Document:

EX-10.2

 

Exhibit 10.2

NONCOMPETITION AND NONDISCLOSURE AGREEMENT

     This Noncompetition, Nondisclosure and Nonsolicitation Agreement (this “Agreement”) is made
and entered into as of this 18th day of December, 2007, by and among ENERGY WEST,
INCORPORATED, a Montana corporation (“Buyer”), and DAN F. WHETSTONE a/k/a DANIEL F. WHETSTONE, an
individual residing in Cut Bank, Montana (“DFW”).

Background

     DFW owns five thousand nine hundred thirty-nine (5,939) shares (the “Whetstone
Shares”) of the common stock of Cut Bank Gas Company, Inc. (the “Company”), which constitute
approximately 65.762% of the issued and outstanding shares of capital stock of the Company. DFW is
and has been an employee of the Company for 37 years and has served as its President since 1979.
Currently, his services are being provided pursuant to an Employment Agreement, dated December 20,
2006, for term ending December 31, 2013, a copy of which has been provided to Buyer. Concurrently
with the execution and delivery of this Agreement, Buyer is purchasing the Whetstone Shares from
DFW pursuant to the terms and conditions of a Stock Purchase Agreement, dated as of the date
hereof, by and between Buyer, DFW and certain other shareholders of the Company who are selling
his/her shares of the Company to Buyer (the “Purchase Agreement”). Pursuant to the Purchase
Agreement, Buyer is purchasing a majority interest in the Company as well as the goodwill of the
Company. As a condition to Buyer entering into the Purchase Agreement, Buyer requires that this
Agreement be executed and delivered by DFW. Since DFW will receive substantial benefit from the
transactions contemplated in the Purchase Agreement, and because Buyer is willing to pay DFW
additional consideration pursuant to this Agreement in consideration of his performance of the
terms and conditions of this Agreement, DFW has agreed to enter into this Agreement and make the
noncompetition, nondisclosure, nonsolicitation and other covenants set forth in this Agreement.

Agreement

     In consideration of the mutual promises made herein, and for the consideration to be paid by
Buyer to Sellers pursuant to the Purchase Agreement, the parties hereto agree as follows:

     1. Acknowledgements by DFW. DFW acknowledges that he has occupied a position of trust
and confidence with the Company prior to the date hereof and has had access to and has become
familiar with the following information of the Company, any and all of which is confidential to the
Company (collectively, the “Confidential Information”): (a) any and all trade secrets concerning
the business and affairs of the Company, data, know-how, formulae, compositions, processes, current
and/or planned distribution methods and processes, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans, computer software and programs, database
technologies, systems, structures, concepts, methods and information of the Company and any other
information, however documented, of the Company that is a trade secret within the meaning of the
trade secret laws of Montana or under other applicable law; (b) any and all information concerning
the business and affairs of the Company (which includes historical financial statements, financial
projections and budgets, historical and projected sales, capital spending budgets and plans, the
names and backgrounds of key personnel, contractors, agents, suppliers and potential suppliers, personnel training

 

 

techniques and materials, and purchasing methods and techniques however documented); and (c) any
and all notes, analysis, compilations, studies, summaries and other material prepared by or for the
Company containing or based, in whole or in part, upon any information included in the foregoing.
DFW further acknowledges that (i) the business of the Company is Territorial in scope; (ii) the
products and services related to such business are marketed throughout the Territory; (iii) the
Company competes with other businesses that are or could be located in any part of the Territory;
(iv) Buyer has required that DFW make the covenants set forth in this Agreement as a condition to
Buyer’s purchase of the Whetstone Shares; (v) the provisions of this Agreement are reasonable and
necessary to protect and preserve Buyer’s interests in and right to the Company from and after the
date of this Agreement; and (vi) Buyer would be irreparably damaged if any DFW were to breach the
covenants set forth in this Agreement.

