Non-Qualified Stock Option Agreement
     This NON-QUALIFIED STOCK OPTION AGREEMENT, dated as of this ___day of
                    , 200___, by and between Energy West, Incorporated, a
Montana corporation (the “Company”), and                      (the “Optionee”).
     Pursuant to the Energy West, Incorporated 2002 Stock Option Plan (the
“Plan”), the Compensation Committee has determined that the Optionee is to be
granted a Non-Qualified Stock Option (the “Option”) to purchase shares of the
Company’s common stock, on the terms and conditions set forth herein. It is
intended that the Option shall not constitute an “Incentive Stock Option” within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”). Any capitalized terms not defined herein shall have the meaning set
forth in the Plan.
     1. Number of Shares and Option Price. The Option entitles the Optionee to
purchase [___] shares of the Company’s common stock, par value $.15 per share
(the “Option Shares”), at a price of [___] per share (the “Option Price”).
     2. Period of Option. The term of the Option and of this Option Agreement
shall commence on the date hereof (the “Grant Date”) and terminate upon the
earlier of (i) the expiration of ___years from the Grant Date, or (ii) the
occurrence of one of the events set forth under Section 6.4.1 of the Plan. Upon
termination of the Option, all rights of the Optionee hereunder shall cease.
     3. Vesting of Options.
     Option 1: Immediate Vesting
     The Option Shares granted hereunder shall be fully vested and
nonforfeitable at all times, except as otherwise provided herein.
     The right of the Optionee to purchase Shares may be exercised in whole or
in part at any time or from time to time up to the expiration of the stated term
of such Option as set forth under Section 2 above[, but in no event earlier than
___months following the Grant Date].
     Option 2: Graduated Vesting
     For so long as the Optionee is employed by or provides services to the
Company or a Subsidiary, the Option Shares granted hereunder shall vest as
follows:
     (a)                      percent (___%) of the Option Shares (rounded down
to the nearest whole number of shares) on ___;
     (b) An additional                      percent (___%) of the Option Shares
(rounded down to the nearest whole number of shares) on                     ;
and
     (c) The remainder of the Option Shares on                     .
     Notwithstanding the foregoing, the Option Shares shall immediately vest, to
the extent not already vested, in the event of a Change in Control (subject to
the limitations set forth in the Plan).

 

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     The right of the Optionee to purchase shares with respect to which this
Option has become vested as herein provided may be exercised in whole or in part
at any time or from time to time up to the expiration of the stated term of such
Option as set forth under Section 2 above[, but in no event earlier than
___months following the Grant Date].
     Option 3: Cliff Vesting
     For so long as the Optionee is employed by or provides services to the
Company or a Subsidiary, the Option Shares granted hereunder shall vest on
                    . Notwithstanding the foregoing, the Option Shares shall
immediately vest, to the extent not already vested, in the event of a Change in
Control (subject to the limitations set forth in the Plan).
     The right of the Optionee to purchase shares with respect to which this
Option has become vested as herein provided may be exercised in whole or in part
at any time or from time to time up to the expiration of the stated term of such
Option as set forth under Section 2 above[, but in no event earlier than
___months following the Grant Date].
     4. Non-transferability of Option. The Option and this Option Agreement
shall not be transferable otherwise than by will or by laws of descent and
distribution; and the Option may be exercised, during the lifetime of the
Optionee, only by the Optionee or by the Optionee’s legal representative.
     5. Exercise of Option. The Option shall be exercised in the following
manner: the Optionee, or the person or persons having the right to exercise the
Option upon the death or Disability of the Optionee, shall deliver to the
Company written notice specifying the number of vested Option Shares which the
Optionee elects to purchase, together with either (i) cash, (ii) shares of
Company common stock having Fair Market Value determined as of the date of
exercise, or (iii) any combination of the above, the sum of which equals the
total price to be paid upon the exercise of the Option, and the stock purchased
shall thereupon be promptly delivered. The Optionee will not be deemed to be a
holder of any shares pursuant to exercise of the Option until the date of
issuance to the Optionee of a stock certificate for such shares and until the
shares are paid in full.
     6. Termination of Service.
     If the Optionee incurs a Termination of Service by the Company or a
Subsidiary for Cause, the Optionee’s unexercised Option Shares, irrespective of
whether or not vested, shall be immediately forfeited.
     If the Optionee incurs a Termination of Service due to death or Disability,
the Optionee may exercise his or her unexercised and vested Option Shares for a
period of up one (1) year following the Optionee’s Termination of Service.
     If the Optionee incurs a Termination of Service for any reason other than
described in (a) or (b) above, the Optionee may exercise his or her unexercised
and vested Option Shares for a period of up ninety (90) days after the
Optionee’s Termination of Service.
     7. Notices. Any notice required or permitted under this Option Agreement
shall be deemed given when delivered personally, or when deposited in a United
States Post Office, postage prepaid, addressed, as appropriate, to the Optionee
either at the Optionee’s address set forth below or such other address as the
Optionee may designate in writing to the Company, or the Company: Attention:
Board of

