Document:

EX-10.1

 

Exhibit 10.1

CINCINNATI FINANCIAL CORPORATION

RESTRICTED STOCK UNIT AGREEMENT

PERFORMANCE-BASED

[RECIPIENT NAME]

[RECIPIENT ADDRESS]

As of [Award Date], the Fair Market Value of the shares underlying this award was $                     .

     Cincinnati Financial Corporation (the “Company”) hereby grants to the associate
identified below (the “Participant”) a Restricted Stock Unit Award (the “Award”) under the
Company’s 2006 Stock Compensation Plan (the “Plan”) with respect to the number of Restricted Stock
Units (the “Units”) specified under the “Award Information” section below, all in accordance with
and subject to the provisions set forth in Part II — Terms and Conditions.

PART I. AWARD INFORMATION:

Participant Name:                                                            

Number of Units Awarded:                                                            

Award Date:                                                            , 20__

Vesting Criteria (when Units granted in the Award vest and shares are issued to the Participant):

	 	 	 
	Number of Shares	 	Vesting Date and Performance Target
	 
	 	 
	                     shs.

	 	On ___, 20___ if the sum of “operating income” for the three calendar years
ending December 31, 20___ equals or exceeds
___ percent of “operating income” for the
calendar year ending December 31, 20___, the last completed calendar year prior to the
Award Date.
	 
	 	 
	 

	 	For purposes of this agreement, the calculation for
“operating income,” shall not include the effects of capital
gains and losses, accounting changes, and losses attributable
to catastrophes which are assigned catastrophe numbers.

Beneficiary
Designation (Optional — see Part II, Section 8):   
               
              
              
               

THIS AWARD IS SUBJECT TO FORFEITURE AS PROVIDED IN THIS RESTRICTED STOCK UNIT AGREEMENT AND THE
PLAN.

     By accepting this Award, the Participant acknowledges the receipt of a copy of this Restricted
Stock Unit Agreement (including Part II — Terms and Conditions) and a copy of the Prospectus and
agrees to be bound by all the terms and provisions contained in them and in the Plan.

     IN WITNESS WHEREOF, this Restricted Stock Unit Agreement has been duly executed as of the
Award Date specified above.

	 	 	 	 	 	 	 
	 	 	CINCINNATI FINANCIAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	ACCEPTED:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

Participant

	 	 	 	 	 	 

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PART II. TERMS AND CONDITIONS

     1. Restricted Stock Units. Each Unit represents a hypothetical share of the Company’s Common
Stock (the “Shares”), and each Unit will at all times be equal in value to one Share. The Units
will be credited to the Participant in an account established for the Participant and maintained by
the Company’s stock transfer department. If and when Units vest as provided below, Shares in an
amount equal to the number of vested Units will automatically be issued to the Participant and will
be evidenced by a stock certificate or a book entry account maintained by the Company’s stock
transfer department for the Common Stock.

     2. Restrictions. Subject to Sections 3 and 4 below, the restrictions on the Units specified in
Part I — Award Information (the “Award Information”) shall lapse and such Units shall vest on the
vesting dates set forth in the Award Information (the “Vesting Date”), provided that: (a) the
Performance Target has been met; and (b) the Participant remains an employee of the Company (or a
subsidiary of the Company) during the entire period ending on and including the Vesting Date (the
“Restriction Period”) commencing on the Award Date set forth in the Award Information and ending on
the Vesting Date. Upon vesting, one Share shall be issued with respect to each vested Unit

     3. Participant Death, Disability or Retirement During Restriction Period. In the event of the
termination of the Participant’s employment with the Company (and with all subsidiaries of the
Company) prior to a Vesting Date due to (a) death or Disability, the attainment of the Performance
Target is waived, all restrictions on the Units shall lapse, and all of the Units shall become
fully vested on the date of death or Disability, or (b) the Participant reaching eligibility for
Normal Retirement, restriction 2(b) concerning continuous employment during the Restriction Period
is waived and shall lapse and the Units shall remain subject to all other vesting requirements and
restrictions including the Vesting Date. Upon vesting, one Share shall be issued with respect to
each such vested Unit.

