EMPLOYMENT AGREEMENT made and entered into as of the 13th day of
April, 2007 by and between ENERGY WEST, INCORPORATED (the
“Company”), a Montana corporation, and DAVID
C. SHIPLEY (the “Executive”);
WHEREAS, the Company desires to secure the
employment of the Executive as a Vice President;
WHEREAS, the Executive is willing to commit
himself to be employed by the Company on the terms and conditions
herein set forth and thus to forego opportunities
elsewhere;
WHEREAS, the Executive (i) has represented
and warranted to the Company that he is not bound by any agreement
which precludes him from either entering into this Agreement or
performing the duties and services described in this Agreement and
(ii) acknowledges that such representation and warranty is a
material term and condition of this Agreement; and
WHEREAS, the parties desire to enter into this
Agreement, as of the Effective Date, as hereinafter defined,
setting forth the terms and conditions for the employment
relationship of the Executive with the Company during the
Employment Period (as hereinafter defined).
NOW, THEREFORE, IN CONSIDERATION of the
premises, and the covenants and agreements set forth below, it is
hereby agreed as follows:
(a) Employment . The Company
agrees to employ the Executive, and the Executive agrees to be
employed by the Company, in accordance with the terms and
provisions of this Agreement during the term hereof (as described
below).
(b) Term . The term of this
Agreement shall commence as of May 18, 2007 or such earlier
date as the parties shall mutually agree in writing (the
“Effective Date” ) and shall continue until
terminated in accordance with Section 4 hereof (the
“Employment Period” ).
2. Duties
and Powers of Executive .
(a) Position, Location . The
Executive shall serve as a Vice President of the Company and shall
report to the President and Chief Executive Officer of the Company.
The Executive shall perform such duties and services appertaining
to such position as reasonably directed by the President and Chief
Executive Officer and commensurate with the duties and authority of
officers holding comparable positions in similar businesses of
similar size in the United States. The Executive shall use his
reasonable best efforts to carry out such responsibilities
faithfully and efficiently. The Executive’s services shall
initially primarily involve the management of the Company’s
operations in North Carolina and Maine.
(b) Attention . During the
Employment Period, and excluding any periods of vacation and sick
leave to which the Executive is entitled, the Executive shall
devote substantially all of his business time, energy and best
efforts to the business and affairs of the Company. The Executive
may not engage, directly or indirectly, in any other business,
investment or activity that interferes with the Executive’s
performance of his duties hereunder, is contrary to the interests
of the Company, or requires any significant portion of the
Executive’s business time. It shall not be considered a
violation of the foregoing for the Executive to serve on corporate,
industry, civic or charitable boards or committees, so long as such
activities do not materially interfere with the performance of the
Executive’s responsibilities as an employee of the Company in
accordance with this Agreement. Following the first anniversary of
the Effective Date, the Executive may serve on the board of
directors of up to one non-competing for-profit businesses which
does not materially interfere with his duties hereunder.
3.
Compensation . The Executive shall receive the
following compensation for his services hereunder to the
Company:
(a) Salary and Bonus . The
Executive’s initial annual base salary (the “ Annual
Base Salary ”), payable in accordance with the
Company’s general payroll practices, in effect from time to
time, shall be at the annual rate of $130,000. The Board shall
review such base salary at least annually and may from time to time
direct such upward adjustments in Annual Base Salary as the Board
deems to be necessary or desirable, including, without limitation,
adjustments in order to reflect surveys of compensation for
comparable positions at other companies. The Annual Base Salary
shall not be reduced after any increase thereof. Any increase in
the Annual Base Salary shall not serve to limit or reduce any other
obligation of the Company under this Agreement. During each
calendar year during the Employment Period, the Executive shall be
eligible to receive a discretionary bonus targeted at twenty
percent (20%) of his Annual Base Salary. The discretionary bonus
shall be based on performance criteria determined by the Company,
which may include, but not be limited to, revenue and customer
additions in the North Carolina and Maine operations
areas.
(b) Retirement and Welfare Benefit
Plans . During the Employment Period and so long as the
Executive is employed by the Company, he shall be eligible (subject
to any generally applicable waiting periods) to participate in all
other savings, retirement and welfare plans, practices, policies
and programs applicable generally to employees and/or senior
executive officers of the Company in accordance with the terms of
such plans. The Company reserves the right to modify, eliminate or
add to its retirement and welfare benefit plans, practices and
policies at any time in its sole discretion.