 

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Directors/Corporate Secretary, at the Company’s address or such other address as
the Company may designate in writing to the Optionee.
     8. Withholding of Taxes. As a condition to the issuance of the Option
Shares, the Optionee shall (a) remit to the Company at the time of any exercise
of the Option any taxes required to be withheld by the Company under federal,
state or local laws as a result of the exercise of the Option; or (b) instruct
the Company to withhold in accordance with applicable law from any compensation
payable to the Optionee the taxes required to be held by the Company under
federal, state or local laws as a result of the exercise of the Option; or
(c) instruct the Company to withhold such number of shares as are necessary for
the fair market value of such shares to equal the amount of taxes required to be
withheld by the Company, under federal, state, or local laws as a result of the
exercise of the Option. The determination of the amount of any such withholding
shall be made by the Company.
     9. Failure to Enforce Not a Waiver. The failure of the Company to enforce
at any time any provision of this Option Agreement shall in no way be construed
to be a waiver of such provision or of any other provision hereof.
     10. Incorporation of Plan. The Plan is hereby incorporated by reference and
made a part hereof, and the Option and this Option Agreement are subject to all
terms and conditions of the Plan.
     11. Amendments. This Option Agreement may be amended or modified at any
time by an instrument in writing signed by the parties hereto.
     12. Successors and Assigns. This Option Agreement shall inure to the
benefit of and be binding upon the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.
     IN WITNESS WHEREOF, the parties have executed this Option Agreement on the
day and year first above written.

                  COMPANY:   ENERGY WEST, INCORPORATED
 
           
 
      By:    
 
           
 
           
 
      Title:    
 
           
 
                    The undersigned hereby accepts and agrees to all the terms
and provisions of the foregoing Option Agreement and to all the terms and
provisions of the Plan herein incorporated by reference.
 
           
 
  OPTIONEE:                  

 

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Incentive Stock Option Agreement
     This INCENTIVE STOCK OPTION AGREEMENT, dated as of this ___day of
                    , 200___, by and between Energy West, Incorporated, a
Montana corporation (the “Company”), and                      (the “Optionee”).
     Pursuant to the Energy West, Incorporated 2002 Stock Option Plan (the
“Plan”), the Compensation Committee has determined that the Optionee is to be
granted an Incentive Stock Option (the “Option”) to purchase shares of the
Company’s common stock, on the terms and conditions set forth herein. It is
intended that the Option shall constitute an “Incentive Stock Option” within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”). Any capitalized terms not defined herein shall have the meaning set
forth in the Plan.
     1. Number of Shares and Option Price. The Option entitles the Optionee to
purchase [___] shares of the Company’s common stock, par value $.15 per share
(the “Option Shares”), at a price of [___] per share (the “Option Price”).
     2. Period of Option. The term of the Option and of this Option Agreement
shall commence on the date hereof (the “Grant Date”) and terminate upon the
earlier of (i) the expiration of                      years from the Grant Date,
or (ii) the occurrence of one of the events set forth under Section 6.4.1 of the
Plan. Upon termination of the Option, all rights of the Optionee hereunder shall
cease.
     3. Vesting of Options.
Option 1: Immediate Vesting
     The Option Shares granted hereunder shall be fully vested and
nonforfeitable at all times, except as otherwise provided herein.
     The right of the Optionee to purchase Shares may be exercised in whole or
in part at any time or from time to time up to the expiration of the stated term
of such Option as set forth under Section 2 above[, but in no event earlier than
___months following the Grant Date].
Option 2: Graduated Vesting
     For so long as the Optionee is employed by or provides services to the
Company or a Subsidiary, the Option Shares granted hereunder shall vest as
follows:
     (a)                      percent (___%) of the Option Shares (rounded down
to the nearest whole number of shares) on                     ;
     (b) An additional                      percent (___%) of the Option Shares
(rounded down to the nearest whole number of shares) on                     ;
and
     (c) The remainder of the Option Shares on                     .
     Notwithstanding the foregoing, the Option Shares shall immediately vest, to
the extent not already vested, in the event of a Change in Control (subject to
the limitations set forth in the Plan).

