:

Exhibit 10.4

 

TETON ENERGY
CORPORATION

 

2005
Long Term Incentive Plan

 

RESTRICTED
STOCK AWARD AGREEMENT

 

THIS AGREEMENT is made as of this 1st day of April 2006,
by and between Teton Energy Corporation, a Delaware corporation (the “Company”),
and                           
(“Participant”).

 

The Company, pursuant to its 2005 Long
Term Incentive Plan (the “Plan”),
hereby grants the following stock award to Participant, which award shall have
the terms and conditions set forth in this Agreement:

 

1.              Award

 

The Company, effective as of
the date of this Agreement, hereby grants to Participant a restricted stock
award of             
shares (the “Shares”) of common stock, par value $0.001 per share, of the
Company (the “Common Stock”), subject to the terms and conditions set forth
herein.

 

2.              Vesting

 

Subject to the terms and
conditions of this Agreement, the Shares shall vest in Participant as
follows: the Shares shall vest ratably over a three-year period, with
one-third of the Shares (     ) vesting on January 1,
2007; one-third of the Shares (     ) vesting on January 1,
2008, and the balance or (     ) of the Shares vesting
on January 1, 2009, if, and only if, Participant remains continuously employed
by the Company from the date hereof until each respective vesting date, and
subject to the forfeiture provisions below. Vesting of the Shares shall be
accelerated to an earlier date only under the following conditions:

 

(a)          in the event of a Change in Control of Company (as defined in the
attached Exhibit A), and provided that Participant remains continuously in
the service of or employed the Company until the effective date of such Change
in Control, all unvested Shares granted under this Agreement shall become
immediately vested on the effective date of the Change in Control;

 

(b)         in the event that Participant’s employment by or service provision for
the Company is terminated because Participant becomes in the service of a new
owner of any business of the Company pursuant to a Change in Control event, and
provided that Participant remains continuously employed by or in the service of
the Company until the date of closing of the Change in Control event, all
unvested Shares granted under this Agreement shall become immediately vested as
of the last date of Participant’s service to or employment by the Company; or

 

(c)          in the event that Participant’s service to the Company is involuntarily
terminated by the Company without cause within one year following a Change in
Control Event, and provided that Participant remains continuously in the
service of the Company until the date of such involuntary termination, all
unvested Shares granted under this Agreement shall become immediately vested as
of the last date of Participant’s employment with or service for the Company.

 

(d)         in the event that the Participant’s employment with or service to the
Company terminates because of death or Disability or at the request of the Chief
Executive Officer of the Company (other than for Cause) or of a U.S. government
agency, all the Shares issuable under this award will vest on such termination.
Except to the

 

 

extent provided in the
preceding sentence or unless specifically provided in this Agreement or in a
side letter thereto, this award will not vest upon the Participant’s
retirement. On the Vesting Date (or promptly thereafter), the Company will
deliver to the Participant a certificate representing the Shares which have
vested on such date. For purposes of this Agreement, the term “Disability”
shall be defined as any condition which shall render the Participant incapable
of fulfilling his or her obligations hereunder because of injury or physical or
mental illness, and such incapacity shall exist or reasonably may be
expected, upon the competent medical opinion of a doctor chosen by the Company,
for a period exceeding 60 consecutive days or 120 nonconsecutive days within a
six-month period.

 

3.              Restriction on Transfer

 

Until the Shares vest
pursuant to Section 2 hereof, none of the Shares may be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of or
encumbered, and no attempt to transfer the Shares, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee with
any interest or right in or with respect to the Shares.

 

4.              Forfeiture

 

If Participant ceases to be
an employee of or otherwise providing services to the Company or any
majority-owned affiliate of the Company for any reason prior to the vesting of
the Shares pursuant to Section 2 hereof, Participant’s rights to the
unvested portion of the Shares shall be immediately and irrevocably forfeited.

 

5.              Issuance and Custody of Certificate

 

(a)          The Company shall cause to be issued one or more stock certificates,
registered in the name of Participant, evidencing the Shares. Each such certificate
(except for certificates in respect of shares to be sold for taxes) shall bear
the following legend:

 

“The shares of common stock
represented by this certificate are subject to forfeiture, and the
transferability of this certificate and the shares of stock represented hereby
are subject to the restrictions, terms and conditions (including restrictions
against transfer) contained in the 2005 Long Term
Incentive Plan (the “Plan”) and a Restricted Stock Award
Agreement (the “Agreement”) entered into between Teton Energy Corporation and
the registered owner of such shares. Copies of the Plan and the Agreement are
on file in the office of the Secretary of Teton Energy Corporation, 410 17th
Street, Suite 1850, Denver, Colorado 80202.”