     2. Nondisclosure of Confidential Information. DFW hereby agrees not to disclose to
any unauthorized Persons or use for DFW’s own account or for the benefit of any third party any
Confidential Information, whether or not such information is embodied in writing or other physical
form or is retained in the memory of DFW, unless and to the extent that (i) the Confidential
Information is or becomes generally known to and available for use by the public other than as a
result of DFW’s fault, or (ii) DFW is required to disclose same by order of any court with
jurisdiction to make such order. DFW agrees to deliver to Buyer at the closing of the Purchase
Agreement, or at any other time Buyer may request, all documents, memoranda, notes, plans, records,
reports and other documentation, models, components, devices or computer software, whether embodied
in a disk or in other form (and all copies of all of the foregoing), that contain Confidential
Information and any other Confidential Information that DFW may then possess or have under his
control.

     3. Noncompetition and Nonsolicitation. As an inducement for Buyer to enter into the
Purchase Agreement, and as additional consideration for the consideration to be paid to the Company
under the Purchase Agreement and to be paid to DFW under this Agreement, DFW agrees that for a
period of three (3) years after the Closing hereof:

     (a) DFW will not, directly or indirectly, engage in, invest in, own, manage, operate,
finance, control, assist, advise or participate in as an employee, shareholder, independent
contractor or otherwise, any business, firm, partnership, individual, corporation or any
other entity located in, represented in, or conducting business in the Territory if said
business is in any respects competitive with the business of the Company or the business of
the Buyer; provided, however, that DFW may purchase or otherwise acquire up
to (but not more than) one percent (1%) of any class of securities of any entity (but
without otherwise participating in the activities of such entity) if such securities are
listed on any national or regional securities exchange or have been registered under Section
12(g) of the Securities Exchange Act of 1934. As used herein, “directly or indirectly”
means either personally or through any person, firm, or other entity with which DFW may be
associated or connected, as principal, representative, independent contractor, lender,
investor or in any other individual or representative capacity whatsoever. As used herein,
“Territory” means the following counties within the State of Montana: Glacier, Flathead,
Pondera & Toole. DFW agrees that this covenant is reasonable with respect to its duration,
geographical area and scope;

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     (b) From and after the Effective Date hereof, DFW will not, directly or indirectly, (i)
induce or attempt to induce any employee of the Company to leave the employ of the Company;
(ii) in any way interfere with the relationship between Buyer and any employees of the
Company; (iii) employ or otherwise engage as an employee, independent contractor or
otherwise any employee of the Company; or (iv) induce or attempt to induce any customer,
supplier, licensee or other Person to cease doing business with the Company or in any way
interfere with the relationship between any such customer, supplier, licensee or other
business entity and the Company;

     (c) DFW will not directly or indirectly, solicit the business of any person or entity
who is a customer of the Company with respect to products or activities which compete in
whole or in part with the business of the Company; and

     (d) DFW will not disparage Buyer, the Company or any shareholder, director, officer,
employee or agent of Buyer or the Company.

     In the event of a breach by DFW of any covenant set forth in this Section 3, the term of such
covenant will be extended by the period of the duration of such breach.

     4. Remedies. 

     (a) Injunctive Relief and Damages. If DFW commits or threatens to commit a breach of
any of the provisions of this Agreement, Buyer shall have the right to have the provisions of this
Agreement specifically enforced by an court having jurisdiction, it being acknowledged by DFW and
agreed by the parties that any such breach or threatened breach will cause injury to Buyer for
which money damages alone will not provide an adequate remedy. The rights and remedies enumerated
above shall be in addition to, and not in lieu of, any other rights and remedies available to Buyer
or to the Company at law or in equity.

     (b) Reformation of Agreement. If any of the covenants contained in this Agreement
shall be found by a court of competent jurisdiction to be invalid or unenforceable for any reason,
such court shall exercise its discretion to reform such covenant to the end that Employee shall be
subject to nondisclosure, noninterference and noncompetition covenants that are reasonable under
the circumstances and are enforceable by Buyer.

     (c) Expenses of Enforcement of Covenants. If any action, suit, or other proceeding at
law or in equity is brought to enforce any of the covenants contained in this Agreement or to
obtain money damages for the breach thereof, the party prevailing in any such action, suit or other
proceeding shall be entitled upon demand or reimbursement from the other party for all expenses
(including, without limitation, reasonable attorneys’ fees and disbursements) incurred in
connection therewith.

     (d) The parties acknowledge and agree that the restrictive covenants set forth in this
Agreement fall within the “Goodwill Exception” codified in Montana Code Ann. §28-2-704 to the
general policy provisions of Montana Code Ann. §28-2-703.

