ENERGY WEST INC
INCORPORATED RETENTION BONUS PLAN DATED 9/14/00
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>c58595ex10-1.txt
<DESCRIPTION>INCORPORATED RETENTION BONUS PLAN DATED 9/14/00
<TEXT>

<PAGE>   1
                            ENERGY WEST INCORPORATED
                              RETENTION BONUS PLAN


     THE ENERGY WEST  INCORPORATED  RETENTION  BONUS PLAN (the "Plan") is hereby
adopted by Energy West Corporation, a Montana corporation (the "Company"), as of
this 14th day of September, 2000.



 .     1   Purpose. The Company may from time to time consider transactions which
          could result in a Change in Control (as defined below) of the
          Company (a "Transaction"). The purpose of this Plan is to help the
          Company retain key employees through a period of transition related to
          such Transaction. The retention of key employees is critical to a
          successful Transaction and the operations of the Company or any
          successor to the Company after the Transaction.


     2.   Eligibility and Bonus Amount. The persons eligible to participate in
          the Plan (the "Participants") and the amount of any retention bonus
          awarded to any Participant (the "Bonus") will be determined by the
          President and Chief Executive Officer of the Company.

     3.   Payment of Bonus. Each Bonus will be paid as soon as practicable
          following a Change in Control. In order to receive a Bonus, the
          Participant (i) must be employed by the Company on the date of the
          Change in Control, (ii) must have performed his or her duties in a
          satisfactory manner through the date of the Change in Control; and
          (iii) must sign an agreement in a form and substance satisfactory to
          the Company relative to the Plan ("Agreement").

     4.   Bonus Pool. The aggregate amount of all Bonuses shall not exceed
          $1,500,000.

     5.   Limitation on the Amount of Each Bonus. Anything in this Plan to the
          contrary notwithstanding, in the event it shall be determined that any
          payment or distribution by the Company to or for the benefit of the
          Participant (whether paid or payable or distributed or distributable
          pursuant to the terms of this Plan or otherwise) (a "Payment") would
          be nondeductible by the Company for federal income tax purposes
          because of Section 280G of the Internal Revenue Code ("Code"), then
          the aggregate present value of amounts payable or distributable as
          severance benefits hereunder shall be reduced to the Reduced Amount.
          The "Reduced Amount" shall be an amount expressed in present value
          which maximizes the aggregate present value of such severance benefits
          without causing any payment to be nondeductible by the Company because
          of Section 280G of the Code. For purposes of this paragraph 5, present
          value shall be determined in accordance with Section 280G of the Code.

     6.   Change in Control. For the purposes of this Plan, the term "Change in
          Control" shall mean (i) the consummation of a reorganization, merger
          or consolidation of the Company with another entity, unless the
          shareholders of the Company immediately prior to the consummation of
          such reorganization, merger or consolidation continue immediately
          after the consummation to hold at least a majority of the voting
          securities of the surviving entity; (ii) the consummation of a sale or
          other transfer of all or substantially all of the assets of the
          Company; (iii) the acquisition (other than from the Company) by any
          person, entity or "group", within the meaning of Section 13(d)(3) or








<PAGE>   2



          14(d)(2) of the Securities Exchange Act" of 1934 (the "Exchange Act")
          (excluding, for this purpose, the Company or its affiliates ,or any
          person, entity or group that has beneficial ownership at the date of
          the adoption of this Plan of 50% of more of the outstanding shares of
          common stock of the Company, or any employee benefit plan of the
          company or its affiliates which acquires beneficial ownership of
          voting securities of the Company) of beneficial ownership (within the
          meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or
          more of either the then outstanding shares of common stock of the
          Company or the Combined Voting Power of the Company's then outstanding
          voting securities. "Combined Voting Power" means, as to any
          corporation or other entity, the combined voting power of such
          corporation's or other entity's then outstanding voting securities
          generally entitled to vote in the election of directors, or comparable
          governing body, or the combined voting power of any other entity's
          voting securities which directly or indirectly has the power to elect
          a majority of such directors or members of a comparable governing body
          of such other entity; (iv) the individuals who, as of the date hereof,
          constitute the Board of Directors of the Company (the "Board") (as of
          the date hereof, the "Incumbent Board") cease for any reason to
          constitute at least a majority of the Board, provided that any person
          becoming a director subsequent to the date hereof whose election, or
          nomination for election by the Company's shareholders, was approved by
          a vote of at least a majority of the directors then comprising the
          Incumbent Board (other than an election or nomination of an individual
          whose initial assumption of office is in connection with an actual or
          threatened election contest relating to the election of the directors
          of the Company, as such terms are used in Rule 14a-11 of Regulation
          14A promulgated under the Exchange Act) shall be, for purposes of this
          subsection, considered as though such person were a member of the
          Incumbent Board; or (v) any other event that the Board of Directors of
          the Company (the "Board") shall determine in its sole discretion
          constitutes a Change in Control of the Company.

     7.   Governing Law. The terms of this Plan will be interpreted in
          accordance with the laws of the state of Montana.

     8.   Funding. The benefits under this Plan shall be paid from the general
          assets of the Company.

     9.   Amendment and  Termination.  This Plan may be amended or terminated at
          any time by the  Board  prior to the  execution  by the  Company  of a
          definitive  written  agreement  providing  for a Change in  Control or
          after the  termination of any such  definitive  agreement  without the
          consent of any Participant.  No such amendment or termination shall be
          made, however, after the occurrence of a Change in Control.

                                        2

<PAGE>   3


         IN WITNESS WHEREOF, the Company has hereby executed this Plan effective
         as of the 14th day of September, 2000.

                                       ENERGY WEST INCORPORATED


                                   By:
                                        ---------------------------------------
                                   Name:     Larry D. Geske
                                        ---------------------------------------
                                   Title: President and Chief Executive Officer
                                        ---------------------------------------




                                       3
</TEXT>
</DOCUMENT>