     4. Other Termination of Employment During Restriction Period. If the Participant’s employment
with the Company (and with all subsidiaries of the Company) is terminated for any reason other than
death, Disability or Normal Retirement prior to the end of the Restriction Period, the Participant
shall forfeit all rights to any Units (and to the related Shares) as to which the Vesting Date has
not yet occurred. Notwithstanding the foregoing, the Compensation Committee of the Board of
Directors of the Company may, in its sole discretion, waive the restrictions on, and the vesting
requirements for, the Units.

     5. Shareholder Rights. The Participant shall not have the right to vote any Shares or to
receive any cash dividends payable with respect to any Shares, or otherwise have any rights as a
shareholder with respect to any Shares, unless and until the Shares have actually been issued to
the Participant hereunder upon the vesting of Units as provided in this Agreement.

     6. Transfer Restrictions. This Award and the Units (until they vest pursuant to the terms
hereof and Shares are issued with respect thereto) are non-transferable and may not be assigned,
hypothecated or otherwise pledged, except by will or the laws of descent and distribution, and
shall not be subject to execution, attachment or similar process. Upon any attempt to effect any
such disposition, or upon the levy of any such process, the Award shall immediately become null and
void and the Units shall be forfeited.

     7. Withholding Taxes. The Company is authorized to satisfy the actual minimum statutory
withholding taxes arising from the vesting of this Award, by deducting the number of Shares having
an aggregate value equal to the amount of withholding taxes due from the total number of Shares
that would otherwise be issuable upon any Units vesting or otherwise becoming subject to current
taxation. Shares deducted from this Award in satisfaction of actual minimum withholding tax
requirements shall be valued at the Fair Market Value of the Shares on the date as of which the
amount giving rise to the withholding requirement first became includible in the gross income of
the Participant under applicable tax laws.

     8. Death of Participant. If any of the Units shall vest upon the death of the Participant, the
Shares issued as a result of such vesting shall be registered in the name of the estate of the
Participant except that, if the Participant has designated a beneficiary where indicated in the
Award Information, the Shares shall be registered in the name of the designated beneficiary.

     9. Other Terms and Provisions. The terms and provisions of the Plan (a copy of which will be
furnished to the Participant upon written request) are incorporated herein by reference. To the
extent any provision

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of this Award is inconsistent or in conflict with any term or provision of the Plan, the Plan
shall govern. For purposes of this Agreement, (a) the term “Disability” means permanent and total
disability as determined under procedures established by the Company from time to time, and (b) the
term “Normal Retirement” means retirement from active employment with at least 35 years of
continuous service with the Company or its subsidiaries or otherwise under a retirement plan of the
Company or any subsidiary or under an employment contract with any of them on or after the date
specified as the normal retirement age in the pension plan or employment contract, if any, under
which the Participant is at that time accruing retirement benefits for his or her current service
(or, in the absence of a specified normal retirement age, the age at which retirement benefits
under such plan or contract become payable without reduction for early commencement and without any
requirement of a particular period of prior service). In any case in which (i) the meaning of
“Normal Retirement” is uncertain under the definition contained in the prior sentence or (ii) a
termination of employment at or after age 65 would not otherwise constitute “Normal Retirement,” a
termination of the Participant’s employment shall be treated as a “Normal Retirement” under such
circumstances as the Committee, in its sole discretion, deems equivalent to retirement. In any
case in which the existence of a “Disability” is uncertain under the applicable definition and
procedures hereunder, a final and binding determination shall be made by the Committee in its sole
discretion.

3EX-10.1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT made and entered into as of the 16th day of November, 2007, by
and between ENERGY WEST, INCORPORATED (the “Company”), a Montana corporation, and JAMES W. GARRETT,
(the “Executive”);

     WHEREAS, the Company desires to secure the employment of the Executive as its President and
Chief Operating Officer;

     WHEREAS, the Executive is willing to commit himself to be employed by the Company on the terms
and conditions herein set forth; 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 December 1, 2007 (the
“Effective Date”) and shall continue until November 30, 2008 (the “Employment Period”).