 

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     The right of the Optionee to purchase shares with respect to which this
Option has become vested as herein provided may be exercised in whole or in part
at any time or from time to time up to the expiration of the stated term of such
Option as set forth under Section 2 above[, but in no event earlier than
___months following the Grant Date].
Option 3: Cliff Vesting
     For so long as the Optionee is employed by or provides services to the
Company or a Subsidiary, the Option Shares granted hereunder shall vest on
                    . Notwithstanding the foregoing, the Option Shares shall
immediately vest, to the extent not already vested, in the event of a Change in
Control (subject to the limitations set forth in the Plan).
     The right of the Optionee to purchase shares with respect to which this
Option has become vested as herein provided may be exercised in whole or in part
at any time or from time to time up to the expiration of the stated term of such
Option as set forth under Section 2 above[, but in no event earlier than
___months following the Grant Date].
     4. Non-transferability of Option. The Option and this Option Agreement
shall not be transferable otherwise than by will or by laws of descent and
distribution; and the Option may be exercised, during the lifetime of the
Optionee, only by the Optionee or by the Optionee’s legal representative.
     5. Exercise of Option. The Option shall be exercised in the following
manner: the Optionee, or the person or persons having the right to exercise the
Option upon the death or Disability of the Optionee, shall deliver to the
Company written notice specifying the number of vested Option Shares which the
Optionee elects to purchase, together with either (i) cash, (ii) shares of
Company common stock having Fair Market Value determined as of the date of
exercise, or (iii) any combination of the above, the sum of which equals the
total price to be paid upon the exercise of the Option, and the stock purchased
shall thereupon be promptly delivered. The Optionee will not be deemed to be a
holder of any shares pursuant to exercise of the Option until the date of
issuance to the Optionee of a stock certificate for such shares and until the
shares are paid in full.
     6. Termination of Service.
     If the Optionee incurs a Termination of Service by the Company or a
Subsidiary for Cause, the Optionee’s unexercised Option Shares, irrespective of
whether or not vested, shall be immediately forfeited.
     If the Optionee incurs a Termination of Service due to death or Disability,
the Optionee may exercise his or her unexercised and vested Option Shares for a
period of up one (1) year following the Optionee’s Termination of Service.
     If the Optionee incurs a Termination of Service for any reason other than
described in (a) or (b) above, the Optionee may exercise his or her unexercised
and vested Option Shares for a period of up ninety (90) days after the
Optionee’s Termination of Service.
     7. Notices. Any notice required or permitted under this Option Agreement
shall be deemed given when delivered personally, or when deposited in a United
States Post Office, postage prepaid, addressed, as appropriate, to the Optionee
either at the Optionee’s address set forth below or such other address as the
Optionee may designate in writing to the Company, or the Company: Attention:
Board of

 

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Directors/Corporate Secretary, at the Company’s address or such other address as
the Company may designate in writing to the Optionee.
     8. Withholding of Taxes. As a condition to the issuance of the Option
Shares, the Optionee shall (a) remit to the Company at the time of any exercise
of the Option any taxes required to be withheld by the Company under federal,
state or local laws as a result of the exercise of the Option; or (b) instruct
the Company to withhold in accordance with applicable law from any compensation
payable to the Optionee the taxes required to be held by the Company under
federal, state or local laws as a result of the exercise of the Option; or
(c) instruct the Company to withhold such number of shares as are necessary for
the fair market value of such shares to equal the amount of taxes required to be
withheld by the Company, under federal, state, or local laws as a result of the
exercise of the Option. The determination of the amount of any such withholding
shall be made by the Company.
     9. Disposition of Option Shares. It is understood that this Option is
intended to qualify as an “Incentive Stock Option” as defined in Section 422 of
the Code. Accordingly, the Optionee understands that in order to obtain the
benefits of an incentive stock option under Section 421 of the Code, no sale or
other disposition may be made of any Shares acquired upon exercise of the Option
within one (1) year after the day of the transfer of such Shares to the
Optionee, nor within two (2) years after the Grant Date of the Option. If the
Optionee disposes (whether by sale, exchange, gift, transfer or otherwise), of
any such Shares within said periods, the Optionee will notify the Company in
writing within ten (10) days after such disposition.
     10. Failure to Enforce Not a Waiver. The failure of the Company to enforce
at any time any provision of this Option Agreement shall in no way be construed
to be a waiver of such provision or of any other provision hereof.
     11. Incorporation of Plan. The Plan is hereby incorporated by reference and
made a part hereof, and the Option and this Option Agreement are subject to all
terms and conditions of the Plan.
     12. Amendments. This Option Agreement may be amended or modified at any
time by an instrument in writing signed by the parties hereto.
     13. Successors and Assigns. This Option Agreement shall inure to the
benefit of and be binding upon the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.

 

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     IN WITNESS WHEREOF, the parties have executed this Option Agreement on the
day and year first above written.

                  COMPANY:   ENERGY WEST, INCORPORATED
 
           
 
      By:    
 
           
 
           
 
      Title:    
 
           
 
                    The undersigned hereby accepts and agrees to all the terms
and provisions of the foregoing Option Agreement and to all the terms and
provisions of the Plan herein incorporated by reference.
 
           
 
  OPTIONEE: