**Exhibit 10 (b)**

Name

Address1

Address 2

Dear                         :

The Empire District Electric Company

2006 Stock Incentive Plan(the “Plan”)

Form of Notice ofNon-Qualified Stock Option Award

This is to advise you that effective as of [             ](the “Grant Date”), The Empire District Electric Company (“the Company”) hasgranted to you an option (“Option”) under the Plan consisting of the right topurchase                       shares of Common Stock of the Company (“Stock”) at an Option price of [             ]per share, subject to the conditions and terms herein stated and the applicableterms and conditions of the Plan (copy attached).

ThisOption is not intended to be, and will not be treated as, an incentive stockoption within the meaning of Section 422 of the Internal Revenue Code of 1986,as amended.

**1.             Exercisability.** This Option shall vest and become exercisable on the earlier of thethird anniversary of the Grant Date or the date of a Change in Control of theCompany.  Thereafter, this Option shallremain exercisable until the tenth anniversary of the Grant Date unless soonerterminated pursuant to Section 2 below.

**2.             Termination ofEmployment.**  In the eventof the termination of your employment with the Company and its Subsidiaries byreason of your death, Retirement, Disability, involuntary termination by theCompany and its Subsidiaries without Cause or voluntary termination by you withthe consent of the Committee, this Option, if not already exercisable, shallbecome exercisable on the date determined pursuant to the first sentence ofSection 1 above and shall remain exercisable until the tenth anniversary of theGrant Date.  A termination of employmentfor any of the reasons specified in the preceding sentence is hereinafterreferred to as a “Designated Termination.” In the event of the involuntary termination of your employment by theCompany and its Subsidiaries for Cause, this Option shall terminate immediatelyupon such termination of employment.  Inthe event of the voluntary termination of your employment by you without theconsent of the Committee, this Option shall terminate on the 30th day followingsuch termination of employment, and shall be exercisable prior to suchtermination only to the extent it has become exercisable, or becomesexercisable during that 30-day period pursuant to the first sentence ofSection 1 above.

**3.             Exercise**.  After this Option becomes exercisablepursuant to Section 1 above and during the period that this Option remainsexercisable pursuant to Sections 1 and 2 above, this****Optionmay

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be exercised in whole orin part by filing a written notice with the Company.  The exercise notice must specify the numberof shares of Stock which you elect to purchase and must be accompanied bypayment of the Option price (including any applicable withholding taxes) forsuch shares of Stock indicated by your election.  Payment of the Option price (and anyapplicable withholding taxes) shall be made in cash or shares of Stock having aFair Market Value (as defined in the Plan) on the date of the exercise of thisOption equal to the Option price payable under this Option or a combination ofcash and shares of Stock, and no shares of Stock shall be issued upon exerciseof this Option until full payment has been made therefore.

4.             **Heirs andSuccessors. **This Award shallbe binding upon, and inure to the benefit of, the Company and its successorsand assigns, and upon any person acquiring, whether by merger, consolidation,purchase of assets or otherwise, all or substantially all of the Company’sassets and business.  If any of yourrights or benefits distributable to you under this Award have not beenexercised or distributed, respectively, at the time of your death, such rightsshall be exercisable by your Designated Beneficiary, and such benefits shall bedistributed to your Designated Beneficiary, in accordance with the provisionsof this Award and the Plan.  The “DesignatedBeneficiary” shall be the beneficiary or beneficiaries designated by you in awriting filed with the Committee in such form and at such time as the Committeeshall require.  If you are deceased andfailed to designate a beneficiary, or if the Designated Beneficiary does notsurvive you, any rights that would have been exercisable by you and any benefitsdistributable to you shall be exercised by or distributed to the legalrepresentative of your estate.  If youare deceased and have designated a beneficiary and the Designated Beneficiarysurvives you but dies before the Designated Beneficiary’s exercise of allrights under this Award or before the complete distribution of benefits to theDesignated Beneficiary under this Award, then any rights that would have beenexercisable by the Designated Beneficiary shall be exercised by the legalrepresentative of the estate of the Designated Beneficiary, and any benefitsdistributable to the Designated Beneficiary shall be distributed to the legalrepresentative of the estate of the Designated Beneficiary.

5.             **Administration. **The authority to manage andcontrol the operation and administration of this Award shall be vested in theCommittee identified in the Plan, and the Committee shall have all of thepowers with respect to this Award that it has with respect to the Plan.  Any interpretation of this Award by the Committeeand any decision made by it with respect to this Award are final and binding onall persons.

6.             **Amendment**.  This Award may be amended by writtenagreement between you and the Company, without the consent of any other person.

