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EXHIBIT 10.17
EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT made and entered into as of the 23d day of June,
2004, by and between ENERGY WEST,
INCORPORATED (the "Company"), a Montana
corporation, and John Allen (the
"Executive");
WHEREAS,
the Company desires to secure the employment of the Executive
as
its Senior Vice President, General Counsel
and Secretary;
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:
1.
Employment and Term.
(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 July 1, 2004
(the "Effective Date") and shall continue
until June 30, 2005, unless sooner
terminated in accordance with Section 4
hereof (the "Employment Period"). The
Executive shall remain employed by the
Company following the end of the
Employment Period on such terms and
conditions as the Company and the Executive
mutually agree.
2. Duties
and Powers of Executive.
(a)
Position; Location. Initially, the Executive shall serve as
Senior
Vice President, General Counsel and
Secretary of the Company and shall report to
the Chief Executive Officer of the Company
and the Board of Directors of the
Company (the "Board"), as appropriate. The
Executive shall perform such duties
and services appertaining to such position
as reasonably directed by the Chief
Executive Officer and the Board 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
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his full 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. The Executive may serve on
boards of directors of up to two
non-competing for profit businesses which
do 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 $135,000. The Board 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)
Incentive Compensation. The Company shall award the Executive a
bonus
under the Company's Balanced Goal Card
Program for fiscal year 2004 of ten
percent (10%) of Executive's annual base
salary for fiscal year 2004. For fiscal
year 2005, the Executive shall be eligible
to receive an annual cash bonus under
the Company's current Balanced Goal Card
Program, provided, however, the Company
has the right to modify, eliminate, or add
to its short-term and long-term
incentive compensation plans, and to
provide for the Executive's participation
in any such plans, at any time in its sole
discretion. Such bonus will be
payable upon the achievement of performance
goals determined in advance by
mutual agreement of the Board and the
Executive. The target opportunity under
the Balanced Goal Card Program for fiscal
year 2005 is to be ten percent (10%)
of Annual Base Salary. Written performance
goals under the Balanced Goal Card
Program shall be determined within the
first thirty (30) days of the beginning
of fiscal year 2005.
(c)
Retirement and Welfare Benefit Plans. In addition to the
benefits
available under Section 3(b), during the
Employment Period and so long as the
Executive is employed by the Company, he
shall be immediately eligible 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, all on a
basis no less favorable than for any other
senior executive of the Company of
equal or subordinate rank. 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.
(d)
Options. The Company shall grant the executive stock options
for
20,000 shares of Company common stock on
the Effective Date, pursuant to the
terms of the Company's 2002
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Stock Option Plan (the "Option Plan").
One-half of such options are being
granted in recognition of the Executive's
previous service as Interim President
and Chief Executive Officer of the Company.
Twenty-five percent (25%) of the
options shall vest on the Effective Date
and the balance of the options shall
vest ratably on the next three
anniversaries of the Effective Date, provided
that Executive remains employed by the
Company on such anniversary date. In
addition, the Company shall grant the
Executive options for not less than 10,000
shares of Company common stock on the first
anniversary of the Effective Date
with ratable vesting of not more than three
years, subject to any limitations
under the Option Plan. The exercise price
for each option granted pursuant to
this Section 3(d) shall be equal to the
fair market value of a share of the
Company's common stock on the date of
grant.
(e)
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.
(f) 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, which benefits shall be at least
the same as those received by any
senior executive officer of the Company of
equal or subordinate rank; provided,
however, the Company reserves the right to
modify, eliminate or add to its
fringe benefits at any time in its sole
discretion.
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
an
officer 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, by action of the Board, 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 Board; (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.
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(d) By the
Company Without Cause. During the term of this Agreement, the
Company, by action of the Board, 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 requirement imposed by the Company that
the
Executive relocate his principal residence; 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 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) any
earned but unpaid annual cash bonus or
other incentive award for a prior fiscal
year, and (C) 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),
(B), and (C) 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 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 (A)
Annual Base Sal