3

 

     5. Compensation. As consideration for the covenants in this Agreement, Buyer will pay
DFW an aggregate amount of Three Hundred Seventy Thousand and 00/100 Dollars ($370,000.00), all of
which shall be paid to DFW in immediately available funds at the date and time of the Closing of
the Purchase Agreement.

     6. Successors and Assigns. This Agreement shall be binding upon Buyer and DFW and
shall inure to the benefit of Buyer and its affiliates, successors and assigns.

     7. Waiver. The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in exercising any right, power
or privilege under this Agreement will operate as a waiver of such right, power or privilege, and
no single or partial exercise of any such right, power or privilege will preclude any other or
further exercise of such right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement can be discharged, in whole or in part, by a waiver or renunciation of the claim or
right except in writing; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of such party, or of the right of the party giving such
notice or demand to require the other party, to take further action without notice or demand as
provided in this Agreement.

     8.  Notices. All notices, consents, waivers and other communications required or
permitted by this Agreement shall be in writing and shall be given in accordance with the
provisions set forth in Section 12 of the Purchase Agreement.

     9. Severability. Whenever possible, each provision and term of this Agreement will be
interpreted in a manner to be effective and valid, but if any provision or term of this Agreement
is held to be prohibited or invalid, then such provision or term will be ineffective only to the
extent of such prohibition or invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provision or term or the remaining provisions or terms of this
Agreement. If any of the covenants set forth in this Agreement are held to be unreasonable,
arbitrary or against public policy, such covenants will be considered divisible with respect to
scope, time and geographic area, and in such lesser scope, time and geographic area, will be
effective, binding and enforceable against DFW to the greatest extent permissible.

     10.  Counterparts. This Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.

     11. Section Headings; Construction. The headings of sections in this Agreement are
provided for convenience only and will not affect its construction or interpretation. All
references to “Section” refer to the corresponding section of this Agreement unless otherwise
specified. All words used in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word “Including” does not limit the
preceding words or terms.

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     12.  Entire Agreement. This Agreement and the Purchase Agreement constitute the
entire agreement between the parties with respect to the subject matter of this Agreement and
supersede all prior written and oral agreements and understandings between the parties with respect
to the subject matter of this Agreement. This Agreement may not be amended except by a written
agreement executed by the party to be charged with the amendment.

     13. Termination. This Agreement constitutes the binding and irrevocable agreement of
the parties hereto to consummate the transactions contemplated hereby subject to the terms and
conditions contained herein, the consideration for which is the covenants set forth herein, and
expenditures and obligations incurred and to be incurred by Buyer, on the one hand, and by DFW, on
the other hand, in respect of this Agreement, and this Agreement may be terminated or abandoned
only as follows:

(1) By the unanimous written consent of DFW and Buyer; or

(2) If any condition to the Closing under Section 7 of the Purchase
Agreement has not been satisfied (or waived by Purchaser) by 5:00 p.m. on the one
(1) year anniversary of the Effective Date of the Purchase Agreement or at such
other time and date as may be mutually agreed upon by the parties in writing, by
either party giving written notice given to the other, provided, however, that if
the Purchase Agreement is terminated at any time by any party pursuant to the terms
thereof, then this Agreement shall also be terminated without further written notice
by the terminating party.

 

[Signatures on following page]

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     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date
first above written.

	 	 	 	 	 	 	 
	 	 	BUYER:

	 	 	ENERGY WEST, INCORPORATED

A Montana Corporation

	 	 	By:	 	/s/ David C. Cerotzke
	 	 	 	 	 
	 

	 	 	 	Print Name:
	 	David C. Cerotzke
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Vice-Chairman
	 

	 	 	 	 	 	 

	 	 	 	 	DANIEL F. WHETSTONE

	 	 	 	 	/s/ Daniel F. Whetstone
	 	 	 	 	 
	 	 	 	 	Daniel F. Whetstone

6EX-10.3

 

Exhibit 10.3

SEPARATION AGREEMENT

     This Separation Agreement (hereinafter “Agreement”) is made and entered into this
31st day of December, 2007 (the “Effective Date”), by and between ENERGY WEST, INC. (hereinafter
“Company”) and DAVID CEROTZKE (hereinafter “Employee”).

     WHEREAS, Company and Employee have agreed to terminate Employee’s employment, which
termination shall include the termination of all of Employee’s prior employment contracts as
amended on January 1, 2006 (collectively the “Employment Agreement”).

     WHEREAS, this Separation Agreement has been entered into based upon Employee’s termination of
his employment with the Company for “Good Reason” as provided for under paragraph 4(e) of his June
23, 2004 Employment Agreement.

     NOW THEREFORE, in consideration of certain benefits provided herein to Employee, and in
consideration of the other promises and agreements contained herein and other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, and intending to be
legally bound, the Company and Employee agree as follows:

     1. Termination of Employment. Employee and the Company hereby agree that Employee’s
employment with the Company shall cease effective January 1, 2008, and that the last day Employee
shall report to work will be December 31, 2007. Upon Employee’s termination, the Company shall pay
to Employee a lump sum amount within thirty (30) days after Employee’s termination date for the
payments due to Employee as set forth in paragraph 5(a) of his June 23, 2004 Employment Agreement
which paragraph is incorporated herein by reference as if fully rewritten herein.

     2. Severance Allowance. In exchange for the promises contained in this Agreement and
the release of claims and covenants not to sue as set forth below, the Company shall provide
Employee with a severance package equal to that set forth in Exhibit “A” attached hereto
and incorporated herein as if fully rewritten. The Company will also agree to provide Employee and
his family with Company health benefits as set forth in the First Amendment to Employee’s
Employment Agreement, after which time the Employee will have access to COBRA continuation coverage
in accordance with Company policy and federal law. All payments due under the Exhibit “A”
schedule shall be paid in accordance with the payment schedule set forth in either Exhibit
“A” or, as applicable, paragraph 5(b) of his June 23, 2004 Employment Agreement which provision
is incorporated herein by reference as if fully rewritten herein.

     3. Release and Covenant Not to Sue. Employee, for himself and his dependents,
successors, assigns, heirs, executors, and administrators, and his legal representative of every
kind, hereby releases, dismisses, remises, and forever discharges the Company, including its
predecessors, parents, subsidiaries, divisions, related or affiliated companies, officers,
directors, stockholders, members, employees, heirs, successors, assigns, representatives, agents,
and counsel from any and all arbitrations, claims, including claims for attorney’s fees, demands,
damages, suits, proceedings, actions, and/or causes of action of any kind and every description,
whether known or unknown, which Employee now has or may have had for, upon, or by reason of any
cause whatsoever, and Employee covenants not to sue or assert any such arbitrations, claims, demands, damages, suits, proceedings, actions,
and/or causes of action of any kind in every description, whether known or unknown, against the
Company, including but not limited to:

 

 

	 	A.	 	Any and all claims arising out of or relating to Employee’s
employment by or service with the Company;
	 
	 	B.	 	Any and all claims arising out of or relating to his Employment
Agreement except as to those claims and agreements contained herein under
paragraph 2 and the Exhibit “A”.
	 
	 	C.	 	Any and all claims of discrimination, including but not limited
to claims of discrimination on the basis of sex, race, age, national origin,
marital status, religion, or handicap, including specifically, but without
limiting the generality of the foregoing, any claims under the Age
Discrimination in Employment Act, as amended, Title VII of the Civil Rights Act
of 1964, as amended, the Americans with Disabilities Act, and all applicable
state of Montana statutes pertaining to any and all employment matters are
causes of actions that could be brought by the Employee against the Company;
	 
	 	C.	 	Any and all claims of wrongdoing or unjust discharge or breach
of any oral or written contract or promise, express or implied, defamation,
promissory estoppel, and any claim based on any employment policy or practice,
and any other common law claim.

Employee understands and acknowledges that the Company does not admit any violation of law,
liability, or invasion of any of his rights and that any such violation, liability or invasion is
expressly denied. The consideration provided under this Agreement is made for the purpose of
settling and distinguishing all claims and rights that Employee ever had or now may have against
the Company to the extent provided for in this Agreement. Employee further agrees and acknowledges
that no representations, promises, or inducements have been made by the Company other than as
appear in this Agreement. Employee further agrees and acknowledges that the Release provided for
in this paragraph releases claims to and including the date of this Agreement; excluded from the
Release paragraph are: (i) Employee’s rights to vested benefits and benefit
continuation/conversion rights under the Company sponsored employee benefits plans and (ii)
Employee’s rights to enforce this Agreement.