7.             **Nontransferability. **This Award shall not betransferable except by will or the laws of descent and distribution or bybeneficiary designation in accordance with Section 5 above and shall beexercisable during your lifetime only by you.

8.             **Taxes. **The Company shall be entitled towithhold the amount of any withholding tax payable with respect to the Optionand to sell such number of shares of Stock as may be necessary to produce theamount so required to be withheld, unless the recipient supplies to the Companycash in the amount requested by the Company for the purpose.

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9.             **Employee andShareholder Status. **ThisAward does not constitute a contract of continued service and does not give youthe right to be retained as an employee of the Company or any of itsSubsidiaries.  This Award does not conferupon you or any other holder thereof any right as a shareholder of the Companyprior to the issuance of shares of Stock pursuant to the exercise of theOption.

10.           **Plan Governs**.  Notwithstanding anything in this Award to thecontrary, the terms of this Award shall be subject to the terms of the Plan.

11.           **Rules Relating toTermination of Employment**.** **For purposes of this Award, thedate of termination of your employment shall be the first day occurring on orafter the Grant Date on which you are not employed by the Company or anySubsidiary, regardless of the reason for the termination of employment; providedthat a termination of employment shall not be deemed to occur by reason of atransfer of you between the Company and a Subsidiary or between twoSubsidiaries; and further provided that your employment shall not be consideredterminated while you are on a leave of absence from the Company or a Subsidiaryapproved by your employer.  If, as a resultof a sale or other transaction, your employer ceases to be a Subsidiary (andyour employer is or becomes an entity that is separate from the Company), andyou are not, at the end of the 30-day period following the transaction,employed by the Company or an entity that is then a Subsidiary, then, theoccurrence of such transaction shall be treated as the date of termination ofyour employment caused by you being discharged by the employer.

12.           **Definitions**.  For purposes of this Award, the terms used inthis Award shall have the following meanings:

**(i)                            Cause.**  A termination of employment for “Cause” meansany termination of your employment by the Company or any of its Subsidiariesfor (i) serious, willful misconduct in respect of your obligations to theCompany or its Subsidiaries, which has caused demonstrable and serious injuryto the Company or any of its Subsidiaries, monetary or otherwise, as evidencedby a determination in a binding and final judgment, order or decree of a courtor administrative agency of competent jurisdiction, in effect after exhaustionor lapse of all rights of appeal, in an action, suit or proceeding, whethercivil, criminal, administrative or investigative; (ii) con­viction of a felony,which has caused demonstrable and serious injury to the Company or any of its Subsidiaries,monetary or otherwise, as evidenced by a binding and final judgment, order, ordecree of a court of competent jurisdiction, in effect after exhaustion orlapse of all rights of appeal; or (iii) your willful and continual failure tosubstantially perform your duties for the Company or any of its Subsidiaries(other than resulting from your incapacity due to physical or mental illness)which failure continued for a period of at least thirty (30) days after awritten notice of demand for substantial performance has been delivered to youspecifying the manner in which you have failed to substantially perform.

**(ii)                           Changein Control.**  A “Changein Control” of the Company shall mean “a change in the ownership or effectivecontrol” of the Company, or “in the ownership of a substantial portion of theassets” of the Company, within the meaning of Section 409A of the InternalRevenue Code of 1986, as amended, and Treasury regulations and Internal RevenueService guidance thereunder.

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(iii)                          **Disability.**** **Exceptas otherwise provided by the Committee, “Disability” means the determination bythe Committee, in its sole discretion, that a permanent and total disability****Notice of Non-exists in accordance with uniform andnon-discriminatory standards adopted by the Committee from time to time.

(iv)                          **Retirement.**  “Retirement” means your retirement on an “EarlyRetirement Date” or on or after your “Normal Retirement Date,” as those termsare defined in The Empire District Electric Company Employees’ Retirement Plan.

(v)**                           Voting Securities.**  “Voting Securities” means any securitieswhich carry the right to vote generally in the election of directors.

(vi)**                          Plan Definitions.**  Except where the context clearly implies orindicates the contrary, a word, term, or phrase used in the Plan is similarlyused in this Award.

Please acknowledge receipt of this Notice of Awardby signing and returning to the Secretary of the Company the enclosed copythereof, together with a completed and signed beneficiary designation form.
|                                                      | Very truly yours,              |
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|                                                 | Chairman of the Plan Committee |
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| Receipt of the  foregoing Notice of Non-Qualified    |                           |
| Stock Option  Award is hereby acknowledged.          |                           |
| My signed  beneficiary designation form is attached. |                           |
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