**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”), theCompensation Committee has determined that the Optionee is to be granted a Non-Qualified StockOption (the “Option”) to purchase shares of the Company’s common stock, on the terms and conditionsset 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 aprice of [___] per share (the “Option Price”).     2. Period of Option. The term of the Option and of this Option Agreement shallcommence on the date hereof (the “Grant Date”) and terminate upon the *earlier of*(i) the expirationof ___years from the Grant Date, or (ii) the occurrence of one of the events set forth underSection 6.4.1 of the Plan. Upon termination of the Option, all rights of the Optionee hereundershall 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 timeor from time to time up to the expiration of the stated term of such Option as set forth underSection 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 aSubsidiary, the Option Shares granted hereunder shall vest as follows:**     **(a)**                    **percent (___%) of the Option Shares (rounded down to the nearest wholenumber of shares) on ___;**     **(b) An additional**                    **percent (___%) of the Option Shares (rounded down to thenearest 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 notalready vested, in the event of a Change in Control (subject to the limitations set forth in thePlan).**
 

 
     **The right of the Optionee to purchase shares with respect to which this Option has becomevested as herein provided may be exercised in whole or in part at any time or from time to time upto the expiration of the stated term of such Option as set forth under Section 2 above*****[, but in noevent 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 aSubsidiary, the Option Shares granted hereunder shall vest on**                    **. Notwithstanding theforegoing, the Option Shares shall immediately vest, to the extent not already vested, in the eventof 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 becomevested as herein provided may be exercised in whole or in part at any time or from time to time upto the expiration of the stated term of such Option as set forth under Section 2 above*****[, but in noevent earlier than ___months following the Grant Date].***     4. Non-transferability of Option. The Option and this Option Agreement shall not betransferable otherwise than by will or by laws of descent and distribution; and the Option may beexercised, during the lifetime of the Optionee, only by the Optionee or by the Optionee’s legalrepresentative.     5. Exercise of Option. The Option shall be exercised in the following manner: theOptionee, or the person or persons having the right to exercise the Option upon the death orDisability of the Optionee, shall deliver to the Company written notice specifying the number ofvested 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 theexercise of the Option, and the stock purchased shall thereupon be promptly delivered. TheOptionee will not be deemed to be a holder of any shares pursuant to exercise of the Option untilthe date of issuance to the Optionee of a stock certificate for such shares and until the sharesare paid in full.     6. Termination of Service.     If the Optionee incurs a Termination of Service by the Company or a Subsidiary for Cause, theOptionee’s unexercised Option Shares, irrespective of whether or not vested, shall be immediatelyforfeited.     If the Optionee incurs a Termination of Service due to death or Disability, the Optionee mayexercise his or her unexercised and vested Option Shares for a period of up one (1) year followingthe 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 periodof up ninety (90) days after the Optionee’s Termination of Service.     7. Notices. Any notice required or permitted under this Option Agreement shall bedeemed given when delivered personally, or when deposited in a United States Post Office, postageprepaid, addressed, as appropriate, to the Optionee either at the Optionee’s address set forthbelow or such other address as the Optionee may designate in writing to the Company, or theCompany: Attention: Board of
 

 
Directors/Corporate Secretary, at the Company’s address or such other address as the Companymay designate in writing to the Optionee.     8. Withholding of Taxes. As a condition to the issuance of the Option Shares, theOptionee shall (a) remit to the Company at the time of any exercise of the Option any taxesrequired to be withheld by the Company under federal, state or local laws as a result of theexercise of the Option; or (b) instruct the Company to withhold in accordance with applicable lawfrom any compensation payable to the Optionee the taxes required to be held by the Company underfederal, state or local laws as a result of the exercise of the Option; or (c) instruct the Companyto withhold such number of shares as are necessary for the fair market value of such shares toequal the amount of taxes required to be withheld by the Company, under federal, state, or locallaws as a result of the exercise of the Option. The determination of the amount of any suchwithholding shall be made by the Company.     9. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any timeany provision of this Option Agreement shall in no way be construed to be a waiver of suchprovision or of any other provision hereof.     10. Incorporation of Plan. The Plan is hereby incorporated by reference and made apart hereof, and the Option and this Option Agreement are subject to all terms and conditions ofthe Plan.     11. Amendments. This Option Agreement may be amended or modified at any time by aninstrument in writing signed by the parties hereto.     12. Successors and Assigns. This Option Agreement shall inure to the benefit of andbe binding upon the heirs, legatees, legal representatives, successors and assigns of the partieshereto.     IN WITNESS WHEREOF, the parties have executed this Option Agreement on the day and year firstabove written.         COMPANY: ENERGY WEST, INCORPORATED           By:                    Title:                    The undersigned hereby accepts and agrees to all theterms and provisions of the foregoing OptionAgreement and to all the terms and provisions of thePlan herein incorporated by reference.         OPTIONEE:         
 

