EMPLOYMENT
AGREEMENT made and entered into as of the 25th day of August,
2006 by and between ENERGY WEST, INCORPORATED (the “
Company ”), a Montana corporation, and KEVIN J.
DEGENSTEIN (the “ Executive ”);
WHEREAS, the
Company desires to secure the employment of the Executive as its
Senior Vice President Operations;
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; 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 tern of this Agreement shall commence as
of September 18, 2006 (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 . Initially, the Executive shall
serve as Senior Vice President Operations 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 be
performed primarily at the Company’s headquarters, which
shall be located in the Great Falls, Montana metropolitan
area.
(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 . 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 $150,000.
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.
(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.
(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. 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, and such
reimbursement shall occur within 30 days of receipt of such
documentation.
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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 Senior Vice President Operations 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 change 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 Great Falls, Montana, metropolitan area;
or
(ii) Any material
breach by the Company of this Agreement not cured within thirty
days after written notice to the Company.
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
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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, and reimbursement shall occur within 30 days of
receipt of such documentation.
(b)
Obligations Upon Termination with Good Reason or Without
Cause . In the event of Termination by the Executive with
Good Reason or by the Company without Cause, in addition to the
amounts and benefits set out in Section 5(a), the Company
shall pay to the Executive as separation benefits (A) Annual
Base Salary payable monthly for twelve months following the date of
Termination, and (B) if the Termination occurs within
twenty-four (24) months of the Effective Date, the Company
shall reimburse Executive for his moving expenses actually incurred
during the six (6) month period following the
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