     (c) The Employment Period shall be extended beyond the Employment Period only upon the mutual
written agreement of the Company and Executive.

     2. Duties and Powers of Executive.

     (a) Position; Location. Initially, the Executive shall serve as President and Chief
Operating Officer of the Company and shall report to the Chief Executive Officer of the Company
(“CEO”) and the Board of Directors of the Company (the “Board”) as applicable, references to the
Board include duly constituted committees of the Board within the scope of their respective areas
of responsibility. The Executive shall perform such duties and services appertaining to such
position as reasonably directed by either the CEO or 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 have the primary management responsibility in connection with
the selection, retention and termination of employees of the Company and outside consultants,
contractors, professionals and service providers to the Company, subject to the overall authority
of the CEO and the Board. The

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Executive shall use his reasonable best efforts to carry out such duties faithfully and
efficiently. The Executive’s services shall be performed primarily at the Company’s offices located
in the Mentor, Ohio, provided however, that the Executive will be required from time to time to
travel to and from the Company’s other operations located within the United States.

     (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
his 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 as soon as is practicable shall be nominated for
election to the Board.

     3. Compensation. The Executive shall receive the following compensation for his
services hereunder to the Company:

     (a) Salary. The Executive’s 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 $170,000.

     (b) Incentive Compensation. During the Employment Period, the Executive shall be
eligible to receive an annual cash bonus under an incentive plan to be developed by the
Compensation Committee of the Board (“Incentive Plan”), provided, however, the Company has the
right to modify, eliminate, or add to its short-term and long-term incentive compensation plans at
any time in its sole discretion. Any such bonus will be payable upon the achievement of performance
goals determined by mutual agreement of the Board and the Executive. Written performance goals
under any such Board approved Incentive Plan shall be determined within the first sixty (60) days
of the Effective Date.

     (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 (subject to any generally applicable waiting periods) 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. 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 10,000 shares
of Company common stock on the Effective Date, pursuant to the terms of the Company’s 2002 Stock
Option Plan a copy of which is attached as Exhibit “A”, which Stock Option Plan shall be
executed simultaneously with this Employment Agreement (the “Option Plan”). Twenty-five

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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 each such anniversary date. Provided Executive’s employment is
extended beyond the Employment Period, the Company shall grant the Executive’s options for not less
than 10,000 shares of Company common stock on the first and second anniversaries of the Effective
Date with ratable vesting of not more than three years, subject to any limitations under the Option
Plan. Option grants following the second anniversary of the Effective Date shall be made in the
discretion of the Board. 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 a company car, four (4) weeks vacation
during the Employment Period, 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; provided, however, the Company reserves the right to modify, eliminate or add to its
fringe benefits at any time in its sole discretion. Unused vacation time shall not be
subject to any accrual and must be used during each Employment Period.

     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 President and
Chief Operating 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 anyone-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, (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 Employment Period, 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.

     5. Obligations of the Company Upon Termination During the Employment Period.

     (a) Obligations Upon Termination for any Cause or Resignation by Executive. If,
during the Employment Period, the Executive’s employment shall terminate for cause or the
resignation of the Executive (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 cash bonus or other incentive awards
previously approved by the Board and prorated to the date of Termination, 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 Without Cause. In the event of an employment
termination by the Company during the Employment Period without Cause, in addition to the amounts
and benefits set out in Section 5(a), the Company shall pay to the Executive as and for severance
compensation the Exhibit “A” computation of severance compensation for the applicable
periods. In addition to the severance compensation, Executive shall receive full vesting of any
unvested options with such options to be exercisable for the remaining term of the option or one
year from the date of Termination, whichever occurs first. All severance compensation due
hereunder shall be contingent upon the Executive and Company executing a mutually acceptable
employment termination agreement and mutual release, which such agreement shall not in any manner
limit the compensation due Executive under this Section 5(b). A nonrenewal of employment shall be
deemed a termination without cause for purposes of receiving the applicable Exhibit “A”
severance compensation and the other benefits set forth in this paragraph 5(b).

     (c) Termination Following a Change of Control. In the event that Executive’s
employment is terminated by the Company due to a change of control or Executive terminates his
employment within 12 months of a change of control of the Company because his duties were
materially changed and/or he is required to relocate his residence out of the greater Cleveland
area and in addition to any amounts that Executive is entitled to receive under this Agreement,
Executive shall be entitled to receive the compensation benefits as set forth in Exhibit
“A”.

     For purposes of this Agreement, a “Change of Control” will be deemed to have taken place upon
the occurrence of any of the following:

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     (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”)) (each, a “Person”) is or becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
Person shall be deemed to have beneficial ownership of all shares that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage of time), directly
or indirectly, of 51% or more of the voting power of the total outstanding securities of the
Company;

     (ii) during any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of the Company (together with any new directors whose
election to such Board of Directors, or whose nomination for election by the shareholders of the
Company, was approved by a vote of 66 2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of such Board of Directors of
the Company then in office;

     (iii) the consummation of a plan for the liquidation or dissolution of the Company; or

     (iv) the consummation of the sale or other disposition (including by merger, consolidation or
otherwise) of all or substantially all of the assets of the Company to any Person as an entirety or
substantially as an entirety in one transaction or a series of related transactions.

     Notwithstanding the foregoing, a Change of Control of the Company shall not be deemed to have
occurred as a result of the consummation of (x) any transaction or a series of related transactions
immediately following in which the holders of the outstanding shares of the Company immediately
prior to such transaction or series of transactions continue to have substantially the same
proportionate ownership in an entity which owns all or substantially all of the assets of the
Company directly or indirectly immediately following such transaction or series of transactions;
(y) any transaction or a series of related transactions approved by the Board of Directors in
accordance with its related party transaction policy to which a member of the Board of Directors or
a Person affiliated with a member of the Board of Directors is a party, other than a transaction or
series of related transactions in which the shareholders of the Company are entitled to participate
and such member of the Board of Directors or a Person affiliated with such member of the Board of
Directors is participating as a shareholder of the Company; (z) any underwritten public offering of
the securities of the Company; (x)(x) any transaction or series of transactions that involve an
acquisition of more than 51% of the shares by Richard M. Osborne or an affiliate of Richard M.
Osborne.

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     (d) Suspension. The Company may, in its sole discretion, suspend the Executive with
or without pay for any act or omission that may otherwise constitute a basis for termination of
this Agreement by the Company, or that is otherwise in violation of the Company’s policies,
practices, procedures, rules or regulations and/or this Agreement. Such suspension may be in lieu
of termination or as an interim action pending a final decision by the Company as to whether
termination of the Executive’s employment is appropriate.

     6. Full Settlement; Mitigation. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts (including amounts
for damages for breach) payable to the Executive under any of the provisions of this Agreement and,
except as provided in Section 5(a), such amounts shall not be reduced whether or not the Executive
obtains other employment.

     7. Confidential Information. The Executive agrees not to disclose during the term
hereof or thereafter any of the Company’s confidential or trade secret information, except as
required by law. The Executive recognizes that the Executive shall be employed in a sensitive
position in which, as a result of a relationship of trust and confidence, the Executive will have
access to trade secrets and other highly confidential and sensitive information. The Executive
further recognizes that the knowledge and information acquired by the Executive concerning the
Company’s materials regarding employer/employee contracts, customers, pricing schedules,
advertising and interviewing techniques, manuals, systems, procedures and forms represent the most
vital part of the Company’s business and constitute by their very nature, trade secrets and
confidential knowledge and information. The Executive hereby stipulates and agrees that all such
information and materials shall be considered trade secrets and confidential information. If it is
at any time determined that any of the information or materials identified in this paragraph 8 are,
in whole or in part, not entitled to protection as trade secrets, they shall nevertheless be
considered and treated as confidential information in the same manner as trade secrets, to the
maximum extent permitted by law. The Executive further agrees that all such trade secrets or other
confidential information, and any copy, extract or summary thereof, whether originated or prepared
by or for the Executive or otherwise coming into the Executive’s knowledge, possession, custody, or
control, shall be and remain the exclusive property of the Company.

     8. Conflict of Interest. The Executive acknowledges and agrees that he owes a
fiduciary duty of loyalty, fidelity and allegiance to act at all times in the best interests of the
Company and to do no act which would injure the Company’s business, its interests or its
reputation. It is agreed that any direct or indirect interest in, connection with, or benefit from
any outside activities, particularly commercial activities, which interest might in any way
adversely affect the Company or any of its affiliates, involves a possible conflict of interest. In
keeping with the Executive’s fiduciary duty to the Company, the Executive agrees that he shall not
knowingly become involved in a conflict of interest with the Company affiliates, or upon discovery
thereof, allow such a conflict to continue. Moreover, the Executive agrees that he shall disclose
to the Board any facts which might involve such a conflict of interest that has not been approved
by the Board. The Executive and the Company recognize that it is impossible to provide an
exhaustive list of actions or interests which constitute a conflict of interest. Moreover, the
Executive and the Company recognize there are many borderline situations. In some instances, full
disclosure of facts by the Executive to the Board may be all that is necessary to

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enable the
Executive, the Company or its affiliates to protect its interests. In others, if no improper
motivation appears to exist and the interests of the Company or its affiliates have not suffered,
prompt elimination of the outside interest will suffice. In still others, it may be necessary for
the Company to terminate the employment relationship. The Company and the Executive agree that the
Company’s determination as to whether a conflict of interest exists shall be conclusive. The
Company reserves the right to take such action as, in its judgment, will end the conflict.

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     9. Nonsolicitation. During the period of his business affiliation with, or employment
by, the Company and for a period of two years after the Executive’s termination of employment for
any reason whatsoever, the Executive will not directly or indirectly, individually or as a
consultant to, or as employee, officer, director, stockholder, partner or other owner or
participant in any business entity other than the Company, solicit. hire, or endeavor to entice
away from the Company, or otherwise materially interfere with the business relationship of the
Company with, (i) any person who is, or was within the 12-month period immediately prior to the
termination of the Executive’s business affiliation with or employment by the Company, employed by
or associated with the Company as a Consultant or (ii) any person or entity who is, or was within
the 12-month period immediately prior to the termination of the Executive’s business affiliation
with or employment by the Company, a customer or client of the Company.

     10. Successors.

     (a) Assignment by Executive. This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by the Executive otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal representatives. Without the prior written consent of the
Executive, no assignment of this Agreement by the Company or any successor of the Company shall
relieve the assignor of its financial responsibility for performance of the Company’s obligations
hereunder.

     (b) Successors and Assigns of Company. This Agreement shall inure to the benefit of
and be binding upon the Company, its successors and assigns.

     11. Miscellaneous.

     (a) Release and Covenant Not to Sue. Notwithstanding anything contained in this
Agreement to the contrary, Executive shall not be entitled to receive any of the Exhibit
“A” Severance Compensation Benefits unless Executive at the time of any employment termination
for which Severance Compensation Benefits would be due and owing, executes a Release and Covenant
Not to Sue upon terms and conditions acceptable to the Company.

     (b) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio, without reference to its principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended, modified, repealed, waived, extended or discharged except by an
agreement in writing signed by the party against whom enforcement of such amendment, modification,
repeal, waiver, extension or discharge is sought. No person, other than pursuant to a resolution of
the Board or a committee thereof, shall have authority on behalf of the Company to agree to amend,
modify, repeal, waive, extend or discharge any provision of this Agreement or anything in reference
thereto.

     (b) Notices. All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified mail,
return-receipt

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requested, postage prepaid, addressed, in either case, at the Company’s headquarters or to
such other address as either party shall have furnished to the other in writing in accordance
herewith. Notices and communications shall be effective when actually received by the addressee.

     (d) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

     (e) Withholding. The Company may withhold from any amounts payable under this Agreement such
federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or
regulation.

     (f) No Waiver. The Executive’s or the Company’s failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, shall not be deemed to be a
waiver of any other provision or right contained in this Agreement.

     (g) Entire Agreement. This instrument contains the entire agreement of the
Executive, the Company or any predecessor or subsidiary thereof with respect to the subject matter
hereof, and may be modified only by a writing signed by the parties hereto. All promises,
representations, understandings, arrangements and prior agreements, are merged herein and
superseded hereby. Any agreement with regard to severance benefits entered into after the Effective
Date shall be effective only if it expressly references this Agreement.

     In the event of any difference between the terms of this Agreement and the terms of any
Company benefit, option or other plan or policy, the terms of this Agreement shall control, unless
such terms violate applicable law, or would require shareholder approval or would cause the Company
to be in material breach of its obligations under such other benefit, option or other plan or
policy. The Company shall not amend any benefit, option or other plan or policy in a manner that
would cause the agreements set forth herein to be nullified, provided that nothing herein shall
limit the Company’s discretion in establishing, maintaining and amending its generally applicable
welfare benefit programs such as health coverage.

     (h) Indemnification. The Company shall indemnify the Executive pursuant to the
Company’s bylaws and the articles of incorporation. In addition, the Company shall maintain
directors and officers liability insurance coverage covering the Executive during the term of
employment and thereafter, so long as the Company elects to continue such coverage for its active
officers and directors.

     (i) Survivorship. The respective rights and obligations of the parties hereunder
shall survive any termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.

     (j) Headings. All descriptive headings of sections and paragraphs in this Agreement
are intended solely for convenience, and no provision of this Agreement is to be construed by
reference to the heading of any section or paragraph.

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     (k) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.

     (l) Construction. The parties acknowledge that this Agreement is the result of arm’s
length negotiations between sophisticated parties each afforded representation by legal counsel.
Each and every provision of this Agreement shall be construed as though both parties participated
equally in the drafting of same, and any rule of construction that a document shall be construed
against the drafting party shall not be applicable to this Agreement.

     (m) Executive acknowledges that he has been given the right and time to have this Agreement
reviewed by his own independent legal counsel.

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

	 	 	 	 	 
	 	EXECUTIVE:

 	 
	 	/s/ James W. Garrett
 	 
	 	JAMES W. GARRATT 	 
	 	 	 
	 	ENERGY WEST INCORPORATED

 	 
	 	By:  	/s/ Thomas J. Smith
 	 
	 	 	Title:  	Vice President and Chief Financial Officer 	 

10

 

	 	 	 	 	 

EXHIBIT “A”

Severance Compensation Benefits for Termination Under Sections 5(b) and 5(c)*

	1.	 	If Executive is terminated during the first (1st) month of his Employment,
Executive shall receive 11/12 of his Annual Base Salary.

	2.	 	If Executive is terminated during the second (2nd) month of his Employment,
Executive shall receive 10/12 of his Annual Base Salary.

	3.	 	If Executive is terminated during the third (3rd) month of his Employment,
Executive shall receive 9/12 of his Annual Base Salary.

	4.	 	If Executive is terminated during the fourth (4th) month of his Employment,
Executive shall receive 8/12 of his Annual Base Salary.

	5.	 	If Executive is terminated during the fifth (5th) month of his Employment,
Executive shall receive 7/12 of his Annual Base Salary.

	6.	 	If Executive is terminated during the sixth (6th) month of his Employment or
at anytime after six (6) months, Executive shall receive 1/2 of his Annual Base Salary.

	7.	 	If Executive’s Employment is not extended beyond the Employment Period, Executive shall
receive 1/2 of his Annual Base Salary.

	8.	 	If Executive’s employment is terminated due to a Section 5(c) Change of Control,
Executive shall be entitled to receive 100% of his Annual Base Salary as his severance
compensation.

 

			
	*	 	The severance compensation is in addition to the benefits due Executive under 5(a), 5(b) and/or
5(c) of his Employment Agreement.

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