Exhibit 10.39





Exhibit 10.39




FIRST AMENDMENT

TO EMPLOYMENT AGREEMENT




THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”) is made and entered into as of
this 31st day of December, 2008, by and between ENERGY WEST, INCORPORATED (the
“Company”), a Montana corporation, and KEVIN J. DEGENSTEIN (the “Executive”).



RECITALS:





	 	A.	 	The Company and the Executive are parties to an Employment Agreement dated as
of August 25, 2006 (the “Original Agreement”).

	 
	 	B.	 	In order to ensure compliance with Section 409A of the Internal Revenue Code of
1986, as amended, and the U.S. Department of Treasury regulations and other
interpretive guidance issued thereunder, the Company and the Executive desire to amend
the Original Agreement as set forth in this Amendment.






ACCORDINGLY, in consideration of the promises hereinafter set forth in this Amendment, the
parties agree as follows:






1.
Changes to Section 5 of the Original Agreement. The Company and the Executive
hereby agree that Section 5 of the Original Agreement is hereby amended as follows:




	 	(a)	 	Section 5(f) of the Original Agreement is deleted from the
Original Agreement in its entirety.








2.
Addition of New Section 13 to the Original Agreement. The Company and
the Executive hereby agree that Section 13 of the Original Agreement is hereby added in
its entirety as follows:



	 	13.	 	Section 409A.







	 	(a)	 	To the extent applicable, this
Agreement shall be interpreted in accordance with Section
409A of the Internal Revenue Code of 1986, as amended (the
“Code”), and the Department of Treasury regulations and other
interpretive guidance issued thereunder, each as in effect
from time to time (collectively, “Section 409A”).





 


 









 





	 	(b)	 	Notwithstanding anything herein
to the contrary, to ensure compliance with Section 409A, the
Company shall pay:







(i) any Annual Base Salary payable under Section 3(a) above
no later than March 15 of the calendar year following the
calendar year in which the Annual Base Salary was earned and
accrued;




(ii) reimbursed expenses payable under Section 3(d) above for
each calendar year no later than March 15 of the calendar
year following the calendar year in which those expenses were
incurred by the Executive;




(iii) to the extent that any fringe benefits or
reimbursements payable under Section 3(e) are taxable to the
Executive, each such payment due to the Executive for each
calendar year no later than March 15 of the calendar year
following the calendar year in which those benefits were
earned or accrued;




(iv) any amount payable under Section 5(a)(A) or (B) above by
no later than March 15 of the calendar year following the
year of Termination; and




(v) to the extent that any continued payments or
reimbursements of Benefit Coverage under Section 5(a)
above are deemed to constitute taxable compensation to the
Executive, any such payment or reimbursement due to the
Executive shall be paid to the Executive on or before the
last day of the Executive’s taxable year following the
taxable year in which the related expense was incurred. The
amount of any such payments eligible for reimbursement in one
year shall not affect the payments or expenses that are
eligible for payment or reimbursement in any other taxable
year, and the Executive’s right to such payments or
reimbursements shall not be subject to liquidation or
exchange for any other benefit.


 


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	 	(c)	 	If the Executive is a “specified
employee” (within the meaning of Treasury Regulation Section
1.409A-1(i)), as determined by the Company in accordance with
Section 409A, as of the date of the Executive’s separation from
service (within the meaning of Treasury Regulation Section
1.409A-1(h)), to the extent that any payments or benefits under
this Agreement are subject to Section 409A and the delayed
payment or distribution of all or any portion of such amounts to
which the Executive is entitled under this Agreement is required
in order to
avoid a prohibited distribution under Section
409A(a)(2)(B)(i) of the Code, then such portion deferred
under this Section 13(c) shall be paid or distributed
(without interest) to the Executive in a lump sum on the
earlier of (i) the date that is six (6) months following
termination of the Executive’s employment, (ii) a date that
is no later than thirty (30) days after the date of the
Executive’s death or (iii) the earliest date as is permitted
under Section 409A. For purposes of clarity, the six (6)
month delay shall not apply in the case of severance pay
contemplated by Treasury Regulation Section
1.409A-1(b)(9)(iii) to the extent of the limits set forth
therein. Any remaining payments due under this Agreement
shall be paid as otherwise provided herein.







	 	(d)	 	To the maximum extent
permitted by applicable law, the amounts payable to the
Executive under this Agreement shall be made in reliance upon
Treasury Regulation Section 1.409A-1(b)(9) (with respect to
separation pay plans) or Treasury Regulation Section
1.409A-1(b)(4) (with respect to short-term deferrals).







	 	(e)	 	As provided in Internal
Revenue Notice 2007-86, notwithstanding any other provision
of this Agreement, with respect to an election or amendment
to change a time and form of payment under this Agreement
that is subject to Section 409A made on or after January 1,
2008 and on or before December 31, 2008, the election or
amendment may apply only to amounts that would not otherwise
be payable in 2008 and may not cause an amount to be paid in
2008 that would not otherwise be payable in 2008.






3. Full Force and Effect. Except to the extent specifically modified in this
Amendment, each and every provision of the Original Agreement remains in full force and effect.



4. Miscellaneous. This Amendment shall be governed by and construed in accordance
with the substantive laws of the State of Montana. The parties intend to and do hereby confer
jurisdiction upon the courts of any jurisdiction within the State of Montana to determine any
dispute arising out of or related to this Amendment, including the enforcement and the breach
hereof. This Amendment may be executed simultaneously in any number of counterparts, each of which
shall be deemed an original but all of which together shall constitute one and the same instrument.
In the event of any conflict between the original terms of the Original Agreement and this
Amendment, the terms of this Amendment shall prevail.


 


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IN WITNESS WHEREOF, the Executive and, pursuant to due authorization from its Board of
Directors, the Company have caused this Amendment to be executed as of the day and year first above
written.



	 	 	 	 	 
	 	
/s/ Kevin J. Degenstein
 	 
	 	Kevin J. Degenstein 	 
	 	 	 
	 	ENERGY WEST, INCORPORATED

 	 
	 	By:  	Thomas J. Smith
 	 
	 	 	Its:  Chief Financial Officer  	 



 


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