     4. Execution of Agreement. Employee has been advised by the Company to consult with
legal counsel prior to the executing this Agreement and the release provided for herein. Employee
has had an opportunity to consult with and to be advised by legal counsel of his choice, and fully
understands the terms of this Agreement and enters into this Agreement freely, voluntarily, and
intending to be bound. Employee acknowledges that he has been given a period of twenty-one (21)
days to review and consider the terms of this Agreement, and the release contained herein, prior to
its execution and that he may use as much of the twenty-one (21) day period as he desires.
Employee may, within seven (7) days after execution, revoke this Agreement. Revocation shall be
made by delivering a written notice of revocation to James Garrett, President, 8500 Station Street,
Mentor, Ohio 44060. For such revocation to be effective, written notice must be actually received
by James Garrett no later than the close of business on the seventh (7th) day after
Employee executes this Agreement. If Employee does exercise his right to revoke this Agreement,
all the terms and conditions of the Agreement shall be of no force and effect and the Company shall
not have any obligation to make payments to provide benefits to Employee as set forth in Paragraph
Two (2) of this Agreement.

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     5. Continued Availability and Cooperation. Employee shall cooperate fully with the
Company and with the Company’s counsel in connection with any business matter in which Employee was
involved or has knowledge in any present and future or actual or threatened litigation or
administrative proceedings involving the Company that relates to events, occurrences, or conduct
occurring or claims to have occurred during the period of Employee’s employment by the Company.
This cooperation by Employee includes, but is not limited to:

	 	A.	 	Making himself reasonably available for interviews and
discussions with Company employees and the Company’s counsel;
	 
	 	B.	 	If depositions or trial testimony were to occur, making himself
reasonably available and cooperating in the preparation therefor as and to the
extent that the Company or the Company’s counsel reasonably request;
	 
	 	C.	 	Refraining from impeding in any way in a prosecution or defense
by the Company or the government or any such litigation or administrative
proceeding; and
	 
	 	D.	 	Cooperating fully in the development and presentation of the
Company’s prosecution or defense of such litigation or administrative
proceeding.
	 
	 	E.	 	Cooperating in training Employee’s replacement, whether that
replacement is a new employee or a current employee to whom Employee’s current
duties are distributed.
	 
	 	F.	 	Performing Employee’s job duties in a manner acceptable to the
Company.

     From the effective date of this Agreement and for any period of time which is mutually
agreeable to both the Company and Employee, Employee shall continue to provide cooperation to the
Company with respect to projects undertaken by the Company where Employee’s prior knowledge with
respect to, or prior involvement in, such or similar projects would be relevant to advancement or
such projects, provided that such cooperation shall but subject to Employee’s time constraints.
The Company will reasonably endeavor to schedule the assistance provided for in this paragraph at
times not conflicting with the scheduled personal obligations of the Employee, the reasonable
requirements of any future employer of Employee or with the requirements of any third party with
whom Employee has a business relationship that provides remuneration to Employee. Employee shall
be reimbursed for any out of pocket expenses incurred by Employee in regard to any such requests.

     6. Confidentiality and Other Agreements. As additional consideration, Employee agrees
that, except to the extent otherwise required by law, Employee will keep secret all confidential
matters of the Company, refrain from disclosing to clients, competitors, or the media any
information concerning the Company’s operations and deliver promptly to the Company all equipment,
memoranda, notes, records, reports, and other documents, and all copies thereof, not heretofore
delivered with respect to any such confidential matters and other proprietary information which the
Company may then possess or have under his control, and otherwise comply with the Section 8, 9 and
10 of his Employment Agreement.

     7. Company Property. Employee agrees to return to the Company all Company property in
his possession, including but not limited to, keys, computers, computer programs, files, and other
such things upon execution of this Agreement.

     8. 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 or endeavor

3

 

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.

     9. Successors and Binding Agreement. This Agreement will be binding upon and enure to
the benefit of the Company and any successor of or to the Company, including, without limitation,
any person acquiring directly or indirectly all or substantially all of the business and/or assets
of the Company whether by purchase, merger, consolidation, reorganization, or otherwise, and such
successor shall thereafter be deemed included in the definition of “Company” for purposes of this
Agreement, but will not otherwise be assignable or delegable by the Company. This Agreement will
enure to the benefit of and be enforceable by Employee’s personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or legatees. This Agreement is
personal in nature and none of the parties hereto will, without the consent of the other parties,
assign, transfer, or delegate this Agreement or any rights or obligations hereunder except as
expressly provided for in this Agreement.

     10. Miscellaneous. The death or disability of Employee following the execution of
this Agreement will not effect or revoke this Agreement or any of the obligations of the parties
hereto. No provision of this Agreement may be modified, waived, or discharged unless such waiver,
modification, or discharge is agreed to in writing, signed by Employee and the Company. No waiver
by either party hereto at any time of any breach by the other party hereto or compliance with any
condition or provisions of this Agreement to be formed by sch other party will be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.
No Agreements or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof, have been made by any of the parties that are not set forth expressly in
this Agreement and every one of them, if, in fact, there have been any, is hereby terminated
without liability or any other legal effect whatsoever.

     11. Entire Agreement. This Agreement constitutes the entire Agreement among the
parties hereto with respect to the subject matter hereof and supersedes all prior verbal or written
agreements, covenants, communications, understandings, commitments, representations or warranties,
whether oral or written, by and party hereto or any of his or its representatives pertaining to
such subject matter, except for any confidentiality or non-compete agreement(s) Employee has
previously entered into with the Company.

     12. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Montana, without reference to its principles of conflict of law.

     13. Validity. The invalidity or enforceability of any provisions of this Agreement
will not effect the validity of enforceability of any other provision of this Agreement which will
nevertheless remain in full force and effect.

     14. Counterparts. This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original, but all of which together will constitute one in the same
agreement.

     15. Captions and Paragraph Headings. Captions and paragraph headings used herein are
used for convenience and are not part of this Agreement and will not be used in construing it.

4

 

     16. Further Assistance. Each party shall execute such additional documents, and do
such additional things, as may reasonably be requested by the other party to effectuate the purpose
and provisions of this Agreement.

     17. Board Approval. This Agreement is subject to the approval of the Board of
Directors of the Company, which approval shall be contained in a Board of Directors resolution.

     18. Indemnification. The indemnification provision contained in paragraph 12(h) of
the June 23, 2004 Employment Agreement are incorporated in this Separation Agreement are
incorporated and made a part of this Separation Agreement as if fully rewritten herein, provided
however, no indemnification shall be given Employee for matters involving any fraudulent acts on
the part of the Employee.

     WHEREFORE, the parties have executed and delivered this Separation Agreement on the last date
set forth below.

	 	 	 	 	 
	 	ENERGY WEST, INC.

 	 
	Date: December 17, 2007 	By:  	/s/ James Garrett
 	 
	 	 	James Garrett, President 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	EMPLOYEE

 	 
	Date: December 17, 2007 	By:  	/s/ David Cerotzke
 	 
	 	 	David Cerotzke 	 
	 	 	 	 
	 

5

 

EXHIBIT “A”

Termination obligation due Dave Cerotzke

Upon termination for Good Reason

	 	 	 
	Base Salary
	 	$170,000
	EA section 5(b)(A)
	 	 
	 
	 	 
	Bonus at target 50%
	 	 
	EA section 5(b)(A)
	 	$85,000
	 
	 	 
	Bonus prorated for current year
	 	$42,500
	Assumes severance date is Jan. 1 prorate (183/365)
	 	 
	EA section 5(b)(B)
	 	 
	 
	 	 
	Stock Option Buyout of unvested Stock Options
	 	$68,700*
	 
	 	 
	Outplacement 5(b)(C)
	 	$10,000**
	 
	 	 
	Total Payment
	 	$376,200 (of which $10,000
	 
	 	                  is contingent)**

*To be paid to D. Cerotzke in a lump sum within 30 days of his termination date.

**To be paid to the executive search company subsequently retained by David Cerotzke for any such
service either now or in the future.

6

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