 

(b)         Participant shall execute stock powers relating to the Shares and
deliver the same to the Company. Company shall use such stock powers only for
the purpose of canceling any unvested Shares that are forfeited.

 

(c)          Each certificate issued pursuant to Section 5(a) hereof,
together with the stock powers relating to the Shares, shall be deposited by
the Company with the Secretary of the Company or a custodian designated by the
Secretary. The Secretary or such custodian shall issue a receipt to Participant
evidencing the certificate or certificates held which are registered in the
name of Participant.

 

(d)         After any Shares vest pursuant to Section 2 hereof, the Company
shall promptly cause to be issued a certificate or certificates evidencing such
vested Shares, free of the legend provided in section 5(a) hereof,
and shall cause such certificate or

 

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certificates to be delivered
to Participant or Participant’s legal representatives, beneficiaries or heirs.

 

6.              Distributions and Adjustments

 

(a)          If all or any portion of the Shares vest in Participant subsequent to
any change in the number or character of Shares of Common Stock (through stock
dividend, recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange
of Shares of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Shares of Common Stock or other securities
of the Company or other similar corporate transaction or event affecting the
Shares such that an adjustment is determined by the Compensation Committee of
the Board of Directors (the “Committee”) to be appropriate in order to prevent
dilution or enlargement of the interest represented by the Shares), Participant
shall then receive upon such vesting the number and type of securities or other
consideration which he would have received if the Shares had vested prior to
the event changing the number or character of outstanding Shares of Common
Stock.

 

(b)         Any additional Shares of Common Stock, any other securities of the
Company and any other property (except for cash dividends) distributed with
respect to the Shares prior to the date the Shares vest shall be subject to the
same restrictions, terms and conditions as the Shares. Any cash dividends
payable with respect to the Shares shall be distributed to Participant at the
same time cash dividends are distributed to shareholders of the Company
generally.

 

(c)          Any additional Shares of Common Stock, any securities and any other
property (except for cash dividends) distributed with respect to the Shares
prior to the date such Shares vest shall be promptly deposited with the
Secretary or the custodian designated by the Secretary to be held in custody in
accordance with Section 5(c) hereof.

 

7.              Taxes

 

(a)          In order to provide the Company with the opportunity to claim the
benefit of any income tax deduction which may be available to it in
connection with this restricted stock award, and in order to comply with all
applicable federal or state tax laws or regulations, the Company may take
such action as it deems appropriate to assure that, if necessary, all
applicable federal or state income and social security taxes are withheld or
collected from Participant, including through means of grossing up the grant to
so provide for the collection of such taxes.

 

(b)         Participant may elect to satisfy his federal and state income tax
withholding obligations in connection with this restricted stock award by (i) having
the Company withhold a portion of the shares of Common Stock otherwise to be
delivered upon vesting of this restricted stock award having a fair market
value equal to the amount of federal and state income taxes required to be
withheld in connection with this restricted stock award, in accordance with the
rules of the Committee, or (ii) delivering to the Company shares of
Common Stock other than the shares to be delivered upon vesting of this
restricted stock award having a fair market value equal to such taxes, in
accordance with the rules of the Committee.

 

(c)          Notwithstanding clause 7(b) above, if Participant elects, in
accordance with Section 83(b) of the Internal Revenue Code of 1986,
as amended, to recognize ordinary income in the year of acquisition of the
Shares, the Company may require at

 

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the time of such election an
additional payment for withholding tax purposes based on the fair market value
of such Shares as of the date of the acquisition of such Shares by Participant.

 

8.              Confidentiality, Non-Competition
And Non-Solicitation

 

In consideration of Participant’s
receipt of this award, Participant agrees as follows:

 

(a)          Participant will hold in a fiduciary capacity for the benefit of the
Company all information, knowledge or data relating to the Company or any
Subsidiaries and their respective businesses which the Company or any
Subsidiaries consider to be proprietary, trade secret or confidential that Participant
obtains or have previously obtained during its service and that is not public
knowledge (other than as a result of Participant’s violation of this provision)
(“Confidential Information”). Participant will not directly or indirectly use
any Confidential Information for any purpose not associated with the activities
of the Company or any Subsidiaries, or communicate, divulge or disseminate
Confidential Information to any person or entity not authorized by the Company
or any Subsidiaries to receive it at any time during or after Participant’s service,
except with the prior written consent of the Company or as otherwise required
by law or legal process.

 

(b)         For a period of two years after the termination of Participant’s service,
for any reason, voluntary or involuntary, Participant will not, without the
written consent of the Company, directly or indirectly, engage or hold an
interest in any company listed in Exhibit B, or any subsidiary or
affiliate of such company (the “Competing Businesses”), or directly or
indirectly have any interest in, own, manage, operate, control, be connected
with as a stockholder (other than as a holder of less than five percent (5%) of
any class of publicly traded securities of any such Competing Business). Participant
and the Company explicitly acknowledge that the companies, entities, or
interests identified in Exhibit C were owned by Participant prior to his
employment with the Company and are specifically approved.

 

(c)          For a period of one year after the termination of Participant’s service,
for any reason, Participant will not, without the written consent of the
Company, directly or indirectly solicit, entice, persuade or induce any person
to leave the employment of the Company or any Subsidiaries (other than persons
employed in a clerical, non-professional or non-management position).

 

(d)         Participant understands and agrees that the restrictions set forth
above, including, without limitation, the duration, and the business scope of
such restrictions, are reasonable and necessary to protect the legal interests
of the Company. Participant further agrees that the Company will be entitled to
seek injunctive relief in the event of any actual or threatened breach of such
restrictions. In addition, Participant also agrees that in the event it is
found by a court of law to have violated the confidentiality provisions of this
Agreement, that an adequate remedy will including, among other things, the
immediate forfeit of all shares (whether or not vested) and disgorgement of any
profit associated with this grant. If any provision of this Agreement is
determined to be unenforceable by any court, then such provision will be
modified or omitted only to the extent necessary to make the remaining
provisions of this Agreement enforceable.

 

4

 

9.              Miscellaneous

 

(a)          This Agreement is issued pursuant to the Plan and is subject to its
terms. Participant hereby acknowledges receipt of a copy of the Plan. The Plan
is also available for inspection during business hours at the principal office
of the Company.

 

(b)         This Agreement shall not confer on Participant any right with respect
to continuance of service of or employment by the Company or any of its
subsidiaries.

 

(c)          This award is governed by and subject to the terms and conditions of the
Plan, which contain important provisions of this award and form a part of
this Agreement. Copies of the Plan are being provided to or have been provided
to Participant, along with a summary of the Plan. If there is any conflict
between any provision of this Agreement and the Plan, this Agreement will
control, unless the provision is not permitted by the Plan, in which case the
provision of the Plan will apply. Participant’s rights and obligations under
this Agreement are also governed by and are subject to applicable U.S. laws and
foreign laws.

 

(d)         This Agreement may be executed via facsimile and in counterparts,
each of which shall be considered an original, but all of which together shall
constitute one and the same Agreement.

 

(e)          This Agreement shall be governed by and construed under the internal
laws of the State of Colorado, without regard for conflicts of laws principles
thereof.

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed on the day and year first above written.

 

 

	
   

  	
  TETON
  ENERGY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Chairman

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PARTICIPANT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

	
  Grantee:

  	
  No. of
  Shares:

  	
  Grant
  Date:

  	
  Vesting
  Date:

  

 

5

 

Exhibit A

 

Change In
Control.

 

(i)                                     For purposes of this Agreement and this Exhibit A,
a Change in Control” of the Company shall mean:

 

(a)                                  a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), whether or not the Company is then subject to
such reporting requirement;

 

(b)                                 the public announcement (which, for purposes
of this definition, shall include, without limitation, a report filed pursuant
to Section 13(d) of the Exchange Act) by the Company or any “person”
(as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) that such person has become the “beneficial owner” (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power of the
Company’s then outstanding securities, determined in accordance with Rule 13d-3,
excluding, however, any securities acquired directly from the Company (other
than an acquisition by virtue of the exercise of a conversion privilege unless
the security being so converted was itself acquired directly from the Company);
however, that for purposes of this clause the term “person” shall not include
the Company, any subsidiary of the Company or any employee benefit plan of the
Company or of any subsidiary of the Company or any entity holding shares of
Common Stock organized, appointed or established for, or pursuant to the terms
of, any such plan;

 

(c)                                  the Continuing Directors cease to constitute
a majority of the Company’s Board of Directors;

 

(d)                                 consummation of a reorganization, merger or
consolidation of, or a sale or other disposition of all or substantially all of
the assets of, the Company (a “Business Combination”), in each case, unless,
following such Business Combination, (A) all or substantially all of the
persons who were the beneficial owners of the Company’s outstanding voting
securities immediately prior to such Business Combination beneficially own
voting securities of the corporation resulting from such Business Combination
having more than 50% of the combined voting power of the outstanding voting
securities of such resulting Corporation and (B) at least a majority of
the members of the Board of Directors of the corporation resulting from such
Business Combination were Continuing Directors at the time of the action of the
Board of Directors of the Company approving such Business Combination;

 

(e)                                  approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company; or

 

(f)                                    the majority of the Continuing Directors
determine in their sole and absolute discretion that there has been a change in
control of the Company.

 

(ii)                                  “Continuing Director” shall mean any person
who is a member of the Board of Directors of the Company, while such person is
a member of the Board of Directors, who is not an Acquiring Person (as defined
below) or an Affiliate or Associate (as defined below) of an Acquiring Person,
or a representative of an Acquiring Person or of any such Affiliate or 

 

6

 

Associate, and who (x) was a
member of the Board of Directors on the date of this Agreement as first written
above or (y) subsequently becomes a member of the Board of Directors, if
such  person’s initial nomination for election or initial election to the
Board of Directors is recommended or approved by a majority of the Continuing
Directors. For purposes of this subparagraph (ii), “Acquiring Person” shall
mean any “person” (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) who or which, together with all Affiliates and Associates of
such person, is the “beneficial owner” (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power of the
Company’s then outstanding securities, but shall not include the Company, any
subsidiary of the Company or any employee benefit plan of the Company or of any
subsidiary of the Company or any entity holding shares of Common Stock
organized, appointed or established for, or pursuant to the terms of, any such
plan; and “Affiliate” and “Associate” shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

 

7

 

Exhibit B

 

Prohibited Activities or
Ownership Interests

 

8

 

Exhibit C

 

Permitted Activities or Ownership
Interests

 

9Exhibit 10.5

 

Teton Energy Corporation 2005 Long-Term Incentive Plan

 

2006 Performance Share Unit Award Agreement

 

You have been selected to be
a Participant in the Teton Energy Corporation 2005 Long-Term Incentive Plan
(the “Plan”), as specified below:

 

Participant:

 

Date of Award:

 

Target Number of Performance Share Units Awarded:                                                   Base Units;         Stretch Target Units

 

Performance Period:                              1 January 2006 to 31 December 2008

 

Performance Measure:                  Completion
of acquisitions that increase the Company’s asset base; Management’s efficiency
and effectiveness; Measurement of Teton’s stock performance relative to a stock
performance index of peers of the Company, which index is compiled by an
independent third party based on the size and growth prospects of the Company
(the “Performance Measures”). The Performance Measures are consolidated into a
composite measure based on the relative weighting of each component as a
percentage of 100%. Performance measures are based on the attainment of one,
two, and three year objectives.

 

THIS AWARD AGREEMENT,
effective as of the Date of Award set forth above, represents the award of
Performance Share Units by Teton Energy Corporation, a Delaware corporation
(the “Company”), to the Participant named above, pursuant to the provisions of
the Plan, which is attached as Exhibit A, and pursuant to the plan
administration document (the “Plan Administration”), which is attached as Exhibit B.
The Plan and the Plan Administration provide a complete description of the
terms and conditions governing Performance Share Units. If there is any
inconsistency between the terms of this Award Agreement and the terms of the
Plan, the Plan’s terms shall completely supersede and replace the conflicting
terms of this Award Agreement. All capitalized terms shall have the meanings
ascribed to them in the Plan, unless specifically set forth otherwise herein. In
consideration of the mutual promises contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the parties hereto agree as follows:

 

1. Employment by the Company. The Performance Share Units granted
hereunder are awarded on the condition that the Participant remains employed by
the Company from the Date of Award through the end of the Performance Period,
as specified above. However, neither such condition nor the award of the
Performance Share Units shall impose upon the Company any obligation to retain
the Participant in its employ for any given period or upon any specific terms
of employment.

 

2. Earning Performance Share Units. Subject to the terms of the Plan and this
Award Agreement, the Participant shall be entitled to receive payment of the
number and value of Performance Share Units earned by the Participant over the
Performance Period, where the number of Performance Share Units is determined
as a function of the extent to which the corresponding performance goals have
been achieved.

 

3. Performance Measures. The Performance Measures under this Award
Agreement shall be based on a combination of Completion of acquisitions that
increase the Company’s asset base; Management’s efficiency and effectiveness;
Measurement of Teton’s stock performance relative to a stock performance index
of peers of the Company, which index is compiled by an independent third party
based on the size and growth prospects of the Company. The Performance Measures
are consolidated into a composite measure based on the relative weighting of
each component as a percentage of 100%. Performance measures are based on the
attainment of one, two, and three year objectives.

 

 

Achievement of the following
targets in 2006, 2007, and 2008 will entitle the Participant to payment of the
Target Number of Performance Share Units awarded as set forth above, subject to
other provisions of the Plan and this Award Agreement:

 

Base
Performance Targets

 

	
   

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  	
  2008

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Composite
  Measurement

  	
   

  	
  100.00

  	
   

  	
  100.00

  	
   

  	
  100.00

  	
   

  

 

Achievement of the following
targets in 2006, 2007, and 2008 shall entitle the Participant to payment of
200% of the Target Number of Performance Share Units awarded:

 

Stretch
Performance Targets

 

	
   

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  	
  2008

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Composite
  Measurement

  	
   

  	
  122.50

  	
   

  	
  121.50

  	
   

  	
  118.00

  	
   

  

 

Achievement of the following
targets in 2006, 2007, and 2008 shall entitle the Participant to payment of 50%
of the Target Number of Performance Share Units awarded:

 

Below
Base Performance Targets

 

	
   

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  	
  2008

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Composite
  Measurement

  	
   

  	
  50.00

  	
   

  	
  50.00

  	
   

  	
  50.00

  	
   

  

 

Achievement of less than the
aforementioned targets shall result in no payment of Performance Share Units to
the Participant under this Award Agreement.

 

Achievement of results
between Performance Targets identified above shall entitle the Participant to
payment of the number of Performance Share Units interpolated according to a
performance achievement function defined by the foregoing achievement levels. Such
interpolation shall be made by the Committee in its sole discretion and shall
be binding.

 

In the event that the Base
Performance Targets for 2006 are achieved, 20% of the Target Performance Share
Units shall vest and be paid out to the Participant. In the event that the Base
Performance Targets for 2007 are achieved, 30% of the Target Performance Share
Units shall vest and be paid out to the Participant. In the event that the Base
Performance Targets for 2008 are achieved, the balance or 50% of the Target
Performance Shares Units shall vest and be paid out to the Participant. Stretch
targets, if achieved, will be paid out according to the same schedule.

 

4. Form and Timing of Payment of Performance Share Units. Payment of earned Performance Share Units
shall be made as soon as practicable but in no event after March 15
of the calendar year following the calendar year of the close of the applicable
Performance Period. Subject to the Plan, the Committee, as that term is defined
in the Plan, has authorized that the future payment of any earned Performance
Share Units shall be made 100% in Shares. The Company will withhold from any
such payout Shares having a value equivalent to the amount needed to satisfy
the minimum statutory tax withholding requirements of the Company or its
Subsidiary in the appropriate taxing jurisdiction.

 

5. Voting Rights and Dividends. During the Performance Period and until the
date of payment of Performance Share Units as provided for in Section 4,
the Participant will not have voting rights with respect to the Performance
Share Units. During the Performance Period and until and including the date of
payment of Performance Share Units as provided in Section 4, the
Participant shall receive all dividends, dividend equivalents and other
distributions paid with respect to the number of shares of Common Stock of the
Company equal to the number of Performance Share Units granted under this Award.
Any such payment of dividend, dividend equivalent or other distribution will be
held in escrow and granted to Participant upon the attainment of applicable
targets and vesting of shares. Amounts to be credited to such escrow shall be
credited within 15 calendar days following the specified record date.

 

2

 

6. Termination of Employment Due to Death, Disability, or
Retirement. In the
event the employment of a Participant is terminated by reason of death,
Disability, or Retirement (as such terms are defined in the Plan) during the
Performance Period, the Participant or the Participant’s beneficiary or estate,
as the case may be, shall be entitled to receive a prorated payment of the
Performance Share Units. The prorated payment shall be determined by the
Committee, in its discretion, based on the number of full months of the
Participant’s employment during the Performance Period, in relation to the
total number of months in the Performance Period, and shall further be adjusted
based on the achievement of the pre-established performance goals set forth in Section 3.

 

Payment of Performance Share
Units shall be made at the time specified by the Committee in its discretion. Notwithstanding
the foregoing, with respect to a Participant who retires during the Performance
Period, payments shall be made at the same time as payments are made to
Participants who did not terminate employment during the applicable Performance
Period as set forth in Section 4.

 

7. Termination of Employment for Other Reasons. In the event that the Participant
terminates employment with the Company for any reason other than those reasons
set forth in Section 6, or in the event that the Company terminates the
employment of the Participant with or without cause, all Performance Share
Units awarded to the Participant under this Award Agreement shall be forfeited
by the Participant to the Company; provided, however, that in the event of a
termination of the employment of the Participant by the Company without cause,
the Committee, in its discretion, may waive such automatic forfeiture
provision and pay out on a pro rata basis in accordance with Section 6.

 

8. Change in Control. In the event of a Change in Control as defined in the Plan, during
the Performance Period, the Target Number of Performance Share Units shall
become payable in full and such payment shall be made within twenty-five
(25) calendar days following the date of the Change in Control. The Committee,
in its discretion, may make such payment of the Target Number of
Performance Share Units in the form of cash or in shares (or in a
combination thereof). The number of Shares to be issued, if any, shall be equal
to the number of earned Performance Share Units designated by the Committee to
be paid in Shares. The amount of cash to be paid if any shall be equal to the
Fair Market Value, as defined in the Plan, of a share of the Common Stock of
the Company as of the date of the Change in Control multiplied by the number of
Performance Share Units designated by the Committee to be paid in cash.

 

9. Nontransferability. Performance Share Units may not be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, except
as otherwise determined by the Committee and provided in this Award Agreement,
a Participant’s rights under the Plan shall be exercisable during the
Participant’s lifetime only by the Participant or the Participant’s legal
representative.

 

10. Adjustments in Authorized Shares. The Committee shall have the sole
discretion to adjust the number of Performance Share Units awarded pursuant to
this Award Agreement, in accordance with the Plan.

 

11. Tax Withholding. The Company shall have the power and the right to deduct or withhold,
or require the Participant or beneficiary to remit to the Company, an amount
sufficient to satisfy federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Award Agreement. The Company’s power and right to
withhold includes the right to withhold Shares with a value equivalent to the
amount needed to satisfy the minimum statutory tax withholding requirements of
the Company, its Subsidiary, or affiliate in the appropriate taxing
jurisdiction.

 

12. Share Withholding. With respect to withholding required upon
any other taxable event arising as a result of Awards granted hereunder, the
Participant may elect, subject to the approval of the Committee, to
satisfy the withholding requirement, in whole or in part, by having the Company
withhold Performance Share Units having a Fair Market Value on the date the tax
is to be determined equal to the minimum statutory total tax which could be
withheld on the transaction. All such elections shall be irrevocable, made 

 

3

 

in writing, signed by the
Participant, and shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate.

 

13. Covenant Not to Compete. Without the consent of the Company, the
Participant shall not, directly or indirectly, at any time during the
Participant’s employment with the Company or any of its Subsidiaries, and for a
period of eighteen (18) months following the termination of Participant’s
employment with the Company and its Subsidiaries for any reason, be associated
or in any way connected as an owner, investor, partner, director, officer,
employee, agent, or consultant with any business entity directly engaged in the
production and/or sale of products competitive with any material product,
offering or business of the Company or any of its Subsidiaries; provided,
however, that the Participant shall not be deemed to have breached this
undertaking if his sole relation with such entity consists of his holding,
directly or indirectly, an equity interest in such entity not greater than two
percent (2%) of such entity’s outstanding equity interest, and the class of
equity in which the Participant holds an interest is listed and traded on a
broadly recognized national or regional securities exchange; provided, further,
that in the event that Participant’s employment with the Company or any of its
Subsidiaries terminates for reasons related to a change in control, this
restriction shall not apply. A Participant’s investment in another business
entity shall not be deemed to be directly competitive with the Company’s
operations or otherwise prohibited if: (a) it was known to the independent
directors at the time the Participant commenced work with the Company; (b) reviewed
and approved by disinterested independent directors; or (c) of a passive,
minority investment nature and the
disinterested independent directors have determined that the activities
undertaken by such other business entity are not directly in competition with
the Company as there are no corporate opportunities that are being taken from
the Company by virtue of the Participant’s investment.

 

The Participant acknowledges
that: (a) the services to be performed by him for the Company are of a
special, unique, unusual, extraordinary, and intellectual character; (b) the
business of the Company and its subsidiaries is worldwide in scope and its
business opportunities are located throughout the world; (c) the Company
and its Subsidiaries and affiliates compete with other businesses that are or
could be located in any part of the world; and (d) the provisions of
this Section 13 are reasonable and necessary to protect the Company’s
business.

 

If any covenant in this Section 13
is held to be unreasonable, arbitrary, or against public policy, such covenant
will be considered to be divisible with respect to scope, time, and geographic
area, and such lesser scope, time, or geographic area, or all of them, as a
court of competent jurisdiction may determine to be reasonable, not
arbitrary, and not against public policy, will be effective, binding, and
enforceable against the Participant.

 

The period of time
applicable to any covenant in this Section 13 will be extended by the
duration of any violation by the Participant of such covenant.

 

For so long as while the
covenants under this Section 13 are in effect, the Participant will give
notice to the Company of the identity of the Participant’s new employer, within
two business days after accepting any other employment. The Company may notify
such employer that the Participant is bound by this Award Agreement and, at the
Company’s election, furnish such employer with a copy of this Award Agreement
or relevant portions thereof.

 

14. Disclosure of Confidential Information. Without the consent of the Company, the
Participant shall not disclose to any other person Confidential Information, as
defined below, concerning the Company or any of its Subsidiaries or affiliates,
or the Company’s or any of its Subsidiaries’ trade secrets of which the
Participant has gained knowledge during his employment with the Company. Any
trade secrets of the Company or any of its subsidiaries or related or
affiliated companies or joint ventures will be entitled to all of the
protections and benefits under the Uniform Trade Secrets Act (Article 74
of the Colorado Statutes), Section 18-4-408 of the Colorado Statutes, and
any other applicable law. If any information that the Company deems to be a
trade secret is found by a court of competent jurisdiction not to be a trade
secret for purposes of this Award Agreement, such information will,
nevertheless, be considered Confidential Information for purposes of this Award
Agreement. The Participant hereby waives any requirement that the Company
submits proof of the economic value of any trade secret or posts a bond or
other security. 

 

4

 

None of the foregoing obligations
and restrictions apply to any part of the Confidential Information that
the Participant demonstrates was or became generally available to the public
other than as a result of a disclosure by the Participant.

 

For purposes of this Award
Agreement, Confidential Information shall include any and all information
concerning the business and affairs of the Company or any of its Subsidiaries
or affiliates which is not generally available to others, would be considered
to be information proprietary to the Company or any of its Subsidiaries, or
that is a trade secret within the meaning of the Uniform Trade Secrets Act
(Article 74 of the Colorado Statutes), Section 18-4-408 of the
Colorado Statutes, and any other applicable law.

 

15. Nonsolicitation. Without the written consent of the Company, the Participant shall
not, at any time during Employment and for a period of eighteen (18) months
following the termination of Participant’s employment with the Company and its
Subsidiaries or affiliates for any reason (a) employ or retain or arrange
to have any other person, firm, or other entity employ or retain or otherwise
participate in the employment or retention of any person who is an employee or
consultant of the Company or its Subsidiaries; or (b) solicit or arrange
to have any other person, firm, or other entity solicit or otherwise
participate in the solicitation of business from any entity that was a customer
of the Company or any of its Subsidiaries or affiliates during the time of the
Participant’s employment, whether or not the Participant had personal contact
with such person; provided, further, that in the event that Participant’s
employment with the Company or any of its Subsidiaries terminates for reasons
related to a change in control, this restriction shall not apply.

 

16. Injunctive Relief and Additional Remedy; Essential and
Independent Covenants.

 

The Participant acknowledges
that the injury that would be suffered by the Company as a result of a breach
of the provisions of this Award Agreement (including any provision of Sections
13, 14, and 15) would be irreparable and that an award of monetary damages to
the Company for such a breach would be an inadequate remedy. Consequently, the
Company will have the right, in addition to any other rights it may have,
to obtain injunctive relief to restrain any breach or threatened breach or
otherwise to specifically enforce any provision of this Award Agreement, and
the Company will not be obligated to post bond or other security in seeking
such relief. Without limiting the Company’s rights under this Section 16
or any other remedies of the Company, if the Participant breaches any of the
provisions of Sections 13, 14, or 15, the Company will have the right to cease
making any payments otherwise due to the Participant under this Award
Agreement.

 

The covenants by the
Participant in Sections 13, 14, and 15 are essential elements of this Award
Agreement, and without the Participant’s agreement to comply with such
covenants, the Company would not have entered into this Award Agreement with
the Participant. The Company and the Participant have been afforded the
opportunity to consult their respective counsel and have been advised or had
the opportunity to obtain advice, in all respects concerning the reasonableness
and propriety of such covenants (including, without limitation, the time period
of restriction and the geographical area of restriction set forth in Section 13),
with specific regard to the nature of the business conducted by the Company and
its Subsidiaries and related or affiliated companies or joint ventures. The
Participant’s covenants in Sections 13, 14, and 15 are independent covenants
and the existence of any claim by the Participant against the Company under
this Award Agreement or otherwise, will not excuse the Participant’s breach of
any covenant in Sections 13, 14, or 15.

 

If this Award Agreement or
the Participant’s employment with the Company and its Subsidiaries or
affiliates expires or is terminated, this Award Agreement will continue in full
force and effect as is necessary or appropriate to enforce the covenants and
agreements of the Participant in Sections 13, 14, 15, and 16.

 

17. Beneficiary Designation. The Participant may, from time to time,
name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under this Award Agreement is to be paid in
case of his or her death before he or she receives any or all of such benefit.
Each such designation shall revoke all prior designations by the Participant, shall
be in a form prescribed by the Company, and will be effective only when
filed by the Participant in writing with the Secretary of the 

 

5

 

Company during the
Participant’s lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant’s death shall be paid to the Participant’s
estate.

 

Beneficiary
Designation (name, address, and relationship):

 

	
  Name:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
  Relationship:

  	
   

  	
   

  

 

18. Administration. This Award Agreement and the rights of the Participant hereunder are
subject to all the terms and conditions of the Plan, as the same may be
amended from time to time, as well as to such rules and regulations 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 necessary or appropriate to the administration of the Plan
and this Award Agreement, all of which shall be binding upon the Participant. Any
inconsistency between the Award Agreement and the Plan shall be resolved in
favor of the Plan. Any inconsistency between the Award Agreement and the
administrative rules shall be resolved in favor of the administrative
rules. Any inconsistency between the administrative rules and the Plan
shall be resolved in favor of the Plan.

 

19. Continuation of Employment. This Award Agreement is not an employment
agreement, it shall not confer upon the Participant any right to continuation
of employment by the Company, nor shall this Award Agreement interfere in any
way with the Company’s right to terminate his or her employment at any time.

 

20. No Vested Right In Future Awards. Participant acknowledges and agrees (by
executing this Award Agreement) that the granting of Awards under this Award
Agreement are made on a fully discretionary basis by the Committee and that
this Award Agreement does not lead to a vested right to further Awards in the
future. Further, the Awards set forth in this Award Agreement constitute a
non-recurrent benefit and the terms of Award Agreement are only applicable to
the Awards distributed pursuant to this Award Agreement.

 

21. Severability. In the event that any provision of this Award Agreement shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of this Award Agreement, and this Award Agreement
shall be construed and enforced as if the illegal or invalid provision had not
been included.

 

22. Miscellaneous. With the approval of the Board, the Committee may terminate,
amend, or modify the Plan; provided, however, that no such termination,
amendment, or modification of the Plan may in any way materially impairs
the Participant’s rights under this Award Agreement, without the Participant’s
written approval.

 

This Award Agreement shall
be subject to all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may be
required.

 

All obligations of the
Company under the Plan and this Award Agreement, with respect to the
Performance Share Units granted hereunder, shall be binding (i) on the
Company and on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the
Company; and (ii) on the Participant and his or her heirs and legal
representatives.

 

Each of the terms of this
Award Agreement is deemed severable in whole or in part, and if any term or
provision, or the application thereof, in any circumstance should be illegal,
invalid or unenforceable, the remaining terms and provisions will not be
affected thereby and will remain in full force and effect.

 

6

 

To the extent not preempted
by federal law, this Award Agreement is deemed to have been made and entered
into in the State of Colorado and in all respects the rights and obligations of
the parties will be governed by, and construed and enforced in accordance with,
the laws of the State of Colorado without regard to the principles of conflict
of laws. Any and all lawsuits, legal actions or proceedings against either
party arising out of this Award Agreement will be brought in Denver County,
Colorado or federal court of competent jurisdiction sitting nearest to Denver,
Colorado, and each party hereby submits to and accepts the exclusive
jurisdiction of such court for the purpose of such suit, legal action or
proceeding. Each party irrevocably waives any objection it may now have or
hereinafter have to this choice of venue of any suit, legal action or
proceeding in any such court and further waives any claim that any suit, legal
action or proceeding brought in any such court has been brought in an
inappropriate forum.

 

IN WITNESS WHEREOF, the
parties have caused this Award Agreement to be executed effective as of        ,
2006.

 

	
   

  	
  Teton Energy Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   Name:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Participant

  

 

7

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