(c) Options . During the
Employment Period, the Executive shall be eligible to receive
grants of stock options under the Company’s then existing
stock option plan(s) under such terms and conditions as determined
by the Board of Directors of the Company (the “ Board
”) acting in its sole discretion.
(d) Expenses . The Company
shall reimburse the Executive for all expenses, including those for
travel and entertainment, properly incurred by him in the
performance of his duties hereunder, subject to any reasonable
policies established from time to time by the Board.
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(e) Fringe Benefits . During
the Employment Period and so long as the Executive is employed by
the Company, he shall be entitled to receive vacation and fringe
benefits in accordance with the plans, practices, programs and
policies of the Company from time to time in effect, commensurate
with his position; provided, however, the Company reserves the
right to modify, eliminate or add to its fringe benefits at any
time in its sole discretion. It is agreed and understood that
within six months of the Effective Date, the Executive shall
relocate his primary residence within the Company’s North
Carolina service territory or within a thirty-five mile radius of
that service territory. In addition, the Company shall reimburse
the Executive for his moving expenses actually incurred during the
first six (6) months of the Employment Period up to a maximum
of $20,000. The Executive shall be required to provide
documentation of such moving expenses in a form reasonably
satisfactory to the Company. The Executive shall also be eligible
for reimbursement of reasonable temporary housing expenses for up
to ninety (90) days and reasonable expenses related to two
(2) house hunting trips to the North Carolina operations area
involving another adult.
4.
Termination of Employment .
(a) Death . The
Executive’s employment shall terminate automatically upon the
Executive’s death during the Employment Period.
(b) Disability . The
Executive shall be relieved of his position as a Vice President of
the Company automatically upon the Executive being unable to
perform the material duties of his position due to physical or
mental illness or injury for a period of 60 consecutive days, or
for 90 days within any one-year time period and his employment
shall terminate automatically 120 days after the date that he
is relieved of his position.
(c) By the Company for Cause
. The Company may terminate the Executive’s employment
during the Employment Period for Cause. For purposes of this
Agreement, “Cause” shall mean (i) conduct which
is a material breach of this Agreement and is not cured within
30 days after written notice to Executive or willfully
repeated thereafter, (ii) conduct which is a material
violation of Company policies; (iii) willful failure to
perform substantially all of Executive’s duties as lawfully
delineated by the President and Chief Executive Officer;
(iv) conduct that constitutes fraud, gross negligence of
willful misconduct; or (v) the Executive is convicted of, or
enters a plea of guilty or no contest to, any felony or other
criminal offense involving moral turpitude.
(d) By the Company Without Cause
. During the term of this Agreement, the Company, by action of
the President and Chief Executive Officer, may terminate the
Executive’s employment for any reason other than for Cause
during the Employment Period upon 30 days’ advance
written notice.
(e) By the Executive . The
Executive may terminate his employment during the Employment
Period, either with Good Reason, or without Good Reason upon
30 days’ advance written notice to the Board. For
purposes of this Agreement, “Good Reason” shall
mean:
(i) Without the prior consent of the
Executive: any diminution in title; any material diminution in the
Executive’s duties or authority; assignment of duties
materially inconsistent with the Executive’s duties; any
change resulting in Executive’s being required to report
internally to a person other than the President and Chief Executive
Officer; any requirement imposed by the Company that the Executive
relocate his principal residence once the Executive has relocated
to the North Carolina area; or
(ii) Any material breach by the Company of
this Agreement not cured within thirty days after written notice to
the Company.
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5.
Obligations of the Company Upon Termination
.
(a) Obligations Upon Termination for
any Reason . If, during the Employment Period, the
Executive’s employment shall terminate for any reason
(termination in any such case being referred to as a
“Termination”) , the Company shall pay to the
Executive a lump sum amount in cash equal to the sum of
(A) the Executive’s salary at the rate of the Annual
Base Salary earned through the date of Termination to the extent
not theretofore paid, provided that in the case of termination
because of the Executive’s disability, the Executive shall be
entitled only to the amount provided in the Company’s sick
leave policy, (B) accrued but unpaid vacation pay. In
addition, the Company shall provide benefit continuation or
conversion rights (including COBRA) as provided under Company
benefit plans and vested benefits under Company benefit plans. The
amounts specified in this Section 5(a)(A) and (B) shall
be paid within 30 days after the date of
Termination.
(b) Obligations Upon Termination with Good
Reason or Without Cause . In the event of Termination by
the Executive with Good Reason o
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