 
**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”), theCompensation 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 setforth herein. It is intended that the Option shall constitute an “Incentive Stock Option” withinthe meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Anycapitalized 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 aprice of [___] per share (the “Option Price”).     2. Period of Option. The term of the Option and of this Option Agreement shallcommence on the date hereof (the “Grant Date”) and terminate upon the *earlier of*(i) the expirationof                      years from the Grant Date, or (ii) the occurrence of one of the events set forth underSection 6.4.1 of the Plan. Upon termination of the Option, all rights of the Optionee hereundershall 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 timeor from time to time up to the expiration of the stated term of such Option as set forth underSection 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 aSubsidiary, the Option Shares granted hereunder shall vest as follows:**     **(a) **                    **percent (___%) of the Option Shares (rounded down to the nearest wholenumber of shares) on**                    **;**     **(b) An additional**                    **percent (___%) of the Option Shares (rounded down to thenearest 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 notalready vested, in the event of a Change in Control (subject to the limitations set forth in thePlan).**
 

 
     **The right of the Optionee to purchase shares with respect to which this Option has becomevested as herein provided may be exercised in whole or in part at any time or from time to time upto the expiration of the stated term of such Option as set forth under Section 2 above*****[, but in noevent 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 aSubsidiary, the Option Shares granted hereunder shall vest on**                    **. Notwithstanding theforegoing, the Option Shares shall immediately vest, to the extent not already vested, in the eventof 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 becomevested as herein provided may be exercised in whole or in part at any time or from time to time upto the expiration of the stated term of such Option as set forth under Section 2 above*****[, but in noevent earlier than ___months following the Grant Date].***     4. Non-transferability of Option. The Option and this Option Agreement shall not betransferable otherwise than by will or by laws of descent and distribution; and the Option may beexercised, during the lifetime of the Optionee, only by the Optionee or by the Optionee’s legalrepresentative.     5. Exercise of Option. The Option shall be exercised in the following manner: theOptionee, or the person or persons having the right to exercise the Option upon the death orDisability of the Optionee, shall deliver to the Company written notice specifying the number ofvested 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 theexercise of the Option, and the stock purchased shall thereupon be promptly delivered. TheOptionee will not be deemed to be a holder of any shares pursuant to exercise of the Option untilthe date of issuance to the Optionee of a stock certificate for such shares and until the sharesare paid in full.     6. Termination of Service.     If the Optionee incurs a Termination of Service by the Company or a Subsidiary for Cause, theOptionee’s unexercised Option Shares, irrespective of whether or not vested, shall be immediatelyforfeited.     If the Optionee incurs a Termination of Service due to death or Disability, the Optionee mayexercise his or her unexercised and vested Option Shares for a period of up one (1) year followingthe 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 periodof up ninety (90) days after the Optionee’s Termination of Service.     7. Notices. Any notice required or permitted under this Option Agreement shall bedeemed given when delivered personally, or when deposited in a United States Post Office, postageprepaid, addressed, as appropriate, to the Optionee either at the Optionee’s address set forthbelow or such other address as the Optionee may designate in writing to the Company, or theCompany: Attention: Board of
 

 
Directors/Corporate Secretary, at the Company’s address or such other address as the Companymay designate in writing to the Optionee.     8. Withholding of Taxes. As a condition to the issuance of the Option Shares, theOptionee shall (a) remit to the Company at the time of any exercise of the Option any taxesrequired to be withheld by the Company under federal, state or local laws as a result of theexercise of the Option; or (b) instruct the Company to withhold in accordance with applicable lawfrom any compensation payable to the Optionee the taxes required to be held by the Company underfederal, state or local laws as a result of the exercise of the Option; or (c) instruct the Companyto withhold such number of shares as are necessary for the fair market value of such shares toequal the amount of taxes required to be withheld by the Company, under federal, state, or locallaws as a result of the exercise of the Option. The determination of the amount of any suchwithholding shall be made by the Company.     9. Disposition of Option Shares. It is understood that this Option is intended toqualify as an “Incentive Stock Option” as defined in Section 422 of the Code. Accordingly, theOptionee understands that in order to obtain the benefits of an incentive stock option underSection 421 of the Code, no sale or other disposition may be made of any Shares acquired uponexercise of the Option within one (1) year after the day of the transfer of such Shares to theOptionee, 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 anytime any provision of this Option Agreement shall in no way be construed to be a waiver of suchprovision or of any other provision hereof.     11. Incorporation of Plan. The Plan is hereby incorporated by reference and made apart hereof, and the Option and this Option Agreement are subject to all terms and conditions ofthe Plan.     12. Amendments. This Option Agreement may be amended or modified at any time by aninstrument in writing signed by the parties hereto.     13. Successors and Assigns. This Option Agreement shall inure to the benefit of andbe binding upon the heirs, legatees, legal representatives, successors and assigns of the partieshereto.
 

 
     IN WITNESS WHEREOF, the parties have executed this Option Agreement on the day and year firstabove written.         COMPANY: ENERGY WEST, INCORPORATED           By:                    Title:                    The undersigned hereby accepts and agrees to all theterms and provisions of the foregoing OptionAgreement and to all the terms and provisions of thePlan herein incorporated by reference.         OPTIONEE: