Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.3

DISCHARGE OF OBLIGOR UNDER INDENTURE

THIS DISCHARGE OF OBLIGOR UNDER INDENTURE is dated as of June 22, 2007, between Energy
West, Incorporated, a corporation duly organized and existing under the laws of the State of
Montana (the “Obligor”), having its principal place of business at 1 First Avenue South, Great
Falls, Montana 55401, and HSBC Bank USA, National Association, as successor Trustee (the
“Trustee”), having its principal corporate trust office at 452 Fifth Avenue, Attn: Corporate Trust
and Loan Agency, New York, NY 10018.

WHEREAS, the Trustee is successor Trustee under an Indenture of Trust dated as of September 1,
1992 (the “Indenture”) relating to Industrial Development Bonds (Great Falls Gas Company Project)
issued by Cascade County, Montana, on behalf of Obligor, of which the only bonds remaining
outstanding consist of approximately $775,000 in principal amount of Series 1992B bonds (the
“Bonds”); and

WHEREAS, the Indenture affords the Obligor the right, pursuant to Section 3-6(b) thereof, to
redeem all the Bonds prior to maturity subject to the terms and conditions of the Indenture; and

WHEREAS, the Obligor, on May 11, 2007, provided notice to the Trustee of its intention to
redeem all the Bonds on October 1, 2007 (the “Redemption Date”) in compliance with Section 3-6(e)
of the Indenture; and

WHEREAS, the Obligor has, on May 11, 2007, requested that the Trustee give notice of
redemption of the Bonds to each Owner of the Bonds and to certain specified financial institutions
and information services, all in compliance with Section 2-6 of the Indenture; and

WHEREAS, on June 21, 2007, the Obligor has deposited with the Trustee collected funds in an
amount sufficient to pay in full the principal amount of the Bonds and all interest to become due
thereon through the Redemption Date, along with all other sums payable by the Obligor pursuant to
the Indenture, in compliance with the requirements of Sections 7-1 and 7-2 of the Indenture; and

WHEREAS, the Obligor has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel in compliance with Section 1-3 of the Indenture; and

WHEREAS, Section 7-2 of the Indenture provides that upon deposit with the Trustee of
sufficient cash to pay the Bonds in full to the Redemption Date, all liability of the Obligor shall
forthwith cease, terminate and be completely discharged, and that Owners of the Bonds shall
thereafter have no claim whatsoever against the Obligor, but shall have a claim solely upon the
cash so deposited with the Trustee for payment of the Bonds and shall not be entitled to any other
benefit of or security under the Indenture;

 

 

 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises herein contained,
the receipt and adequacy of which are hereby acknowledged, it is mutually covenanted and agreed as
follows:

ARTICLE I

DISCHARGE OF OBLIGOR

1.1 The Obligor is hereby fully released and discharged from all liability to the Owners of
the Bonds for payment thereon and from all liability under the Indenture; provided, however, that
notwithstanding the full discharge of Obligor under the Indenture, the rights and obligations of
the Obligor under Sections 2-13 and the rights benefits and protections afforded to the Trustee
under Sections 9-1 and 9-2 shall survive until the Bonds are no longer outstanding. On the
Redemption Date, the Bonds shall be considered paid and shall cease to be outstanding and interest
on the Bonds shall cease to accrue. Thereafter, the Obligor’s rights and obligations only under
Sections 2-13 and 9-1 and the indemnity obligations under 9-2 of the Indenture shall survive.

1.2 All liens, mortgages or other security interests on any and all property and assets of the
Obligor which the Trustee holds or may hold in connection with the Indenture are hereby released,
discharged and terminated. Except as otherwise provided in Section 1.1 hereof, all obligations of
the Obligor under the Indenture are deemed fully satisfied, discharged, terminated and null and
void. The Trustee agrees to take all actions and to execute all documents which the Obligor
reasonably deems necessary or appropriate to release all liens of the Trustee on any property or
assets of the Obligor, including, but not limited to, the execution of releases and re-conveyance
of mortgages or deeds of trust or UCC-3 termination statements with respect to any and all such
collateral.

1.3 The Trustee agrees to effectuate the notices of redemption as per the Obligors instruction
letter dated May 11, 2007 for the Redemption Date on October 1, 2007, as requested by Obligor and
in accordance with Section 2-6 of the Indenture, to pay the Bonds as requested by Obligor and in
accordance with Section 7-2 of the Indenture and to destroy all canceled Bonds held by the Trustee
in a manner customarily used to destroy such Bonds and furnish the Obligor a certificate stating
that such Bonds have been destroyed in accordance with Section 2-9 of the Indenture.

ARTICLE II

MISCELLANEOUS PROVISIONS

2.1 Capitalized terms not otherwise defined herein shall have the meanings ascribed such terms
in the Indenture.

2.2 This instrument shall be governed by, and construed in accordance with, the laws of the
State of Montana.

 

2

 

2.3 This instrument may be executed in any number of counterparts, each of which so executed
shall be deemed to be an original, but all of which shall together constitute but one and the same
instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Discharge of Obligor Under Indenture
to be duly executed as of the date written above.

	 	 	 	 	 
	 	ENERGY WEST, INCORPORATED

 	 
	  	By:  	/s/ David A. Cerotzke
 	 
	 	 	David A. Cerotzke 	 
	 	 	President and Chief Executive Officer 	 
	 
	 	HSBC BANK USA, NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Herawatte Alli
 	 
	 	 	Herawatte Alli 	 
	 	 	Assistant Vice President 	 
	 

 

3Filed by Bowne Pure Compliance

 

Exhibit 10.4

EXECUTION COPY

 

 

 

 

ENERGY WEST, INCORPORATED

$13,000,000

6.16% Senior Unsecured Notes, due June 29, 2017

 

NOTE PURCHASE AGREEMENT

 

Dated as of June 29, 2007

 

 

 

 

PPN: 29274A A*6

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	Section	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	1.	 	AUTHORIZATION OF NOTES	 	 	1	 
	 
	 	1.1	 	Description of Notes	 	 	1	 
	 
	 	1.2	 	Subsidiary Guaranty	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	2.	 	SALE AND PURCHASE OF NOTES	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	3.	 	CLOSING	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	4.	 	CONDITIONS TO CLOSING	 	 	2	 
	 
	 	4.1	 	Representations and Warranties	 	 	2	 
	 
	 	4.2	 	Performance; No Default	 	 	2	 
	 
	 	4.3	 	Compliance Certificates	 	 	3	 
	 
	 	4.4	 	Opinions of Counsel	 	 	3	 
	 
	 	4.5	 	Purchase Permitted By Applicable Law, etc.	 	 	3	 
	 
	 	4.6	 	Sale of Other Notes	 	 	3	 
	 
	 	4.7	 	Payment of Special Counsel Fees	 	 	3	 
	 
	 	4.8	 	Private Placement Number	 	 	4	 
	 
	 	4.9	 	Changes in Corporate Structure	 	 	4	 
	 
	 	4.10	 	Funding Instructions	 	 	4	 
	 
	 	4.11	 	Credit Agreement	 	 	4	 
	 
	 	4.12	 	Proceedings and Documents	 	 	4	 
	 
	 	4.13	 	Release of Collateral	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	5.	 	REPRESENTATIONS AND WARRANTIES OF THE COMPANY	 	 	4	 
	 
	 	5.1	 	Organization; Power and Authority	 	 	5	 
	 
	 	5.2	 	Authorization, etc.	 	 	5	 
	 
	 	5.3	 	Disclosure	 	 	5	 
	 
	 	5.4	 	Organization and Ownership of Shares of Subsidiaries	 	 	6	 
	 
	 	5.5	 	Financial Statements; Material Liabilities	 	 	6	 
	 
	 	5.6	 	Compliance with Laws, Other Instruments, etc.	 	 	7	 
	 
	 	5.7	 	Governmental Authorizations, etc.	 	 	7	 
	 
	 	5.8	 	Litigation; Observance of Statutes and Orders	 	 	7	 
	 
	 	5.9	 	Taxes	 	 	8	 
	 
	 	5.10	 	Title to Property; Leases	 	 	8	 
	 
	 	5.11	 	Licenses, Permits, etc.	 	 	8	 
	 
	 	5.12	 	Compliance with ERISA	 	 	9	 
	 
	 	5.13	 	Private Offering by the Company	 	 	10	 
	 
	 	5.14	 	Use of Proceeds; Margin Regulations	 	 	10	 
	 
	 	5.15	 	Existing Debt; Future Liens	 	 	10	 
	 
	 	5.16	 	Foreign Assets Control Regulations, etc.	 	 	11	 
	 
	 	5.17	 	Status under Certain Statutes	 	 	11	 
	 
	 	5.18	 	Environmental Matters	 	 	11	 

 

i

 

	 	 	 	 	 	 	 	 	 
	Section	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	6.	 	REPRESENTATIONS OF THE PURCHASERS	 	 	12	 
	 
	 	6.1	 	Purchase for Investment	 	 	12	 
	 
	 	6.2	 	Source of Funds	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	7.	 	INFORMATION AS TO COMPANY	 	 	14	 
	 
	 	7.1	 	Financial and Business Information	 	 	14	 
	 
	 	7.2	 	Officer's Certificate	 	 	16	 
	 
	 	7.3	 	Electronic Delivery	 	 	17	 
	 
	 	7.4	 	Visitation	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	8.	 	PREPAYMENT OF THE NOTES	 	 	18	 
	 
	 	8.1	 	No Scheduled Prepayments	 	 	18	 
	 
	 	8.2	 	Optional Prepayments with Make-Whole Amount	 	 	18	 
	 
	 	8.3	 	Mandatory Offer to Prepay Upon Change of Control	 	 	18	 
	 
	 	8.4	 	Allocation of Partial Prepayments	 	 	20	 
	 
	 	8.5	 	Maturity; Surrender, etc.	 	 	20	 
	 
	 	8.6	 	Purchase of Notes	 	 	20	 
	 
	 	8.7	 	Make-Whole Amount	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	9.	 	AFFIRMATIVE COVENANTS	 	 	22	 
	 
	 	9.1	 	Compliance with Law	 	 	22	 
	 
	 	9.2	 	Insurance	 	 	22	 
	 
	 	9.3	 	Maintenance of Properties	 	 	22	 
	 
	 	9.4	 	Payment of Taxes and Claims	 	 	22	 
	 
	 	9.5	 	Corporate Existence, etc.	 	 	23	 
	 
	 	9.6	 	Subsidiary Guaranty; Release	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	10.	 	NEGATIVE COVENANTS	 	 	24	 
	 
	 	10.1	 	Funded Debt	 	 	24	 
	 
	 	10.2	 	Liens	 	 	24	 
	 
	 	10.3	 	Mergers, Consolidations, etc.	 	 	25	 
	 
	 	10.4	 	Sale of Assets	 	 	26	 
	 
	 	10.5	 	Dividends	 	 	27	 
	 
	 	10.6	 	Nature of Business	 	 	27	 
	 
	 	10.7	 	Transactions with Affiliates	 	 	27	 
	 
	 	10.8	 	Terrorism Sanctions Regulations	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	11.	 	EVENTS OF DEFAULT	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	12.	 	REMEDIES ON DEFAULT, ETC.	 	 	29	 
	 
	 	12.1	 	Acceleration	 	 	29	 
	 
	 	12.2	 	Other Remedies	 	 	30	 
	 
	 	12.3	 	Rescission	 	 	30	 
	 
	 	12.4	 	No Waivers or Election of Remedies, Expenses, etc.	 	 	30	 

 

ii

 

	 	 	 	 	 	 	 	 	 
	Section	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	13.	 	REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES	 	 	31	 
	 
	 	13.1	 	Registration of Notes	 	 	31	 
	 
	 	13.2	 	Transfer and Exchange of Notes	 	 	31	 
	 
	 	13.3	 	Replacement of Notes	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	14.	 	PAYMENTS ON NOTES	 	 	32	 
	 
	 	14.1	 	Place of Payment	 	 	32	 
	 
	 	14.2	 	Home Office Payment	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	15.	 	EXPENSES, ETC.	 	 	33	 
	 
	 	15.1	 	Transaction Expenses	 	 	33	 
	 
	 	15.2	 	Survival	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	16.	 	SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	17.	 	AMENDMENT AND WAIVER	 	 	33	 
	 
	 	17.1	 	Requirements	 	 	33	 
	 
	 	17.2	 	Solicitation of Holders of Notes	 	 	35	 
	 
	 	17.3	 	Binding Effect, etc.	 	 	35	 
	 
	 	17.4	 	Notes held by Company, etc.	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	18.	 	NOTICES	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	19.	 	REPRODUCTION OF DOCUMENTS	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	20.	 	CONFIDENTIAL INFORMATION	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	21.	 	SUBSTITUTION OF PURCHASER	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	22.	 	MISCELLANEOUS	 	 	37	 
	 
	 	22.1	 	Successors and Assigns	 	 	37	 
	 
	 	22.2	 	Payments Due on Non-Business Days	 	 	37	 
	 
	 	22.3	 	Accounting Terms	 	 	37	 
	 
	 	22.4	 	Severability	 	 	37	 
	 
	 	22.5	 	Construction	 	 	38	 
	 
	 	22.6	 	Counterparts	 	 	38	 
	 
	 	22.7	 	Governing Law	 	 	38	 
	 
	 	22.8	 	Jurisdiction and Process; Waiver of Jury Trial	 	 	38	 

 

iii

 

	 	 	 	 	 
	SCHEDULE A
	 	—
	 	Information Relating to Purchasers

	SCHEDULE B
	 	—
	 	Defined Terms

	SCHEDULE 5.4
	 	—
	 	Organization and Ownership of Shares of Subsidiaries

	SCHEDULE 5.14
	 	—
	 	Use of Proceeds

	SCHEDULE 5.15
	 	—
	 	Existing Indebtedness

	SCHEDULE 5.18
	 	—
	 	Environmental Matters

	EXHIBIT 1.1
	 	—
	 	Form of Senior Note

	EXHIBIT 1.2
	 	—
	 	Form of Subsidiary Guaranty

	EXHIBIT 4.4(a)
	 	—
	 	Form of Opinion of Special Counsel for the Company

	EXHIBIT 4.4(b)
	 	—
	 	Form of Opinion of Special Counsel to the Purchasers

 

iv

 

ENERGY WEST, INCORPORATED

1 First Avenue South

Great Falls, MT 59401

Phone: 406-791-7500

Fax: 406-791-7560

$13,000,000 6.16% Senior Unsecured Notes due June 29, 2017

Dated as of June 29, 2007

	 	 	 
	TO EACH OF THE PURCHASERS LISTED IN

	 	 
	THE ATTACHED SCHEDULE A:	 	 

Ladies and Gentlemen:

ENERGY WEST, INCORPORATED, a Montana corporation (the “Company”), agrees with you as follows:

	1.	 	AUTHORIZATION OF NOTES.

	 
	1.1	 	Description of Notes.

The Company has authorized the issue and sale of $13,000,000 aggregate principal amount of its
6.16% Senior Unsecured Notes, due June 29, 2017 (the “Notes”, such term to include any such Notes
issued in substitution therefor pursuant to Section 13 of this Agreement). The Notes shall be
substantially in the form set out in Exhibit 1.1. Certain capitalized terms used in this Agreement
are defined in Schedule B; references to a “Schedule” or an “Exhibit” are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.

	1.2	 	Subsidiary Guaranty.

The payment by the Company of all amounts due with respect to the Notes and the performance by
the Company of its obligations under this Agreement will be guaranteed by each Subsidiary that is
or hereafter becomes a borrower or guarantor under the Credit Agreement (individually, a
“Subsidiary Guarantor” and collectively, the “Subsidiary Guarantors”), pursuant to the Subsidiary
Guaranty in substantially the form of the attached Exhibit 1.2, as it hereafter may be amended or
supplemented from time to time (the “Subsidiary Guaranty”).

 

 

 

	2.	 	SALE AND PURCHASE OF NOTES.

Subject to the terms and conditions of this Agreement, the Company will issue and sell to you
and each of the other purchasers named in Schedule A (the “Other Purchasers”), and you and the
Other Purchasers will purchase from the Company, at the Closing provided for in Section 3, Notes in
the principal amount specified opposite your names in Schedule A at the purchase price of 100% of
the principal amount thereof. Your obligation hereunder and the obligations of the Other
Purchasers are several and not joint obligations and you shall have no obligation and no liability
to any Person for the performance or non-performance by any Other Purchaser hereunder.

	3.	 	CLOSING.

The sale and purchase of the Notes to be purchased by you and the Other Purchasers shall occur
at the offices of Foley & Lardner LLP, 321 North Clark Street, Suite 2800, Chicago, Illinois
60610-4764, at 7:00 a.m., Chicago time, at a closing (the “Closing”) on June 29, 2007. The date or
time of the Closing may be changed to such other Business Day as may be agreed upon by the Company
and the Purchasers. At the Closing, the Company will deliver to you the Notes to be purchased by
you in the form of a single Note (or such greater number of Notes in denominations of at least
$500,000 as you may request) dated the date of such Closing and registered in your name (or in the
name of your nominee), against delivery by you to the Company or its order of immediately available
funds in the amount of the purchase price therefor, as follows: by wire transfer for the account of
the Company to account number 5800452095 at LaSalle Bank, N.A., 135 South LaSalle Street, Suite
628, Chicago, Illinois 60603-3499, ABA number 071000505 (“Funding Instructions”). If at the
Closing the Company shall fail to tender such Notes to you as provided above in this Section 3, or
any of the conditions specified in Section 4 shall not have been fulfilled to your satisfaction,
you shall, at your election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights you may have by reason of such failure or such nonfulfillment.

	4.	 	CONDITIONS TO CLOSING.

Your obligation to purchase and pay for the Notes to be sold to you at the Closing is subject
to the fulfillment to your satisfaction, prior to or at the Closing, of the following conditions:

	4.1	 	Representations and Warranties.

The representations and warranties of the Company in this Agreement shall be correct when made
and at the time of the Closing.

	4.2	 	Performance; No Default.

The Company shall have performed and complied with all agreements and conditions contained in
this Agreement required to be performed or complied with by it prior to or at the Closing, and,
after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof
as contemplated by Section 5.14), no Default or Event of Default shall have occurred and be
continuing.

 

2

 

	4.3	 	Compliance Certificates.

(a) Officer’s Certificate. The Company shall have delivered to you an
Officer’s Certificate, dated the date of Closing, certifying that the conditions specified
in Sections 4.1, 4.2 and 4.9 have been fulfilled.

(b) Secretary’s Certificate. The Company shall have delivered to you
certificates of its and each Subsidiary Guarantor’s Secretary or an Assistant Secretary,
dated the date of Closing, certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of the Notes and
this Agreement.

	4.4	 	Opinions of Counsel.

You shall have received opinions in form and substance satisfactory to you, dated the date of
the Closing (a) from Rogers & Hool LLP, counsel for the Company and the Subsidiary Guarantors, and
from Browning, Kaleczyc, Berry and Hoven, P.C., special Montana counsel for the Company and the
Subsidiary Guarantors, covering the matters set forth in Exhibit 4.4(a) and covering such other
matters incident to the transactions contemplated hereby as you or your counsel may reasonably
request (and the Company instructs its counsel to deliver such opinion to you), and (b) from Foley
& Lardner LLP, your special counsel in connection with such transactions, substantially in the form
set forth in Exhibit 4.4(b) and covering such other matters incident to such transactions as you
may reasonably request.

	4.5	 	Purchase Permitted By Applicable Law, etc.

On the date of the Closing your purchase of Notes shall (i) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without recourse to provisions (such as
Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular investment, (ii) not violate
any applicable law or regulation (including, without limitation, Regulation U, T or X of the Board
of Governors of the Federal Reserve System) and (iii) not subject you to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or regulation was not in
effect on the date hereof. If requested by you, you shall have received an Officer’s Certificate
certifying as to such matters of fact as you may reasonably specify to enable you to determine
whether such purchase is so permitted.

	4.6	 	Sale of Other Notes.

Contemporaneously with the Closing, the Company shall sell to the Other Purchasers and the
Other Purchasers shall purchase the Notes to be purchased by them as specified in Schedule A.

	4.7	 	Payment of Special Counsel Fees.

Without limiting the provisions of Section 15.1, the Company shall have paid on or before the
Closing the fees, charges and disbursements of your special counsel referred to in
Section 4.4 to the extent reflected in a statement of such counsel rendered to the Company at
least one Business Day prior to such Closing.

 

3

 

	4.8	 	Private Placement Number.

Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with
the SVO) shall have been obtained by Foley & Lardner LLP for the Notes.

	4.9	 	Changes in Corporate Structure.

The Company shall not have changed its jurisdiction of incorporation or been a party to any
merger or consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most recent financial
statements included in the Disclosure Documents.

	4.10	 	Funding Instructions.

At least three Business Days prior to the date of the Closing, you shall have received written
Funding Instructions signed by a Responsible Officer on letterhead of the Company confirming the
Funding Instructions specified in Section 3 including (i) the name and address of the transferee
bank, (ii) such transferee bank’s ABA number and (iii) the account name and number into which the
purchase price for the Notes is to be deposited.

	4.11	 	Credit Agreement.

The Company shall have entered into the Credit Agreement and you shall have received a copy of
a fully executed counterpart thereof.

	4.12	 	Proceedings and Documents.

All corporate and other proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such transactions shall be reasonably
satisfactory to you and your special counsel, and you and your special counsel shall have received
all such counterpart originals or certified or other copies of such documents as you or they may
reasonably request.

	4.13	 	Release of Collateral.

You and your special counsel shall have received evidence satisfactory to you and your special
counsel that the banks party to the Company’s prior credit agreement released all collateral
securing the Company’s obligations under such credit agreement.

	5.	 	REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to you that:

 

4

 

	5.1	 	Organization; Power and Authority.

The Company is a corporation duly organized, validly existing and in good standing under the
laws of the State of Montana, and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The
Company has the corporate power and authority to own or hold under lease the properties it purports
to own or hold under lease, to transact the business it transacts and proposes to transact, to
execute and deliver this Agreement and the Notes and to perform the provisions hereof and thereof.

	5.2	 	Authorization, etc.

This Agreement and the Notes have been duly authorized by all necessary corporate action on
the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof
each Note will constitute, a legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

The Subsidiary Guaranty has been duly authorized by all necessary corporate action on the part
of each Subsidiary Guarantor and upon execution and delivery thereof will constitute the legal,
valid and binding obligation of such Subsidiary Guarantor, enforceable against such Subsidiary
Guarantor in accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer,
moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii)
general principles of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

	5.3	 	Disclosure.

The Company has made available to you, through its public filings, the Company’s Annual Report
on Form 10-K for the year ended June 30, 2006, its Quarterly Reports on Form 10-Q for the quarters
ended September 30, 2006, December 31, 2006 and March 31, 2007, and its Current Report on Form
8-K/A dated May 14, 2007, each of which has been filed with the SEC under the Exchange Act (such
reports, together with such other reports as may be subsequently filed by the Company with the SEC
pursuant to §13(a) or §15(d) of the Exchange Act, the “Disclosure Documents”). The Disclosure
Documents, taken as a whole, do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in the Disclosure Documents, since
June 30, 2006, there has been no change in the financial condition, operations, business or
properties of the Company or any of its Subsidiaries except changes that individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect.

 

5

 

	5.4	 	Organization and Ownership of Shares of Subsidiaries.

(a) Schedule 5.4 contains (except as noted therein) complete and correct lists of (i)
the Company’s Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and each other
Subsidiary, (ii) each other entity in which the Company holds a direct or indirect
investment, other than Subsidiaries, and (iii) the Company’s directors and senior officers.

(b) All of the outstanding shares of capital stock or similar equity interests of each
Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have
been validly issued, are fully paid and nonassessable and are owned by the Company or
another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule
5.4).

(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity
duly organized, validly existing and in good standing or equivalent status under the laws of
its jurisdiction of organization, and is duly qualified as a foreign corporation or other
legal entity and is in good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be so qualified
or in good standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold under lease
and to transact the business it transacts and proposes to transact.

(d) No Subsidiary is a party to, or otherwise subject to any legal, regulatory,
contractual or other restriction (other than this Agreement, the agreements listed on
Schedule 5.4 and customary limitations imposed by corporate law or similar statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to the Company or any of its Subsidiaries that owns
outstanding shares of capital stock or similar equity interests of such Subsidiary.

	5.5	 	Financial Statements; Material Liabilities.

The financial statements of the Company included in the Disclosure Documents (including in
each case the related schedules and notes) fairly present in all material respects the consolidated
financial position of the Company and its Subsidiaries as of the respective dates specified therein
and the consolidated results of their operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case of any interim
financial statements, to normal year-end adjustments). The Company and its Subsidiaries do not
have any Material liabilities that are not disclosed on such financial statements or otherwise
disclosed in the Disclosure Documents.

 

6

 

	5.6	 	Compliance with Laws, Other Instruments, etc.

The execution, delivery and performance by the Company of this Agreement and the Notes will
not (i) contravene, result in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any property of the Company or any Subsidiary under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate
charter or by-laws, or any other agreement or instrument to which the Company or any Subsidiary is
bound or by which the Company or any Subsidiary or any of their respective properties may be bound
or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions
of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Subsidiary or (iii) violate any provision of any statute or other
rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary.

The execution, delivery and performance by each Subsidiary Guarantor of the Subsidiary
Guaranty will not (i) contravene, result in any breach of, or constitute a default under, or result
in the creation of any Lien in respect of any property of such Subsidiary Guarantor under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which such Subsidiary Guarantor is bound or by
which such Subsidiary Guarantor or any of its properties may be bound or affected, (ii) conflict
with or result in a breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable to such Subsidiary
Guarantor or (iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to such Subsidiary Guarantor.

	5.7	 	Governmental Authorizations, etc.

Each of the Montana Public Service Commission (the “Montana Commission”) and the Wyoming
Public Service Commission (the “Wyoming Commission”) has entered one or more orders authorizing the
issue and sale of the Notes by the Company on the terms and conditions not inconsistent with the
terms and conditions set forth in or contemplated by this Agreement and no other consent, approval
or authorization of, or registration, filing or declaration with, any Governmental Authority is
required in connection with the execution, delivery or performance by the Company of this Agreement
or the Notes or the execution, delivery or performance by each Subsidiary Guarantor of the
Subsidiary Guaranty.

	5.8	 	Litigation; Observance of Statutes and Orders.

(a) Except as set forth in the Disclosure Documents, there are no actions, suits,
proceedings or investigations pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary or any property of the Company or any
Subsidiary in any court or before any kind of arbitrator or before or by any Governmental
Authority that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

(b) Neither the Company nor any Subsidiary is in default under any term of any
agreement or instrument to which it is a party or by which it is bound, or any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in
violation of any applicable law, ordinance, rule or regulation (including Environmental Laws
and the USA Patriot Act) of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

 

7

 

	5.9	 	Taxes.

The Company and its Subsidiaries have filed all tax returns that are required to have been
filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and
all other taxes and assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is not, individually or in
the aggregate, Material or (ii) the amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which the Company or a
Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The
Company knows of no basis for any other tax or assessment that could reasonably be expected to have
a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of Federal, state or other taxes for all fiscal periods are adequate. The
Federal income tax liabilities of the Company and its Subsidiaries have been finally determined
(whether by reason of completed audits or the statute of limitations having run) for all fiscal
years up to and including the fiscal year ended June 30, 2003.

	5.10	 	Title to Property; Leases.

The Company and its Subsidiaries have good and sufficient title to their respective properties
that individually or in the aggregate are Material, including all such properties that are
individually or in the aggregate Material and are reflected in the most recent audited balance
sheet included in the Disclosure Documents or purported to have been acquired by the Company or any
Subsidiary after said date (except as sold or otherwise disposed of as disclosed in the Disclosure
Documents or in the ordinary course of business), in each case free and clear of Liens prohibited
by this Agreement. All leases that individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material respects.

	5.11	 	Licenses, Permits, etc.

(a) The Company and its Subsidiaries own or possess all licenses, permits, franchises,
authorizations, patents, copyrights, proprietary software, service marks, trademarks and
trade names, or rights thereto, that individually or in the aggregate are Material, without
known conflict with the rights of others.

(b) To the best knowledge of the Company, no product of the Company or any of its
Subsidiaries infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, proprietary software, service mark, trademark, trade name
or other right owned by any other Person.

(c) To the best knowledge of the Company, there is no Material violation by any Person
of any right of the Company or any of its Subsidiaries with respect to any patent,
copyright, proprietary software, service mark, trademark, trade name or other right owned or
used by the Company or any of its Subsidiaries.

 

8

 

(d) The Company has valid and subsisting franchises, covering all municipalities in
which it operates, that authorize the Company to carry on the respective utility businesses
in which it is engaged in the municipalities covered by such franchises.

	5.12	 	Compliance with ERISA.

(a) The Company and each ERISA Affiliate have operated and administered each Plan in
compliance with all applicable laws except for such instances of noncompliance as have not
resulted in and could not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I
or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has
occurred or exists that could reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of
the rights, properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to section
401(a)(29) or 412 of the Code or section 4068 of ERISA, other than such liabilities or Liens
as would not be individually or in the aggregate Material.

(b) The present value of the aggregate benefit liabilities under each of the Plans
(other than Multiemployer Plans), determined as of the end of such Plan’s most recently
ended plan year on the basis of the actuarial assumptions specified for funding purposes in
such Plan’s most recent actuarial valuation report, did not exceed the aggregate current
value of the assets of such Plan allocable to such benefit liabilities by an amount that,
individually, or in the aggregate for all Plans, is Material. The term “benefit
liabilities” has the meaning specified in section 4001 of ERISA and the terms “current
value” and “present value” have the meaning specified in section 3 of ERISA.

(c) The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and
are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in
respect of Multiemployer Plans that individually or in the aggregate are Material.

(d) The expected postretirement benefit obligation (determined as of the last day of
the Company’s most recently ended fiscal year in accordance with Financial Accounting
Standards Board Statement No. 106, without regard to liabilities attributable to
continuation coverage mandated by section 4980B of the Code) of the Company and its
Subsidiaries is not Material.

(e) The execution and delivery of this Agreement and the issuance and sale of the Notes
hereunder will not involve any transaction that is subject to the prohibitions of section
406 of ERISA or in connection with which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the Code. The representation by the Company in the first sentence of
this Section 5.12(e) is made in reliance upon and subject to the accuracy of your
representation in Section 6.2 as to the sources of the funds used to pay the purchase price
of the Notes to be purchased by you.

 

9

 

	5.13	 	Private Offering by the Company.

Neither the Company nor anyone acting on its behalf has offered the Notes or any similar
securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached
or negotiated in respect thereof with, any person other than you, the Other Purchasers and not more
than 7 other Accredited Investors, each of which has been offered the Notes at a private sale for
investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act or to the registration requirements of any securities or blue sky
laws of any applicable jurisdiction.

	5.14	 	Use of Proceeds; Margin Regulations.

The Company will apply the proceeds of the sale of the Notes to refinance Indebtedness of the
Company as set forth in Schedule 5.14 and for general corporate purposes. No part of the proceeds
from the sale of the Notes will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of Regulation X of
said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said
Board (12 CFR 220). Margin stock does not constitute more than 1% of the value of the consolidated
assets of the Company and its Subsidiaries and the Company does not have any present intention that
margin stock will constitute more than 1% of the value of such assets. As used in this Section,
the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to
them in said Regulation U.

	5.15	 	Existing Debt; Future Liens.

(a) All outstanding Indebtedness of the Company and its Subsidiaries as of March 31,
2007 was properly included on the consolidated balance sheet of the Company and its
Subsidiaries as of that date that was included in the Disclosure Documents. Since March 31,
2007, there has been no Material change in the amounts, interest rates, sinking funds,
installment payments or maturities of the Indebtedness of the Company or its Subsidiaries
except as described in Schedule 5.15 and except for the Credit Agreement, which is being
entered into on the date of Closing. Neither the Company nor any Subsidiary is in default
and no waiver of default is currently in effect, in the payment of any principal or interest
on any Indebtedness of the Company or any Subsidiary and no event or condition exists with
respect to any Indebtedness of the Company or any Subsidiary that would permit (or that with
notice or the lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its regularly
scheduled dates of payment.

(b) Except as disclosed in Schedule 5.15, neither the Company nor any Subsidiary has
agreed or consented to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a
Lien not permitted by Section 10.2.

 

10

 

(c) Other than the Credit Agreement, neither the Company nor any Subsidiary is a party
to, or otherwise subject to any provision contained in, any instrument evidencing
Indebtedness of the Company or such Subsidiary, any agreement relating thereto or any other
agreement (including its charter or other organizational document) that limits the amount
of, or otherwise imposes restrictions on the incurring of, Indebtedness of the Company,
except as specifically indicated in Schedule 5.15.

	5.16	 	Foreign Assets Control Regulations, etc.

(a) Neither the sale of the Notes by the Company hereunder nor its use of the proceeds
thereof will violate (i) the Trading with the Enemy Act, as amended, (ii) any of the foreign
assets control regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating thereto,
(iii) the Anti-Terrorism Order or (iv) the United States Foreign Corrupt Practices Act of
1997, as amended. Without limiting the foregoing, neither the Company nor any Subsidiary
(A) is a blocked person described in Section 1 of the Anti-Terrorism Order or (B) knowingly
engages in any dealings or transactions, or is otherwise associated, with any such person.

(b) No part of the proceeds from the sale of the Notes hereunder will be used, directly
or indirectly, in violation of the United States Foreign Corrupt Practices Act of 1977, as
amended, assuming in all cases that such act applies to the Company.

	5.17	 	Status under Certain Statutes.

Neither the Company nor any Subsidiary is subject to regulation under the Investment Company
Act of 1940, as amended, the ICC Termination Act, as amended, or the Federal Power Act, as amended.
The Company is not an “investment company” or “controlled” by an “investment company,” as such
terms are defined in the Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder. The Company is a public utility as defined in the statutes of the States
of Montana and Wyoming and has the legal right to function and operate as a natural gas utility in
the States of Montana and Wyoming.

	5.18	 	Environmental Matters.

Except as disclosed in Schedule 5.18:

(a) Neither the Company nor any Subsidiary has knowledge of any claim or has received
any notice of any claim, and no proceeding has been instituted raising any claim against the
Company or any of its Subsidiaries or any of their respective real properties now or
formerly owned, leased or operated by any of them or other assets, alleging any damage to
the environment or violation of any Environmental Laws, except, in each case, such as could
not reasonably be expected to result in a Material Adverse Effect.

(b) Neither the Company nor any Subsidiary has knowledge of any facts that would give
rise to any claim, public or private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by any of them or to other assets
or their use, except, in each case, such as could not reasonably be expected to result in a
Material Adverse Effect.

 

11

 

(c) Neither the Company nor any Subsidiary has stored any Hazardous Materials on real
properties now or formerly owned, leased or operated by any of them and has not disposed of
any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any
manner that could reasonably be expected to result in a Material Adverse Effect.

(d) All buildings on all real properties now owned, leased or operated by the Company
or any Subsidiary are in compliance with applicable Environmental Laws, except where failure
to comply could not reasonably be expected to result in a Material Adverse Effect.

	6.	 	REPRESENTATIONS OF THE PURCHASERS.

	 
	6.1	 	Purchase for Investment.

You represent that you are an Accredited Investor and an Institutional Investor purchasing the
Notes for your own account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of your or their property shall at all times be within your or their
control. You understand that the Notes have not been registered under the Securities Act and may
be resold or otherwise transferred only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available, except under circumstances where neither
such registration nor such an exemption is required by law, and that the Company is not required to
register the Notes.

	6.2	 	Source of Funds.

You represent that at least one of the following statements is an accurate representation as
to each source of funds (a “Source”) to be used by you to pay the purchase price of the Notes to be
purchased by you hereunder:

(a) the Source is an “insurance company general account” (as the term is defined in the
United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in
respect of which the reserves and liabilities (as defined by the annual statement for life
insurance companies approved by the National Association of Insurance Commissioners (the
“NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any
employee benefit plan together with the amount of the reserves and liabilities for the
general account contract(s) held by or on behalf of any other employee benefit plans
maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the
same employee organization in the general account do not exceed 10% of the total reserves
and liabilities of the general account (exclusive of separate account liabilities) plus
surplus as set forth in the NAIC Annual Statement filed with your state of domicile; or

 

12

 

(b) the Source is a separate account that is maintained solely in connection with your
fixed contractual obligations under which the amounts payable, or credited, to any employee
benefit plan (or its related trust) that has any interest in such separate account (or to
any participant or beneficiary of such plan (including any annuitant)) are not affected in
any manner by the investment performance of the separate account; or

(c) the Source is either (i) an insurance company pooled separate account, within the
meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank collective investment fund,
within the meaning of PTE 91-38 (issued July 12, 1991) and, except as you have disclosed to
the Company in writing pursuant to this paragraph (c), no employee benefit plan or group of
plans maintained by the same employer or employee organization beneficially owns more than
10% of all assets allocated to such pooled separate account or collective investment fund;
or

(d) the Source constitutes assets of an “investment fund” (within the meaning of Part V
of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or
“QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s
assets that are included in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or by an affiliate
(within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of the total client assets
managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the
definition of “control” in Section V(e) of the QPAM Exemption) owns a 5% or more interest in
the Company and (i) the identity of such QPAM and (ii) the names of all employee benefit
plans whose assets are included in such investment fund have been disclosed to the Company
in writing pursuant to this clause (d); or

(e) the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of
PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within
the meaning of Part IV of the INHAM exemption), the conditions of Part I(a), (g) and (h) of
the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled
by the INHAM (applying the definition of “control” in Section IV(h) of the INHAM Exemption)
owns a 5% or more interest in the Company and (i) the identity of such INHAM and (ii) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have been
disclosed to the Company in writing pursuant to this clause (e); or

(f) the Source is a governmental plan; or

(g) the Source is one or more employee benefit plans, or a separate account or trust
fund comprised of one or more employee benefit plans, each of which has been identified to
the Company in writing pursuant to this paragraph (g); or

(h) the Source does not include assets of any employee benefit plan, other than a plan
exempt from the coverage of ERISA.

 

13

 

As used in this Section 6.2, the terms “employee benefit plan”, “governmental plan” and “separate
account” shall have the respective meanings assigned to such terms in Section 3 of ERISA.

	7.	 	INFORMATION AS TO COMPANY.

	 
	7.1	 	Financial and Business Information.

The Company will deliver to each holder of Notes that is an Institutional Investor:

(a) Quarterly Statements — within 60 days after the end of each quarterly
fiscal period in each fiscal year of the Company (other than the last quarterly fiscal
period of each such fiscal year), duplicate copies of,

(i) a consolidated balance sheet of the Company and its Subsidiaries as at the
end of such quarter, and

(ii) consolidated statements of operations of the Company and its Subsidiaries
for such quarter and (in the case of the second and third quarters) for the portion
of the fiscal year ending with such quarter,

(iii) consolidated statements of cash flows of the Company and its Subsidiaries
for such quarter or (in the case of the second and third quarters) for the portion
of the fiscal year ending with such quarter,

setting forth in each case in comparative form the figures for the corresponding periods in
the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, unaudited, and certified by a Senior
Financial Officer as fairly presenting, in all material respects, the financial position of
the companies being reported on and their results of operations and cash flows, subject to
changes resulting from year-end adjustments and the absence of footnotes, provided that
delivery within the time period specified above of copies of the Company’s Quarterly Report
on Form 10-Q (the “Form 10-Q”) prepared in compliance with the requirements therefor and
filed with the SEC shall be deemed to satisfy the requirements of this Section 7.1(a);

(b) Annual Statements — within 120 days after the end of each fiscal year of
the Company, duplicate copies of

(i) a consolidated balance sheet of the Company and its Subsidiaries, as at the
end of such year, and

(ii) consolidated statements of operations, changes in stockholders’ equity and
cash flows of the Company and its Subsidiaries for such year,

 

14

 

setting forth in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion
thereon of independent public accountants of recognized national standing, or other
independent public accountants reasonably satisfactory to the Required Holders, which
opinion shall state that such financial statements present fairly, in all material respects,
the financial position of the companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with GAAP, and that the examination of
such accountants in connection with such financial statements has been made in accordance
with generally accepted auditing standards, and that such audit provides a reasonable basis
for such opinion in the circumstances, provided that the delivery within the time period
specified above of the Company’s Annual Report on Form 10-K (the “Form 10-K”) for such
fiscal year (together with the Company’s annual report to shareholders, if any, prepared
pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements
therefor and filed with the SEC shall be deemed to satisfy the requirements of this Section
7.1(b);

(c) SEC and Other Reports — promptly upon their becoming available, one copy
of (i) each financial statement, report, notice or proxy statement sent by the Company or
any Subsidiary to its public securities holders generally and (ii) each regular or periodic
report, each registration statement (without exhibits except as expressly requested by such
holder), and each prospectus and all amendments thereto filed by the Company or any
Subsidiary with the SEC;

(d) Notice of Default or Event of Default — promptly, and in any event within
five Business Days after a Responsible Officer becoming aware of the existence of any
Default or Event of Default or that any Person has given any notice or taken any action with
respect to a claimed default hereunder or that any Person has given any notice or taken any
action with respect to a claimed default of the type referred to in Section 11(e), a written
notice specifying the nature and period of existence thereof, whether or not the Company
agrees that any claimed default constitutes a Default or Event of Default, and what action
the Company is taking or proposes to take with respect thereto;

(e) ERISA Matters — promptly, and in any event within five Business Days after
a Responsible Officer becoming aware of any of the following, a written notice setting forth
the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes
to take with respect thereto:

(i) with respect to any Plan, any reportable event, as defined in section
4043(c) of ERISA and the regulations thereunder, for which notice thereof has not
been waived pursuant to such regulations as in effect on the date hereof; or

(ii) the taking by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan
that such action has been taken by the PBGC with respect to such Multiemployer Plan;
or

 

15

 

(iii) any event, transaction or condition that could result in the incurrence
of any liability by the Company or any ERISA Affiliate pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, or in the imposition of any Lien on any of the
rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title
I or IV of ERISA or such penalty or excise tax provisions, if such liability or
Lien, taken together with any other such liabilities or Liens then existing, could
reasonably be expected to have a Material Adverse Effect; and

(f) Notices from Governmental Authority — promptly, and in any event within 30
days of receipt thereof, copies of any notice to the Company or any Subsidiary from any
Federal or state Governmental Authority relating to any order, ruling, statute or other law
or regulation that could reasonably be expected to have a Material Adverse Effect; and

(g) Requested Information — with reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition, assets or
properties of the Company or any of its Subsidiaries (including actual copies of the
Company’s Form 10-Q and Form 10-K) or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be reasonably requested
by any such holder of Notes.

	7.2	 	Officer’s Certificate.

Each set of financial statements delivered to a holder of Notes pursuant to Section 7.1(a) or
Section 7.1(b) will be accompanied by a certificate of a Senior Financial Officer setting forth:

(a) Covenant Compliance — the information (including detailed calculations)
required in order to establish whether the Company was in compliance with the requirements
of Section 10.1 through Section 10.5, inclusive, during the quarterly or annual period
covered by the statements then being furnished (including with respect to each such Section,
where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as
the case may be, permissible under the terms of such Sections, and the calculation of the
amount, ratio or percentage then in existence); and

(b) Event of Default — a statement that such Senior Financial Officer has
reviewed the relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and its Subsidiaries
from the beginning of the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall not have disclosed the
existence during such period of any condition or event that constitutes a Default or an
Event of Default or, if any such condition or event existed or exists (including any such
event or condition resulting from the failure of the Company or any Subsidiary to comply
with any Environmental Law), specifying the nature and period of existence thereof and what
action the Company shall have taken or proposes to take with respect thereto.

 

16

 

	7.3	 	Electronic Delivery.

Financial statements and officers’ certificates required to be delivered by the Company
pursuant to Sections 7.1(a), (b) or (c) and Section 7.2 shall be deemed to have been delivered if
(i) the Company shall have timely filed such Form 10-Q or Form 10-K, satisfying the requirements of
Section 7.1(a) or (b) as the case may be, with the SEC on “EDGAR” and shall have made such Form and
the related certificate satisfying the requirements of Section 7.2 available on its home page on
the worldwide web (at the date of this Agreement located at http://www.ewst.com) or (ii) such
financial statements satisfying the requirements of Section 7.1(a) or (b) and related certificate
satisfying the requirements of Section 7.2 are timely posted by or on behalf of the Company on
IntraLinks or on any other similar website to which each holder of Notes has free access or (iii)
the Company shall have filed any of the items referred to in Section 7.1(c) with the SEC on “EDGAR”
and shall have made such items available on its home page on the worldwide web or if any of such
items are timely posted by or on behalf of the Company on IntraLinks or on any other similar
website to which each holder of Notes has free access; provided however, that in the case of any of
clause (i), (ii) or (iii), the Company shall concurrently with such filing or posting give notice
to each holder of Notes of such posting or filing and provided further, that upon request of any
holder, the Company will thereafter deliver written copies of such forms, financial statements and
certificates to such holder.

	7.4	 	Visitation.

The Company shall permit the representatives of each holder of Notes that is an Institutional
Investor:

(a) No Default — if no Default or Event of Default then exists, at the expense
of such holder and upon reasonable prior notice to the Company, to visit the principal
executive office of the Company during normal business hours, to discuss the affairs,
finances and accounts of the Company and its Subsidiaries with the Company’s officers, and
(with the consent of the Company, which consent will not be unreasonably withheld) to visit
the other offices and properties of the Company and each Subsidiary, all at such reasonable
times and as often as may be reasonably requested in writing; and

(b) Default — if a Default or Event of Default then exists, at the expense of
the Company, to visit and inspect any of the offices or properties of the Company or any
Subsidiary during normal business hours, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to discuss
their respective affairs, finances and accounts with their respective officers and
independent public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such reasonable times and as often as may be reasonably requested.

 

17

 

	8.	 	PREPAYMENT OF THE NOTES.

	 
	8.1	 	No Scheduled Prepayments.

No regularly scheduled prepayments are due on the Notes prior to their stated maturity.

	8.2	 	Optional Prepayments with Make-Whole Amount.

The Company may, at its option, upon notice as provided below, prepay at any time all, or from
time to time any part of, the Notes in an amount not less than $2,000,000 in the aggregate in the
case of a partial prepayment, at 100% of the principal amount so prepaid, and the Make-Whole Amount
determined for the prepayment date with respect to such principal amount. The Company will give
each holder of Notes written notice of each optional prepayment under this Section 8.2 not less
than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such
notice shall specify such date (which shall be a Business Day), the aggregate principal amount of
the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be
prepaid (determined in accordance with Section 8.4), and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid, and shall be accompanied by a certificate
of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the prepayment), setting
forth the details of such computation. Two Business Days prior to such prepayment, the Company
shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the
calculation of such Make-Whole Amount as of the specified prepayment date.

	8.3	 	Mandatory Offer to Prepay Upon Change of Control.

(a) Notice of Change of Control or Control Event — The Company will, within
five Business Days after any Responsible Officer has knowledge of the occurrence of any
Change of Control or Control Event, give notice of such Change of Control or Control Event
to each holder of Notes unless notice in respect of such Change of Control (or the Change of
Control contemplated by such Control Event) shall have been given pursuant to subparagraph
(b) of this Section 8.3. If a Change of Control has occurred, such notice shall contain and
constitute an offer to prepay Notes as described in paragraph (c) of this Section 8.3 and
shall be accompanied by the certificate described in paragraph (g) of this Section 8.3.

(b) Condition to Company Action — The Company will not take any action that
consummates or finalizes a Change of Control unless (i) at least 15 Business Days prior to
such action it shall have given to each holder of Notes written notice containing and
constituting an offer to prepay Notes accompanied by the certificate described in paragraph
(g) of this Section 8.3, and (ii) subject to the provisions of paragraph (d) below,
contemporaneously with such action, it prepays all Notes required to be prepaid in
accordance with this Section 8.3.

 

18

 

(c) Offer to Prepay Notes — The offer to prepay Notes contemplated by
paragraphs (a) and (b) of this Section 8.3 shall be an offer to prepay, in accordance with
and subject to this Section 8.3, all, but not less than all, of the Notes held by each
holder (in this case only, “holder” in respect of any Note registered in the name of a
nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date
specified in such offer (the “Proposed Prepayment Date”). If such Proposed Prepayment Date
is in connection with an offer contemplated by paragraph (a) of this Section 8.3, such date
shall be not less than 30 days and not more than 60 days after the date of such offer.

(d) Acceptance; Rejection — A holder of Notes may accept the offer to prepay
made pursuant to this Section 8.3 by causing a notice of such acceptance to be delivered to
the Company on or before the date specified in the certificate described in paragraph (g) of
this Section 8.3. A failure by a holder of Notes to respond to an offer to prepay made
pursuant to this Section 8.3, or to accept an offer as to all of the Notes held by the
holder, within such time period shall be deemed to constitute rejection of such offer by
such holder.

(e) Prepayment — Prepayment of the Notes to be prepaid pursuant to this
Section 8.3 shall be at 100% of the principal amount of such Notes, together with interest
on such Notes accrued to the date of prepayment and shall not require the payment of any
Make-Whole Amount. The prepayment shall be made on the Proposed Prepayment Date except as
provided in paragraph (f) of this Section 8.3.

(f) Deferral Pending Change of Control — The obligation of the Company to
prepay Notes pursuant to the offers required by paragraphs (a) and (b) and accepted in
accordance with paragraph (d) of this Section 8.3 is subject to the occurrence of the Change
of Control in respect of which such offers and acceptances shall have been made. In the
event that such Change of Control does not occur on or prior to the Proposed Prepayment Date
in respect thereof, the prepayment shall be deferred until and shall be made on the date on
which such Change of Control occurs. The Company shall keep each holder of Notes reasonably
and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on
which such Change of Control and the prepayment are reasonably expected to occur, and (iii)
any determination by the Company that efforts to effect such Change of Control have ceased
or been abandoned (in which case the offers and acceptances made pursuant to this Section
8.3 in respect of such Change of Control shall be deemed rescinded). Notwithstanding the
foregoing, in the event that the prepayment has not been made within 90 days after such
Proposed Prepayment Date by virtue of the deferral provided for in this Section 8.3(f), the
Company shall make a new offer to prepay in accordance with paragraph (c) of this Section
8.3.

(g) Officer’s Certificate — Each offer to prepay the Notes pursuant to this
Section 8.3 shall be accompanied by a certificate, executed by a Senior Financial Officer of
the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date,
(ii) that such offer is made pursuant to this Section 8.3, (iii) the principal amount of
each Note offered to be prepaid, (iv) the interest that would be due on each Note offered to
be prepaid, accrued to the Proposed Prepayment Date, (v) that the conditions of this Section
8.3 have been fulfilled, (vi) in reasonable detail, the nature and date or proposed
date of the Change of Control and (vii) the date by which any holder of a Note that
wishes to accept such offer must deliver notice thereof to the Company, which date shall not
be earlier than seven Business Days prior to the Proposed Prepayment Date or, in the case of
a prepayment pursuant to Section 8.3(b), the date of the action referred to in Section
8.3(b)(i).

 

19

 

	8.4	 	Allocation of Partial Prepayments.

In the case of each partial prepayment of Notes pursuant to Section 8.2, the principal amount
of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.

	8.5	 	Maturity; Surrender, etc.

In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of
each Note to be prepaid shall mature and become due and payable on the date fixed for such
prepayment (which shall be a Business Day), together with interest on such principal amount accrued
to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the
Company shall fail to pay such principal amount when so due and payable, together with the interest
and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to
accrue. Any Note paid or prepaid in full shall be surrendered to the Company and canceled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any
Note.

	8.6	 	Purchase of Notes.

The Company will not and will not permit any Affiliate to purchase, redeem, prepay or
otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the Notes. The Company
will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment or
prepayment of Notes pursuant to any provision of this Agreement and no Notes may be issued in
substitution or exchange for any such Notes.

	8.7	 	Make-Whole Amount.

“Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of
the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of
such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount, the following
terms have the following meanings:

“Called Principal” means, with respect to any Note, the principal of such Note that is to be
prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.

 

20

 

“Discounted Value” means, with respect to the Called Principal of any Note, the amount
obtained by discounting all Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the Settlement Date with respect to
such Called Principal, in accordance with accepted financial practice and at a discount factor
(applied on the same periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.

“Reinvestment Yield” means, with respect to the Called Principal of any Note, .50% over the
yield to maturity implied by (i) the yields reported as of 10:00 a.m. (New York City time) on the
second Business Day preceding the Settlement Date with respect to such Called Principal, on the
display designated as “Page PX1” (or such other display as may replace Page PX1 on Bloomberg
Financial Markets (“Bloomberg”) or, if Page PX1 (or its successor screen on Bloomberg) is
unavailable, the Telerate Access Service screen which corresponds most closely to Page PX1 for the
most recently issued actively traded on-the-run U.S. Treasury securities having a maturity equal to
the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such
yields are not reported as of such time or the yields reported as of such time are not
ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so reported as of the second Business
Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the actively traded U.S. Treasury
security with the maturity closest to and greater than such Remaining Average Life and (2) the
actively traded U.S. Treasury security with the maturity closest to and less than such Remaining
Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears
in the interest rate of the applicable Note.

“Remaining Average Life” means, with respect to any Called Principal, the number of years
(calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into
(ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to
the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of any Note, all
payments of such Called Principal and interest thereon that would be due after the Settlement Date
with respect to such Called Principal if no payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled
interest payment will be reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to Section 8.2 or 12.1.

“Settlement Date” means, with respect to the Called Principal of any Note, the date on which
such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.

 

21

 

	9.	 	AFFIRMATIVE COVENANTS.

The Company covenants that so long as any of the Notes are outstanding:

	9.1	 	Compliance with Law.

The Company will, and will cause each Subsidiary to, comply with all laws, ordinances or
governmental rules or regulations to which each of them is subject, including ERISA, the USA
Patriot Act and Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations necessary to the ownership
of their respective properties or to the conduct of their respective businesses, in each case to
the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses, certificates, permits,
franchises and other governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

	9.2	 	Insurance.

The Company will, and will cause each of its Subsidiaries to, maintain, with financially sound
and reputable insurers, insurance with respect to their respective properties and businesses
against such casualties and contingencies, of such types, on such terms and in such amounts
(including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established reputations engaged in the
same or a similar business and similarly situated.

	9.3	 	Maintenance of Properties.

The Company will, and will cause each of its Subsidiaries to, maintain and keep, or cause to
be maintained and kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

	9.4	 	Payment of Taxes and Claims.

The Company will, and will cause each Subsidiary to, file all tax returns required to be filed
in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns
and all other taxes, assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and assessments have become due
and payable and before they have become delinquent and all claims for which sums have become due
and payable that have or might become a Lien on properties or assets of the Company or any
Subsidiary, provided that neither the Company nor any Subsidiary need pay any such tax or
assessment or claims if (i) the amount, applicability or validity thereof is contested by the
Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the
Company or such Subsidiary has established adequate reserves therefor in
accordance with GAAP on the books of the Company or such Subsidiary or (ii) the nonpayment of
all such taxes, assessments and claims in the aggregate could not reasonably be expected to have a
Material Adverse Effect.

 

22

 

	9.5	 	Corporate Existence, etc.

Subject to Section 10.3, the Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 10.3 and 10.4, the Company will at all times
preserve and keep in full force and effect the corporate (or, as applicable, limited liability
company) existence of each Subsidiary (unless merged into the Company or a Wholly Owned Subsidiary)
and all rights and franchises of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in full force and
effect such corporate existence, right or franchise could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

	9.6	 	Subsidiary Guaranty; Release.

(a) Subsidiary Guarantors. The Company will cause each Subsidiary that becomes
a borrower or guarantor of Indebtedness in respect of the Credit Agreement, within 10
Business Days of its becoming a borrower or a guarantor of Indebtedness in respect of the
Credit Agreement, to become a party to the Subsidiary Guaranty, and shall deliver to each
holder:

(i) an executed counterpart of a Joinder to the Subsidiary Guaranty;

(ii) copies of such directors’ or other authorizing resolutions, charter,
bylaws and other constitutive documents of such Subsidiary as the Required Holders
may reasonably request; and

(iii) an opinion of counsel reasonably satisfactory to the Required Holders
covering the authorization, execution, delivery, compliance with law, no conflict
with other documents, no consents and enforceability of the Subsidiary Guaranty
against such Subsidiary in form and substance reasonably satisfactory to the
Required Holders.

(b) Release of Subsidiary Guarantor. Each holder of a Note fully releases and
discharges from the Subsidiary Guaranty a Subsidiary Guarantor, immediately and without any
further act, upon such Subsidiary Guarantor being released and discharged as a borrower or
guarantor under and in respect of the Credit Agreement; provided that (i) no Default or
Event of Default exists or will exist immediately following such release and discharge; and
(ii) at the time of such release and discharge, the Company delivers to each holder of Notes
a certificate of a Responsible Officer certifying (x) that such Subsidiary Guarantor has
been or is being released and discharged as a borrower or guarantor under and in respect of
each of the Credit Agreement and (y) as to the matters set forth in clause (i). Any
outstanding Indebtedness of a Subsidiary Guarantor shall be deemed to have been incurred by
such Subsidiary Guarantor as of the date it is released and discharged from the Subsidiary
Guaranty.

 

23

 

	10.	 	NEGATIVE COVENANTS.

The Company covenants that so long as any of the Notes are outstanding:

	10.1	 	Funded Debt.

The Company will not create, assume or incur additional Consolidated Funded Debt unless:

(a) Consolidated Net Income Available for Interest Charges in two of the three
preceding fiscal years shall have exceeded 150% of the Pro Forma Annual Interest Charges of
the Company and its Subsidiaries. If the proceeds from the additional Consolidated Funded
Debt are to be used to acquire an operating company that will become a Subsidiary of the
Company, Consolidated Net Income Available for Interest Charges will be determined as if
such company was a Subsidiary of the Company during the three preceding fiscal years; and

(b) Consolidated Funded Debt of the Company, after giving effect to the additional
Consolidated Funded Debt to be incurred and to the use of the proceeds therefrom, will not
exceed 65% of the Total Capitalization of the Company.

	10.2	 	Liens.

The Company will not, and the Company will not permit any Subsidiary to, create, assume or
suffer to exist, directly or indirectly, any Lien on its properties or assets, whether now owned or
hereafter acquired, or any interest therein or income or profits therefrom, without equally and
ratably securing the Notes with a Lien ranking ratably with, and equal to, such secured
indebtedness, except:

(a) Liens for taxes, assessments, or governmental charges or levies not yet due or
which are being actively contested in good faith by appropriate proceedings;

(b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics and
materialmen incurred in the ordinary course of business for sums not yet due or being
contested in good faith and by appropriate proceedings promptly initiated and diligently
conducted, if such reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor and if no material items of property would be lost,
forfeited or materially damaged as a result of such contest;

(c) Liens incurred or deposits made in the ordinary course of business in connection
with workmen’s compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, performance and return-of-money bonds and other similar obligations (exclusive of
obligations for the payments of borrowed money);

(d) any judgment Lien, unless the judgment it secures shall not, within 60 days after
the entry thereof, have been discharged or execution thereof stayed pending
appeal, or shall not have been discharged within 60 days after the expiration of any
such stay;

 

24

 

(e) leases or subleases granted to others in ordinary course of business and not
interfering with the ordinary conduct of the business of the Company or any Subsidiary;

(f) easements, rights of way, restrictions and other similar charges or encumbrances
incurred in the ordinary course of business and not interfering with the ordinary conduct of
the business of the Company or any Subsidiary;

(g) Liens on the property or assets of any Subsidiary securing Indebtedness of such
Subsidiary owing to the Company;

(h) Liens to secure the purchase price or construction cost of capital assets acquired
by or constructed for the Company or any Subsidiary after the date hereof or existing on
assets of the Company or any Subsidiary acquired at the time of acquisition provided that
(i) each such Lien shall at all times be confined solely to the asset in question, (ii) the
aggregate principal amount of Indebtedness secured by any such Lien shall not exceed 100% of
the cost of the acquisition or construction of the asset subject thereto or the fair market
value of such asset, whichever is lower and (iii) any such Lien on any property acquired,
constructed or improved by the Company or any Subsidiary after the date of this Agreement
shall be created or assumed contemporaneously with, or within 180 days after, such
acquisition, or completion of such construction or improvement, or within six months
thereafter pursuant to a firm commitment for financing arranged with a lender or investor
within such 180 day period; and

(i) any other Liens or charges securing Indebtedness not exceeding $1,000,000 in the
aggregate.

	10.3	 	Mergers, Consolidations, etc.

The Company will not dissolve or otherwise dispose of all or substantially all of its assets,
and will not consolidate with or merge into another corporation, partnership or other entity;
provided that the Company may consolidate with or merge into a corporation or partnership organized
and existing under the laws of one of the states of the United States, or sell or otherwise
transfer to another domestic corporation or partnership all or substantially all of its assets and
thereafter dissolve, if the surviving, resulting or transferee corporation or partnership, as the
case may be (if other than the Company): (i) assumes all of the obligations of the Company under
this Agreement and the Notes and further agrees that it will continue to operate its facilities as
part of a system comprising a public utility regulated by the Public Service Commission of the
State of Montana or another federal or state agency or authority; and (ii) has a net worth
immediately subsequent to such acquisition, consolidation or merger equal to or greater than
$10,000,000; (iii) immediately after such acquisition, consolidation or merger, is not in Default
in the performance of any covenant or condition under this Agreement; and (iv) has caused to be
delivered to each holder of any Notes an opinion of nationally recognized independent counsel, or
other independent counsel reasonably satisfactory to the Required Holders, to the effect that all
agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms hereof. For purposes of
this Section 10.3, the term “net worth” means the Consolidated assets of the Company and its
Consolidated Subsidiaries, less the Consolidated liabilities of the Company and its Consolidated
Subsidiaries as determined in accordance with GAAP.

 

25

 

No such conveyance, transfer or lease of substantially all of the assets of the Company shall
have the effect of releasing the Company or any successor corporation or limited liability company
that shall theretofore have become such in the manner prescribed in this Section 10.3 from its
liability under this Agreement or the Notes.

	10.4	 	Sale of Assets.

Except as limited by Section 10.6, the Company will not, and will not permit any Subsidiary
to, directly or indirectly sell or otherwise dispose of any of its properties or assets (except (i)
properties or assets disposed of in the ordinary course of business, (ii) properties or assets
which the Company determines in good faith are no longer usable or of economic advantage in the
conduct of any business by the Company or any Subsidiary or (iii) properties or assets transferred
by the Company to a Subsidiary or by any Subsidiary to the Company or another Subsidiary) if, as a
result of such sale or other disposition, the aggregate net book value of all properties and assets
so disposed of after the date of this Agreement during the twelve-month period next preceding the
date of such sale or other disposition would constitute more than 15% of the aggregate book value
(on a consolidated basis for the Company and its Subsidiaries) of all Tangible Assets of the
Company and its Subsidiaries; provided, however, that any such sale may be disregarded for the
purposes of this Section 10.3 if the proceeds therefrom are (a) reinvested within twelve months in
businesses related to the business of the Company or (b) applied to the payment or prepayment of
the Notes or any other outstanding Indebtedness of the Company or any Subsidiary owed to a
non-Affiliate ranking pari passu with or senior to the Notes.

For purposes of foregoing clause (b), if the Company elects to prepay the Notes, the Company
shall offer to prepay (on a Business Day not less than 30 or more than 60 days following such
offer) the Notes on a pro rata basis with any such other Indebtedness that the Company elects to
include in such offer at a price of 100% of the principal amount of the Notes to be prepaid
(without any Make-Whole Amount) together with interest accrued to the date of prepayment; provided
that if any holder of the Notes declines or rejects such offer, the proceeds that would have been
paid to such holder shall be offered pro rata to the other holders of the Notes that have accepted
the offer. A failure by a holder of Notes to respond in writing not later than 10 Business Days
prior to the proposed prepayment date to an offer to prepay made pursuant to this Section 10.4
shall be deemed to constitute an acceptance of such offer by such holder. Solely for the purposes
of foregoing clause (b), whether or not such offers are accepted by the holders, the entire
principal amount of the Notes subject thereto shall be deemed to have been prepaid.

 

26

 

	10.5	 	Dividends.

The Company will not declare or pay any dividends (other than dividends payable solely in
shares of Common Stock of the Company or solely in rights to purchase Capital Stock
of the Company) on, or set apart any sum for the payment of any dividends on, or make any
other distribution, by reduction of capital or otherwise, in respect of, any shares of any class of
Capital Stock of the Company unless after giving effect to such action the aggregate amount of
dividend payments and related distributions made in the immediately preceding 60-month period would
not exceed Consolidated Net Income for such period.

	10.6	 	Nature of Business.

The Company will not, and will not permit any Subsidiary to, engage in any business if, as a
result, the general nature of the business in which the Company and its Subsidiaries, taken as a
whole, would then be engaged would be substantially changed from the general nature of the business
in which the Company and its Subsidiaries, taken as a whole, are engaged on the date of this
Agreement as described in the Disclosure Documents. The Company will not transfer or sell a
currently regulated business of the Company to its Subsidiaries.

	10.7	 	Transactions with Affiliates.

The Company will not, and will not permit any Subsidiary to, enter into directly or indirectly
any Material transaction or Material group of related transactions (including the purchase, lease,
sale or exchange of properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary), except in the ordinary course and pursuant to the
reasonable requirements of the Company’s or such Subsidiary’s business and upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than would be obtainable in a comparable
arm’s-length transaction with a Person not an Affiliate.

	10.8	 	Terrorism Sanctions Regulations.

The Company will not and will not permit any Subsidiary to (a) become a Person described or
designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign
Assets Control or in Section 1 of the Anti Terrorism Order or (b) knowingly engage in any dealings
or transactions with any such Person.

	11.	 	EVENTS OF DEFAULT.

An “Event of Default” shall exist if any of the following conditions or events shall occur and
be continuing:

(a) the Company defaults in the payment of any principal or Make-Whole Amount, if any,
on any Note when the same becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration or otherwise; or

(b) the Company defaults in the payment of any interest on any Note for more than 10
days after the same becomes due and payable; or

(c) the Company defaults in the performance of or compliance with any term contained
herein (other than those referred to in paragraphs (a) and (b) of this Section 11) and such
default is not remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the Company receiving
written notice of such default from any holder of a Note (any such written notice to be
identified as a “notice of default” and to refer specifically to this paragraph (c) of
Section 11); or

 

27

 

(d) any representation or warranty made in writing by or on behalf of the Company or
any Subsidiary Guarantor or by any officer of the Company or a Subsidiary Guarantor in this
Agreement, the Subsidiary Guaranty or in any writing furnished in connection with the
transactions contemplated hereby or thereby proves to have been false or incorrect in any
material respect on the date as of which made; or

(e) (i) the Company or any Subsidiary is in default (as principal or as guarantor or
other surety) in the payment of any principal of or premium or make-whole amount or interest
on any Indebtedness that is outstanding in an aggregate principal amount of at least
$1,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company or
any Subsidiary is in default in the performance of or compliance with any term of any
evidence of any Indebtedness that is outstanding in an aggregate principal amount of at
least $1,000,000 or of any mortgage, indenture or other agreement relating thereto or any
other condition exists thereunder, and as a consequence of such default or condition such
Indebtedness has become, or has been declared (or one or more Persons are entitled to
declare such Indebtedness to be), due and payable before its stated maturity or before its
regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time or the right of the
holder of Indebtedness to convert such Indebtedness into equity interests), the Company or
any Subsidiary has become obligated to purchase or repay Indebtedness before its regular
maturity or before its regularly scheduled dates of payment in an aggregate outstanding
principal amount of at least $1,000,000; or

(f) the Company or any Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law (i) commences a voluntary case, (ii) consents to the entry of an order for
relief against it in an involuntary case, (iii) consents to the appointment of a Custodian
of it or for all or substantially all of its property, or (iv) makes a general assignment
for the benefit of its creditors; or

(g) a court of competent jurisdiction enters an order or decree under any Bankruptcy
Law, and the order or decree remains unstayed and in effect for 60 days, that (i) is for
relief against the Company or any Significant Subsidiary, in an involuntary case,(ii)
appoints a Custodian of the Company, or any Significant Subsidiary, or for all or
substantially all of the property of the Company, or any Significant Subsidiary, or (iii)
orders the liquidation of the Company, or any Significant Subsidiary; or

 

28

 

(h) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the
Code for any plan year or part thereof or a waiver of such standards or extension of any
amortization period is sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected to be filed with the
PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any
ERISA Affiliate that a Plan may become a subject of
any such proceedings, (iii) the aggregate “amount of unfunded benefit liabilities”
(within the meaning of section 4001(a)(18) of ERISA) under all Plans determined in
accordance with Title IV of ERISA, shall exceed $1,000,000, (iv) the Company or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or amends any employee
welfare benefit plan that provides post-employment welfare benefits in a manner that would
increase the liability of the Company or any Subsidiary thereunder; and any such event or
events described in clauses (i) through (vi) above, either individually or together with any
other such event or events, could reasonably be expected to have a Material Adverse Effect;
or

(i) the Subsidiary Guaranty ceases to be in full force and effect (except in accordance
with and by reason of the provisions of Section 9.6(b)) or is declared to be null and void
in whole or in material part by a court or other governmental or regulatory authority having
jurisdiction or the validity or enforceability thereof shall be contested by the Company or
any Subsidiary Guarantor or any of them renounces any of the same or denies that it has any
or further liability thereunder.

As used in Section 11(h), the terms “employee benefit plan” and “employee welfare benefit plan”
shall have the respective meanings assigned to such terms in section 3 of ERISA.

	12.	 	REMEDIES ON DEFAULT, ETC.

	 
	12.1	 	Acceleration.

(a) If an Event of Default with respect to the Company described in paragraph (f) or
(g) of Section 11, all the Notes then outstanding shall automatically become immediately due
and payable.

(b) If any other Event of Default has occurred and is continuing, any holder or
holders of at least 51% in principal amount of the Notes at the time outstanding may at any
time at its or their option, by notice or notices to the Company, declare all the Notes then
outstanding to be immediately due and payable.

(c) If any Event of Default described in paragraph (a) or (b) of Section 11 has
occurred and is continuing, any holder or holders of Notes at the time outstanding affected
by such Event of Default may at any time, at its or their option, by notice or notices to
the Company, declare all the Notes held by it or them to be immediately due and payable.

 

29

 

Upon any Notes becoming due and payable under this Section 12.1, whether automatically or by
declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes,
plus (x) all accrued and unpaid interest thereon (including, but not limited to, interest accrued
thereon at the Default Rate) and (y) the Make-Whole Amount determined in respect of such principal
amount (to the fullest extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand, protest or
further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto
agree, that each holder of a Note has the right to maintain its investment in the Notes free from
repayment by the Company (except as herein specifically provided for) and that the provision for
payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid or are
accelerated as a result of an Event of Default, is intended to provide compensation for the
deprivation of such right under such circumstances.

	12.2	 	Other Remedies.

If any Default or Event of Default has occurred and is continuing, and irrespective of whether
any Notes have become or have been declared immediately due and payable under Section 12.1, the
holder of any Note at the time outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an injunction against
a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted
hereby or thereby or by law or otherwise.

	12.3	 	Rescission.

At any time after any Notes have been declared due and payable pursuant to clause (b) or (c)
of Section 12.1, the holder or holders of at least 51% in principal amount of the Notes then
outstanding, by written notice to the Company, may rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by
reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if
any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes,
at the Default Rate, (b) neither the Company nor any other Person shall have paid any amounts that
have become due solely by reason of such declaration; (c) all Events of Default and Defaults, other
than non-payment of amounts that have become due solely by reason of such declaration, have been
cured or have been waived pursuant to Section 17, and (d) no judgment or decree has been entered
for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment
under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.

	12.4	 	No Waivers or Election of Remedies, Expenses, etc.

No course of dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s
rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note
upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein
or therein or now or hereafter available at law, in equity, by statute or otherwise. Without
limiting the obligations of the Company under Section 15, the Company will pay to the holder of
each Note on demand such further amount as shall be sufficient to cover all costs and expenses of
such holder incurred in any enforcement or collection under this Section 12, including reasonable
attorneys’ fees, expenses and disbursements.

 

30

 

	13.	 	REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

	 
	13.1	 	Registration of Notes.

The Company shall keep at its principal executive office a register for the registration and
registration of transfers of Notes. The name and address of each holder of one or more Notes, each
transfer thereof and the name and address of each transferee of one or more Notes shall be
registered in such register. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an Institutional Investor,
promptly upon request therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.

	13.2	 	Transfer and Exchange of Notes.

Upon surrender of any Note to the Company at the address and to the attention of the
designated officer (all as specified in Section 18(iii)), for registration of transfer or exchange
(and in the case of a surrender for registration of transfer accompanied by a written instrument of
transfer duly executed by the registered holder of such Note or such holder’s attorney duly
authorized in writing and accompanied by the relevant name, address and other information for
notices of each transferee of such Note or part thereof), the Company shall execute and deliver
within 10 Business Days, at the Company’s expense (except as provided below), one or more new Notes
(as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal
to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be substantially in the form of Exhibit 1.1. Each
such new Note shall be dated and bear interest from the date to which interest shall have been paid
on the surrendered Note or dated the date of the surrendered Note if no interest shall have been
paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $500,000, provided that if necessary to enable the
registration of transfer by a holder of its entire holding of Notes, one Note may be in a
denomination of less than $500,000. Any transferee, by its acceptance of a Note registered in its
name (or the name of its nominee), shall be deemed to have made the representations set forth in
Sections 6.1 and 6.2.

	13.3	 	Replacement of Notes.

Upon receipt by the Company at the address and to the attention of the designated officer (all
as specified in Section 18(iii)) of evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an
Institutional Investor, notice from such Institutional Investor of such ownership and such loss,
theft, destruction or mutilation), and

(a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to
it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser
or another holder of a Note with a minimum net worth of at least
$50,000,000 or a Qualified Institutional Buyer, such Person’s own unsecured agreement
of indemnity shall be deemed to be satisfactory), or

 

31

 

(b) in the case of mutilation, upon surrender and cancellation thereof,

the Company at its own expense shall execute and deliver within 10 Business Days, in lieu thereof,
a new Note, dated and bearing interest from the date to which interest shall have been paid on such
lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.

	14.	 	PAYMENTS ON NOTES.

	 
	14.1	 	Place of Payment.

Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and interest
becoming due and payable on the Notes shall be made in New York, New York at the principal office
of JPMorgan Chase Bank, N.A. in such jurisdiction. The Company may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the principal office of a
bank or trust company in such jurisdiction.

	14.2	 	Home Office Payment.

So long as you or your nominee shall be the holder of any Note, and notwithstanding anything
contained in Section 14.1 or in such Note to the contrary, the Company will pay all sums becoming
due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below your name in Schedule A, or by such other method or at
such other address as you shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for cancellation,
reasonably promptly after any such request, to the Company at its principal executive office or at
the place of payment most recently designated by the Company pursuant to Section 14.1. Prior to
any sale or other disposition of any Note held by you or your nominee you will, at your election,
either endorse thereon the amount of principal paid thereon and the last date to which interest has
been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes
pursuant to Section 13.2. The Company will afford the benefits of this Section 14.2 to any
Institutional Investor that is the direct or indirect transferee of any Note purchased by you under
this Agreement and that has made the same agreement relating to such Note as you have made in this
Section 14.2.

 

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	15.	 	EXPENSES, ETC.

	 
	15.1	 	Transaction Expenses.

Whether or not the transactions contemplated hereby are consummated, the Company will pay all
costs and expenses (including reasonable attorneys’ fees of one special counsel and, if reasonably
required by the Required Holders, local or other counsel) incurred by
you and each Other Purchaser or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this Agreement or the
Notes (whether or not such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether
or how to enforce or defend) any rights under this Agreement or the Notes or in responding to any
subpoena or other legal process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a holder of any Note, (b) the costs and expenses,
including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the
Company or any Subsidiary or in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes and (c) the costs and expenses incurred in connection with the
initial filing of this Agreement and all related documents and financial information with the SVO.
The Company will pay, and will save you and each Other Purchaser or holder of a Note harmless from,
all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than
those, if any, retained by a Purchaser or other holder in connection with its purchase of the
Notes).

	15.2	 	Survival.

The obligations of the Company under this Section 15 will survive the payment or transfer of
any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and
the termination of this Agreement.

	16.	 	SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

All representations and warranties contained herein shall survive the execution and delivery
of this Agreement and the Notes, the purchase or transfer by you of any Note or portion thereof or
interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a
Note, regardless of any investigation made at any time by or on behalf of you or any other holder
of a Note. All statements contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of
the Company under this Agreement. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between you and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.

 

33

 

	17.	 	AMENDMENT AND WAIVER.

	 
	17.1	 	Requirements.

This Agreement, the Notes and the Subsidiary Guaranty may be amended, and the observance of
any term hereof or thereof may be waived (either retroactively or prospectively), with (and only
with) the written consent of the Company and the Required Holders (and the Subsidiary Guarantors,
in the case of the Subsidiary Guaranty), except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used therein),
will be effective as to you unless consented to by you in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of Section 12 relating to
acceleration or rescission, change the amount or time of any prepayment or payment of principal of,
or reduce the rate or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (ii) change the percentage of the principal amount of the Notes
the holders of which are required to consent to any such amendment or waiver, or (iii) amend any of
Sections 8, 11(a), 11(b), 12, 17 or 20.

	17.2	 	Solicitation of Holders of Notes.

(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient information,
sufficiently far in advance of the date a decision is required, to enable such holder to
make an informed and considered decision with respect to any proposed amendment, waiver or
consent in respect of any of the provisions hereof or of the Notes. The Company will
deliver executed or true and correct copies of each amendment, waiver or consent effected
pursuant to the provisions of this Section 17 to each holder of outstanding Notes promptly
following the date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.

(b) Payment. The Company will not directly or indirectly pay or cause to be
paid any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, or grant any security, to any holder of Notes as consideration for or as an
inducement to the entering into by any holder of Notes of any waiver or amendment of any of
the terms and provisions hereof unless such remuneration is concurrently paid, or security
is concurrently granted, on the same terms, ratably to each holder of Notes then outstanding
that also enters into any such waiver or amendment of any of the terms and provisions
hereto. If any such remuneration is paid to any holder of Notes that for any reason does
not enter into any waiver or amendment of any of the terms and provisions hereof, such
remuneration shall also be paid to all other non-consenting holders.

	17.3	 	Binding Effect, etc.

Any amendment or waiver consented to as provided in this Section 17 applies equally to all
holders of Notes and is binding upon them and upon each future holder of any Note and upon the
Company without regard to whether such Note has been marked to indicate such amendment or waiver.
No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default
or Event of Default not expressly amended or waived or impair any right consequent thereon. No
course of dealing between the Company and the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term “this Agreement” or “the Agreement” and references thereto shall
mean this Note Purchase Agreement as it may from time to time be amended or supplemented.

 

34

 

	17.4	 	Notes held by Company, etc.

Solely for the purpose of determining whether the holders of the requisite percentage of the
aggregate principal amount of Notes then outstanding approved or consented to
any amendment, waiver or consent to be given under this Agreement or the Notes, or have
directed the taking of any action provided herein or in the Notes to be taken upon the direction of
the holders of a specified percentage of the aggregate principal amount of Notes then outstanding,
Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.

	18.	 	NOTICES.

All notices and communications provided for hereunder shall be in writing and sent (a) by
telecopy if the sender on the same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (b) by registered or certified mail with return
receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:

(i) if to you or your nominee, to you or it at the address specified for such
communications in Schedule A, or at such other address as you or it shall have
specified to the Company in writing,

(ii) if to any other holder of any Note, to such holder at such address as such
other holder shall have specified to the Company in writing, or

(iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of Vice President Administration, or at such other
address as the Company shall have specified to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

	19.	 	REPRODUCTION OF DOCUMENTS.

This Agreement and all documents relating hereto, including (a) consents, waivers and
modifications that may hereafter be executed, (b) documents received by you at a Closing (except
the Notes themselves), and (c) financial statements, certificates and other information previously
or hereafter furnished to you, may be reproduced by you by any photographic, photostatic,
electronic, digital or other similar process and you may destroy any original document so
reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any
such reproduction shall be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in evidence. This Section
19 shall not prohibit the Company or any other holder of Notes from contesting any such
reproduction to the same extent that it could contest the original, or from introducing evidence to
demonstrate the inaccuracy of any such reproduction.

 

35

 

	20.	 	CONFIDENTIAL INFORMATION.

For the purposes of this Section 20, “Confidential Information” means information delivered to
any Purchaser by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this Agreement that
is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified
when received by you as being confidential information of the Company or such Subsidiary, provided
that such term does not include information that (a) was publicly known or otherwise known to you
prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or
omission by you or any Person acting on your behalf, (c) otherwise becomes known to you other than
through disclosure by the Company or any Subsidiary, or (d) constitutes financial statements
delivered to you under Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures adopted by you in
good faith to protect confidential information of third parties delivered to you, provided that you
may deliver or disclose Confidential Information to (i) your directors, officers, employees,
agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes), (ii) your financial advisors and other
professional advisors who agree to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20), (v) any Person from
which you offer to purchase any security of the Company (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over you, (vii) the NAIC or the
SVO or, in each case, any similar organization, or any nationally recognized rating agency that
requires access to information about your investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law,
rule, regulation or order applicable to you, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which you are a party or (z) if an Event of
Default has occurred and is continuing, to the extent you may reasonably determine such delivery
and disclosure to be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under your Notes and this Agreement. Each holder of a Note, by its acceptance
of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this
Section 20 as though it were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to be delivered to
such holder under this Agreement or requested by such holder (other than a holder that is a party
to this Agreement or its nominee), such holder will enter into an agreement with the Company
embodying the provisions of this Section 20.

	21.	 	SUBSTITUTION OF PURCHASER.

You shall have the right to substitute any one of your Affiliates as the purchaser of the
Notes that you have agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both you and such Affiliate, shall contain such Affiliate’s agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with
respect to it of the representations set forth in Section 6. Upon receipt of such notice, wherever
the word “you” is used in this Agreement (other than in this Section 21), such word shall be deemed
to refer to such Affiliate in lieu of you. In the event that such Affiliate is so substituted as a
purchaser hereunder and such Affiliate thereafter transfers to you all of the Notes then held by
such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word “you” is used in this Agreement (other than in this Section 21), such word
shall no longer be deemed to refer to such Affiliate, but shall refer to you, and you shall have
all the rights of an original holder of the Notes under this Agreement.

 

36

 

	22.	 	MISCELLANEOUS.

	 
	22.1	 	Successors and Assigns.

All covenants and other agreements contained in this Agreement by or on behalf of any of the
parties hereto bind and inure to the benefit of their respective successors and assigns (including
any subsequent holder of a Note) whether so expressed or not.

	22.2	 	Payments Due on Non-Business Days.

Anything in this Agreement or the Notes to the contrary notwithstanding (but without limiting
the requirement in Section 8.2 that the notice of any optional prepayment specify a Business Day as
the date fixed for such prepayment), any payment of principal of or Make-Whole Amount or interest
on any Note that is due on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of the interest
payable on such next succeeding Business Day; provided that if the maturity date of any Note is a
date other than a Business Day, the payment otherwise due on such maturity date shall be made on
the next succeeding Business Day and shall include the additional days elapsed in the computation
of interest payable on such next succeeding Business Day.

	22.3	 	Accounting Terms.

All accounting terms used herein that are not expressly defined in this Agreement have the
meanings respectively given to them in accordance with GAAP. Except as otherwise specifically
provided herein, (i) all computations made pursuant to this Agreement shall be made in accordance
with GAAP and (ii) all financial statements shall be prepared in accordance with GAAP.

	22.4	 	Severability.

Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall (to the fullest extent permitted by law) not invalidate or render
unenforceable such provision in any other jurisdiction.

	22.5	 	Construction.

Each covenant contained herein shall be construed (absent express provision to the contrary)
as being independent of each other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such Person.

 

37

 

For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall be
deemed to be a part hereof.

	22.6	 	Counterparts.

This Agreement may be executed in any number of counterparts, each of which shall be an
original but all of which together shall constitute one instrument. Each counterpart may consist
of a number of copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.

	22.7	 	Governing Law.

This Agreement shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the state of New York excluding choice of law principles
of the law of such state that would require the application of the laws of a jurisdiction other
than such state.

	22.8	 	Jurisdiction and Process; Waiver of Jury Trial.

(a) The Company irrevocably submits to the non-exclusive jurisdiction of any New York
state or federal court sitting in the Borough of Manhattan, The City of New York, over any
suit, action or proceeding arising out of or relating to this Agreement or the Notes. To
the fullest extent permitted by applicable law, the Company irrevocably waives and agrees
not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject
to the jurisdiction of any such court, any objection that it may now or hereafter have to
the laying of the venue of any such suit, action or proceeding brought in any such court and
any claim that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.

(b) The Company consents to process being served by or on behalf of any holder of Notes
in any suit, action or proceeding of the nature referred to in Section 22.8(a) by mailing a
copy thereof by registered or certified mail (or any substantially similar form of mail),
postage prepaid, return receipt requested, to it at its address specified in Section 18 or
at such other address of which such holder shall then have been notified pursuant to said
Section. The Company agrees that such service upon receipt (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or proceeding and (ii)
shall, to the fullest extent permitted by applicable law, be taken and held to be valid
personal service upon and personal delivery to it. Notices hereunder shall be conclusively
presumed received as evidenced by a delivery receipt furnished by the United States Postal
Service or any reputable commercial delivery service.

 

38

 

(c) Nothing in this Section 22.8 shall affect the right of any holder of a Note to
serve process in any manner permitted by law, or limit any right that the holders of any of
the Notes may have to bring proceedings against the Company in the courts of any
appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction.

(d) THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO
THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR
THEREWITH.

 

39

 

If you are in agreement with the foregoing, please sign the form of agreement on a counterpart
of this Agreement and return it to the Company, whereupon this Agreement shall become a binding
agreement between you and the Company.

	 	 	 	 	 
	 	Very truly yours,
 
ENERGY WEST, INCORPORATED

 	 
	 	By:  	/s/ David A. Cerotzke
 	 
	 	 	Name:  	David A. Cerotzke 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

 

S-1

 

This Agreement is accepted and

agreed to as of the date thereof.

ALLSTATE LIFE INSURANCE COMPANY

	 	 	 	 	 
	By:

	 	/s/ John W. Kunkle
	 	 
	 

	 	 	 	 
	Name:

	 	John W. Kunkle	 	 
	 
	 	 	 	 
	By:

	 	/s/ Jerry D. Zinkula	 	 
	 

	 	 	 	 
	Name:

	 	Jerry D. Zinkula	 	 

Authorized Signatories

 

S-2

 

CUNA MUTUAL LIFE INSURANCE COMPANY

CUNA MUTUAL INSURANCE SOCIETY

CUMIS INSURANCE SOCIETY, INC.

MEMBERS LIFE INSURANCE COMPANY

	 	 	 	 	 
	By:

	 	MEMBERS Capital Advisors, Inc.,

acting as Investment Advisor
	 	 
	 
	 	 	 	 
	By:

	 	/s/ John Petchler	 	 
	 

	 	 	 	 
	Name:

	 	John Petchler	 	 
	Title:

	 	Managing Director, Investments	 	 

 

S-3

 

SCHEDULE A

INFORMATION RELATING TO PURCHASERS

	 	 	 
	 
	 	Principal Amount of
	Name and Address of Purchaser
	 	Notes to be Purchased
	 	 	 
	Allstate Life Insurance Company
	 	$6,500,000

	(1)	 	All payments by Fedwire transfer of immediately available funds or ACH Payment, identifying the name of the
Issuer, the Private Placement Number and the payment as principal, interest or premium, in the format as
follows:

Bank: Citibank

ABA #: 021000089

Account Name: Allstate Life Insurance Company Collection Account — PP

Account #: 30547007

Reference: OBI [Insert 9-digit Private Placement No., Credit Name, Coupon, Maturity here],
Payment Due Date (MM/DD/YY) and the type and amount of payment being made.

     For example:

     P
 _____ 
(Enter “P” and amount of principal being remitted,

     for example, P5000000.00) -

     I
 _____ 
(Enter “I” and amount of interest being remitted,

     for example, I225000.00)

	(2)	 	All notices of scheduled payments and written confirmations of such wire transfer to be sent to:

Allstate Investments LLC

Investment Operations — Private Placements

3075 Sanders Road, STE G4A

Northbrook, IL 60062-7127

Telephone: (847) 402-6672 Private Placements

Telecopy: (847) 326-7032

E-Mail: PrivateIOD@allstate.com

	(3)	 	All financial reports, compliance certificates and all other written communications, including notice of
prepayments, to be sent by email (PrivateCompliance@allstate.com) or hard copy to:

Allstate Investments LLC

Private Placements Department

3075 Sanders Road, STE G3A

Northbrook, Illinois 60062-7127

Telephone: (847) 402-7117

Telecopy: (847) 402-3092

 

 1

Schedule A

 

	(4)	 	Address for delivery of Notes:

Citibank N.A.

333 West 34th Street

3rd Floor Securities Vault

New York, N.Y. 10001

Attn: Danny Reyes

For Allstate Life Insurance Company/Safekeeping Account No. 846627

	(5)	 	E-mail Address for Electronic Delivery:

Privatecompliance@allstate.com

	(6)	 	One manually executed set of closing documents and two conformed copies to be sent to:

Allstate Investments LLC

Attention: Kevin E. Trabaris

3075 Sanders Road, STE G5A

Northbrook, Illinois 60062-7127

Telephone: (847) 402-5000

	(7)	 	Tax ID No.: 36-2554642

 

 2

Schedule A

 

INFORMATION RELATING TO PURCHASERS

	 	 	 
	 
	 	Principal Amount of
	Name and Address of Purchaser
	 	Notes to be Purchased
	 	 	 
	CUNA MUTUAL LIFE INSURANCE COMPANY
	 	$2,925,000

	 	 	Register Notes in Name of: TURNSPEED + CO

	 
	(1)	 	All payments by wire transfer of immediately available funds to:

State Street Bank

DTC/New York Window

55 Water Street

Plaza Level — 3rd Floor

New York, NY 10041

Account: State Street Bank

ABA #: 011000028

A/C: CUNA Mutual Life Insurance Company

A/C Number: ZT2A
 

with sufficient information to identify the source and application of such funds.

	(2)	 	All notices of payments and written confirmations of such wire transfers:

State Street Bank

Attn: Brian Kershner

801 Pennsylvania

Kansas City, MO 64105

FAX: 816-691-5545

E-Mail: bdkersh@statestreetkc.com
 

With copy to:
 

CUNA Mutual Insurance Society

Attn: Rosie Pope

5910 Mineral Point Road

Madison, WI 53705-4456

FAX: 608-231-8591

E-Mail: rosie.pope@cunamutual.com

 

 3

Schedule A

 

	(3)	 	All other communications:

CUNA Mutual Insurance Society

Attn: Managing Director — Investments

5910 Mineral Point Road

Madison, WI 53705-4456

Telephone: 608-231-8255

FAX: 608-236-6224

E-Mail: john.petchler@cunamutual.com 
 

With copy to: 
 

CUNA Mutual Insurance Society

Attn: Associate General Counsel

5910 Mineral Point Road

Madison, WI 53705-4456

Telephone: 608-231-7653

FAX: 608-236-7653

E-Mail: steve.suleski@cunamutual.com

	(4)	 	Address for delivery of Notes to DTC:

DTC / New York Window 

Attn: Robert Mendez 

55 Water Street

New York, New York 10041

	(5)	 	Tax ID No.: 42-0388260

 

 4

Schedule A

 

INFORMATION RELATING TO PURCHASERS

	 	 	 
	Name and Address of Purchaser
	 	Principal Amount of

Notes to be Purchased
	 	 	 
	CUNA MUTUAL INSURANCE SOCIETY
	 	$1,950,000

	 	 	Register Notes in Name of: TURNKEYS + CO

	 
	(1)	 	All payments by wire transfer of immediately available funds to:

State Street Bank

DTC/New York Window

55 Water Street

Plaza Level — 3rd Floor

New York, NY 10041

Account: State Street Bank

ABA #: 011000028

A/C: CUNA Mutual Insurance Society

A/C Number: ZT1E
 

with sufficient information to identify the source and application of such funds.

	(2)	 	All notices of payments and written confirmations of such wire transfers:

State Street Bank

Attn: Brian Kershner

801 Pennsylvania

Kansas City, MO 64105

FAX: 816-691-5545

E-Mail: bdkersh@statestreetkc.com
 

With copy to:
 

CUNA Mutual Insurance Society

Attn: Rosie Pope

5910 Mineral Point Road

Madison, WI 53705-4456

FAX: 608-231-8591

E-Mail: rosie.pope@cunamutual.com

 

 5

Schedule A

 

	(3)	 	All other communications:

CUNA Mutual Insurance Society

Attn: Managing Director — Investments

5910 Mineral Point Road

Madison, WI 53705-4456

Telephone: 608-231-8255

FAX: 608-236-6224

E-Mail: john.petchler@cunamutual.com
 

With copy to:
 

CUNA Mutual Insurance Society

Attn: Associate General Counsel

5910 Mineral Point Road

Madison, WI 53705-4456

Telephone: 608-231-7653

FAX: 608-236-7653

E-Mail: steve.suleski@cunamutual.com

	(4)	 	Address for delivery of Notes to DTC:

DTC / New York Window

Attn: Robert Mendez

55 Water Street

New York, New York 10041

	(5)	 	Tax ID No.: 39-0230590

 

 6

Schedule A

 

INFORMATION RELATING TO PURCHASERS

	 	 	 
	 
	 	Principal Amount of
	Name and Address of Purchaser
	 	Notes to be Purchased
	 	 	 
	CUMIS INSURANCE SOCIETY
	 	$975,000

	 	 	Register Notes in Name of: TURNJETTY + CO

	 
	(1)	 	All payments by wire transfer of immediately available funds to:

State Street Bank

DTC/New York Window

55 Water Street

Plaza Level — 3rd Floor

New York, NY 10041

Account: State Street Bank

ABA #: 011000028

A/C: CUMIS Insurance Society

A/C Number: ZT1I
 

with sufficient information to identify the source and application of such funds.

	(2)	 	All notices of payments and written confirmations of such wire transfers:

State Street Bank

Attn: Brian Kershner

801 Pennsylvania

Kansas City, MO 64105

FAX: 816-691-5545

E-Mail: bdkersh@statestreetkc.com
 

With copy to:
 

CUNA Mutual Insurance Society

Attn: Rosie Pope

5910 Mineral Point Road

Madison, WI 53705-4456

FAX: 608-231-8591

E-Mail: rosie.pope@cunamutual.com

 

 7

Schedule A

 

	(3)	 	All other communications:

CUNA Mutual Insurance Society

Attn: Managing Director — Investments

5910 Mineral Point Road

Madison, WI 53705-4456

Telephone: 608-231-8255

FAX: 608-236-6224

E-Mail: john.petchler@cunamutual.com
 

With copy to:
 

CUNA Mutual Insurance Society

Attn: Associate General Counsel

5910 Mineral Point Road

Madison, WI 53705-4456

Telephone: 608-231-7653

FAX: 608-236-7653

E-Mail: steve.suleski@cunamutual.com

	(4)	 	Address for delivery of Notes to DTC:

DTC / New York Window

Attn: Robert Mendez

55 Water Street

New York, New York 10041

	(5)	 	Tax ID No.: 39-0972608

 

 8

Schedule A

 

INFORMATION RELATING TO PURCHASERS

	 	 	 
	 
	 	Principal Amount of
	Name and Address of Purchaser
	 	Notes to be Purchased
	 	 	 
	MEMBERS LIFE INSURANCE COMPANY
	 	$650,000

	 	 	Register Notes in Name of: TURNLAUNCH + CO

	 
	(1)	 	All payments by wire transfer of immediately available funds to:

State Street Bank

DTC/New York Window

55 Water Street

Plaza Level — 3rd Floor

New York, NY 10041

Account: State Street Bank

ABA #: 011000028

A/C: Members Life Insurance Company

A/C Number: ZT1J
 

with sufficient information to identify the source and application of such funds.

	(2)	 	All notices of payments and written confirmations of such wire transfers:

	 	 	 	State Street Bank

Attn: Brian Kershner

801 Pennsylvania

Kansas City, MO 64105

FAX: 816-691-5545

E-Mail: bdkersh@statestreetkc.com
 

With copy to:
 

CUNA Mutual Insurance Society

Attn: Rosie Pope

5910 Mineral Point Road

Madison, WI 53705-4456

FAX: 608-231-8591

E-Mail: rosie.pope@cunamutual.com

 

 9

Schedule A

 

	(3)	 	All other communications:

CUNA Mutual Insurance Society

Attn: Managing Director — Investments

5910 Mineral Point Road

Madison, WI 53705-4456

Telephone: 608-231-8255

FAX: 608-236-6224

E-Mail: john.petchler@cunamutual.com
 

With copy to:
 

CUNA Mutual Insurance Society

Attn: Associate General Counsel

5910 Mineral Point Road

Madison, WI 53705-4456

Telephone: 608-231-7653

FAX: 608-236-7653

E-Mail: steve.suleski@cunamutual.com

	(4)	 	Address for delivery of Notes to DTC:

DTC / New York Window

Attn: Robert Mendez

55 Water Street

New York, New York 10041

	(5)	 	Tax ID No.: 39-1236386

 

 10

Schedule A

 

SCHEDULE B

DEFINED TERMS

As used herein, the following terms have the respective meanings set forth below or set forth
in the Section hereof following such term:

“Affiliate” means, at any time, and with respect to any Person, (a) any other Person that at
such time directly or indirectly through one or more intermediaries Controls, or is Controlled by,
or is under common Control with, such first Person, and, with respect to the Company, shall include
(b) any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of
voting or equity interests of the Company or any Subsidiary or any corporation of which the Company
and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or
more of any class of voting or equity interests. As used in this definition, “Control” means the
possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by contract or
otherwise. Unless the context otherwise clearly requires, any reference to an “Affiliate” is a
reference to an Affiliate of the Company.

“Anti-Terrorism Order” means Executive Order 13224 of September 23, 2001, Blocking Property
and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66
Fed. Reg. 49079 (2001)).

“Bankruptcy Law” means Title 11, U.S. Code or any similar Federal and State law for the relief
of debtors.

“Business Day” means any day other than a Saturday, a Sunday or a day on which commercial
banks in New York City are required or authorized to be closed.

“Capitalized Lease” means any lease of property (real, personal or mixed) which in accordance
with GAAP is required to be capitalized on a balance sheet of the lessee.

“Capitalized Lease Obligation” means at any time, the aggregate amount included as a liability
on the balance sheet of the lessee with respect to the present value of the minimum rental
commitment under a Capitalized Lease of the lessee.

“Capital Stock” means any and all shares, interests, participations or other equivalents
(however designated) of corporate stock.

“Change of Control” means an event or series of events by which any person or “group” (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) (such person or persons hereinafter
referred to as an “Acquiring Person”) becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of more than 50% of the voting power of the then
outstanding Voting Stock of the Company; provided that, notwithstanding the foregoing, a “Change in
Control” shall not be deemed to have occurred if the Company (or the Acquiring Person if either (x)
the Company is no longer in existence or (y) the Acquiring Person has acquired all or substantially
all of the assets thereof) shall have an
Investment Grade Rating immediately following such Acquiring Person becoming the “beneficial
owner” or consummating such acquisition.

 

 

Schedule B

 

“Closing” is defined in Section 3.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules
and regulations promulgated thereunder from time to time.

“Common Stock” means the common stock, par value $0.15 per share, of the Company as the same
exists at the date of this Agreement or as such stock shall be constituted from time to time.

“Company” means Energy West, Incorporated, a Montana corporation.

“Confidential Information” is defined in Section 20.

“Consolidated” when used in conjunction with any other defined term means the aggregate amount
of the items included within the defined term of the Company and any Subsidiary (provided, however,
that in the case of a Subsidiary, the amount of the items included within the defined term of such
Subsidiary shall be calculated only with respect to the Company’s percentage ownership interest in
such Subsidiary) on a consolidated basis eliminating inter-company items.

“Consolidated Net Income” for any period means the aggregate of the net income or loss of the
Company and its Subsidiaries for such period after eliminating all inter-company items and portions
of earnings properly attributable to minority interests, if any, in shares of capital stock of such
Subsidiaries, and after eliminating any extraordinary gains or losses on the sale or other
disposition of investments, fixed assets or capital assets, and any tax deductions or credits on
account of such excluded gains or losses, all computed in accordance with generally accepted
accounting principles.

“Consolidated Net Income Available for Interest Charges” for any period means Consolidated Net
Income for such period, plus (without duplication) all amounts deducted in the computation thereof
on account of (i) Interest Charges on Consolidated Indebtedness, and (ii) taxes in respect of
income and excess profits.

“Control Event” means:

(a) the execution by the Company or any of its Subsidiaries or Affiliates of any
agreement with respect to any proposed transaction or event or series of transactions or
events that, individually or in the aggregate, may reasonably be expected to result in a
Change of Control, or

(b) the execution of any written agreement that, when fully performed by the parties
thereto, would result in a Change of Control.

 

2

Schedule B

 

“Credit Agreement” means the Credit Agreement dated as of June 29, 2007 by and among Energy
West, Incorporated, various financial institutions and LaSalle Bank National Association, as Agent,
as such agreement may be amended, restated, supplemented, modified, refinanced, extended or
replaced.

“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.

“Default” means an event or condition the occurrence or existence of which would, with the
lapse of time or the giving of notice or both, become an Event of Default.

“Default Rate” means that rate of interest that is the greater of (i) 2% per annum above the
rate of interest stated in clause (a) of the first paragraph of the Notes or (ii) 2% over the rate
of interest publicly announced by JPMorgan Chase Bank, N.A. as its “base” or “prime” rate.

“Deferred Income Taxes” means all taxes in respect of income and excess profits not due within
one year from the date of accrual thereof in accordance with GAAP.

“Disclosure Documents” is defined in Section 5.3.

“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into the environment, including those
related to Hazardous Materials.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time in effect.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as
a single employer together with the Company under section 414 of the Code.

“Event of Default” is defined in Section 11.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Form 10-K” is defined in Section 7.1(b).

“Form 10-Q” is defined in Section 7.1(a).

“Funded Debt” means without duplication (i) all Indebtedness maturing one year or more from
the date of the creation thereof and (ii) all Indebtedness under any revolving credit facility
measured at its lowest amount outstanding during any 30 consecutive day period within the prior
twelve months. Deferred Income Taxes do not constitute Funded Debt.

 

3

Schedule B

 

“Funding Instructions” is defined in Section 3.

“GAAP” means generally accepted accounting principles as in effect from time to time in the
United States of America.

“Governmental Authority” means

(a) the government of

(i) the United States of America or any state or other political subdivision
thereof, or

(ii) any jurisdiction in which the Company or any Subsidiary conducts all or
any part of its business, or which asserts jurisdiction over any properties of the
Company or any Subsidiary, or

(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.

“Guaranty” of a Person means any guaranty, assumption, endorsement, or contingent agreement to
purchase or provide funds for the payment of, or otherwise become liable upon, the obligation of
any other Person, or any agreement to maintain the net worth or working capital or other financial
condition of any other Person or any other assurance to any creditor of any Person against loss,
including any comfort letter, operating agreement, take-or-pay contract, or the contingent
liability of such Person in connection with any application for a letter of credit, excepting from
the foregoing contingent liabilities the amount of such Person’s obligations with respect to bonds,
deposits, standby letters of credit or other evidences of contingent obligations given to
governmental entities in compliance with local and state requirements that have not been drawn or
called upon.

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or other
substances that might pose a hazard to health and safety, the removal of which may be required or
the generation, manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage, seepage or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law including, but not
limited to, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum,
petroleum products, lead based paint, radon gas or similar restricted, prohibited or penalized
substances.

“holder” means, with respect to any Note, the Person in whose name such Note is registered in
the register maintained by the Company pursuant to Section 13.1.

“INHAM Exemption” is defined in Section 6.2(e).

“Indebtedness” with respect to any Person means, at any time, without duplication

 

4

Schedule B

 

(a) all amounts in respect of borrowed money (excluding capital stock, earned and
capital surplus and general contingency reserves) which would be shown on the liabilities
side of a balance sheet of such Person prepared in accordance with GAAP;

(b) all indebtedness secured by any mortgage, pledge, lien, security interest or
conditional sale or other title retention agreement to which any property or asset owned or
held by such Person is subject, whether or not the indebtedness secured thereby shall have
been assumed;

(c) all Capitalized Lease Obligations; and

(d) all Guaranties by such Person.

For the purpose of computing the Indebtedness of any Person, there shall be excluded any particular
Indebtedness to the extent that, upon or prior to the maturity thereof, there shall have been
deposited with the proper depository in trust the necessary funds, or evidences of such
Indebtedness, if permitted by the instrument creating such Indebtedness, for the payment,
redemption or satisfaction of such Indebtedness.

“Institutional Investor” means (a) any original purchaser of a Note, (b) any holder of
$5,000,000 or more in aggregate principal amount of the Notes and (c) any bank, trust company,
savings and loan association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar financial institution or
entity, regardless of legal form.

“Interest Charges” on any Indebtedness of any Person for any period, means all amounts which
would, in accordance with generally accepted accounting principles, be deducted in computing net
income for such Person for such period on account of interest on such Indebtedness, including
imputed interest in respect of Capitalized Lease Obligations and amortization of debt discount and
expense.

“Investment Grade Rating” in respect of any Person means, at the time of determination, at
least two of the following ratings of its senior, unsecured long-term indebtedness for borrowed
money: (i) by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, or any
successor thereof (“S&P”), “BBB-” or better, (ii) by Moody’s Investors Service, Inc., or any
successor thereof (“Moody’s”), “Baa3” or better, or (iii) by another rating agency of recognized
national standing, an equivalent or better rating.

“Lien” as applied to the property of any Person means any mortgage, lien, charge or
encumbrance on, or security interest in, or pledge of, or conditional sale or other title retention
agreement.

“Make-Whole Amount” is defined in Section 8.7.

 

5

Schedule B

 

“Material” means material in relation to the business, operations, affairs, financial
condition, assets, properties or prospects of the Company and its Subsidiaries taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business, operations,
financial condition, assets or properties of the Company and its Subsidiaries taken as a whole, (b)
the ability of the Company to perform its obligations under this Agreement or the Notes, (c) the
ability of any Subsidiary Guarantor to perform its obligations under the Subsidiary Guaranty, or
(d) the validity or enforceability of this Agreement, the Notes or the Subsidiary Guaranty.

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in
section 4001(a)(3) of ERISA).

“NAIC” means the National Association of Insurance Commissioners or any successor thereto.

“NAIC Annual Statement” is defined in Section 6.2(a).

“Notes” is defined in Section 1.

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other
officer of the Company whose responsibilities extend to the subject matter of such certificate.

“Other Purchasers” is defined in Section 2.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any
successor thereto.

“Person” means an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company, limited liability company,
government (or an agency or political subdivision thereof) or other entity of any kind.

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) that is or,
within the preceding five years, has been established or maintained, or to which contributions are
or, within the preceding five years, have been made or required to be made, by the Company or any
ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability.

“Pro Forma Annual Interest Charges” means as of any date, the net amount (without duplication)
of (i) Interest Charges in respect of Consolidated Indebtedness outstanding on such date, after
giving effect to any Consolidated Indebtedness being retired out of the proceeds of any
Indebtedness being created, assumed, incurred or guaranteed on such date, for the period of 12 full
calendar months next preceding such date, plus (ii) Interest Charges in respect of any Indebtedness
being created, assumed, incurred or guaranteed on such date for the period of 12 full calendar
months next succeeding such date.

 

6

Schedule B

 

“property” or “properties” means, unless otherwise specifically limited, real or personal
property of any kind, tangible or intangible, choate or inchoate.

“Proposed Prepayment Date” is defined in Section 8.3(c).

“PTE” is defined in Section 6.2(a).

“Purchaser” means each purchaser listed in Schedule A.

“QPAM Exemption” is defined in Section 6.2(d).

“Qualified Institutional Buyer” means any Person that is a “qualified institutional buyer”
within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.

“Required Holders” means, at any time, the holders of at least 51% in principal amount of the
Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its
Affiliates).

“Responsible Officer” means any Senior Financial Officer and any other officer of the Company
with responsibility for the administration of the relevant portion of this Agreement, including the
President and Chief Executive Officer, the Chief Financial Officer, the Vice President
Administration or the Controller.

“SEC” shall mean the Securities and Exchange Commission of the United States, or any successor
thereto.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Senior Financial Officer” means the chief financial officer, principal accounting officer,
treasurer, Vice President Administration or controller of the Company.

“Source” is defined in Section 6.2.

“Significant Subsidiary” means any Subsidiary within the meaning of Rule 12b-2 under the
Exchange Act, as the same may be amended from time to time.

“Subsidiary” means any corporation, partnership, association, limited liability company, or
other business entity of which 50% or more of the Voting Stock or other equity interests, as
appropriate, is at the time directly or indirectly owned by the Company and one or more other
Subsidiaries, or by one or more other Subsidiaries.

“Stockholders’ Equity” means, as applied to any Person on any date of determination, the
amount which would be shown on the balance sheet of such Person as the difference between such
Person’s total assets and total liabilities, which amount will include capital stock, capital
surplus and retained earnings, all as calculated in accordance with GAAP.

 

7

Schedule B

 

“Subsidiary Guarantor” is defined in Section 1.2.

“Subsidiary Guaranty” is defined in Section 1.2.

“SVO” means the Securities Valuation Office of the NAIC or any successor to such Office.

“Tangible Assets” means, as applied to any Person at any date, all assets other than those
which would be treated as intangibles under GAAP, including, without limitation, as intangibles
such items as good will, trademark, trade names, service marks, brand names, copyrights, patents,
licenses and rights with respect to the foregoing, unamortized debt discount and expense, and
organization expenses.

“this Agreement” or “the Agreement” is defined in Section 17.3.

“Total Capitalization” means as applied to any Person on any date of determination, the sum of
such Person’s Funded Debt and Stockholder’s Equity.

“USA Patriot Act” means United States Public Law 107-56, Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of
2001, as amended from time to time, and the rules and regulations promulgated thereunder from time
to time in effect.

“Voting Stock” means, with respect to any Person, any class of shares of stock or other equity
interests of such Person having general voting power under ordinary circumstances to elect a
majority of the board of directors or other managing entities, as appropriate, of such Person
(irrespective of whether or not at the time stock of any other class or classes or other equity
interests of such Person shall have or might have voting power by reason of the happening of any
contingency).

“Wholly Owned Subsidiary” means, at any time, any Subsidiary 100% of all of the Voting Stock
(except directors’ qualifying shares and other minority shares held solely to satisfy organization
requirements of the applicable jurisdiction) and voting interests of which are owned by any one or
more of the Company and its Wholly Owned Subsidiaries at such time.

 

8

Schedule B

 

SCHEDULE 5.4

ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES

	 	 	 	 	 	 	 
	Name	 	Jurisdiction	 	% Owned
	 
	 	 	 	 	 	 
	Energy West Resources, Inc.

	 	Montana
	 	 	100.00	%
	Energy West Propane, Inc.

	 	Montana
	 	 	100.00	%
	Energy West Development, Inc.

	 	Montana
	 	 	100.00	%

Directors and Senior Officers

Directors:

W.E. ‘Gene’ Argo

Steve A. Calabrese

David A. Cerotzke

Mark D. Grossi

Richard M. Osborne

James R. Smail

Thomas J. Smith

James E. Sprague

Senior Officers:

David A. Cerotzke, President and Chief Executive Officer

Wade F. Brooksby, Chief Financial Officer and Corporate Secretary

Kevin Degenstein, Senior Vice-President Operations

Jed Henthorne, Vice-President Administration

 

 

Schedule 5.4

 

SCHEDULE 5.14

USE OF PROCEEDS

Proceeds of the Notes will be used principally to repay Indebtedness outstanding under its
outstanding credit agreement (that is being terminated on the date of Closing and replaced by the
Credit Agreement) that was incurred to repay:

	 	1.	 	Series 1997 notes — principal outstanding $7,830,000; total payoff: $7,870,781.25

	 
	 	2.	 	Series 1993 notes —  principal outstanding $4,290,000; total payoff: $4,312,518.76

	 
	 	3.	 	Cascade County, Montana Series 1992B Industrial Development Revenue Obligations — principal
outstanding $775,000; total payoff: $799,895.00

 

 

Schedule 5.14

 

SCHEDULE 5.15

EXISTING INDEBTEDNESS

The following is our long-term indebtedness as of June 21, 2007 (See Schedule 5.14).

	 	1.	 	Series 1997 notes — principal outstanding $7,830,000; total payoff: $7,870,781.25

	 
	 	2.	 	Series 1993 notes — principal outstanding $4,290,000; total payoff: $4,312,518.76

	 
	 	3.	 	Cascade County, Montana Series 1992B Industrial Development Revenue Obligations —
principal outstanding $775,000; total payoff: $799,895.00

 

 

Schedule 5.15

 

SCHEDULE 5.18

ENVIRONMENTAL MATTERS

The Company owns property on which it operated a manufactured gas plant from 1909 to 1928. The site
is currently used as an office facility for Company field personnel and a storage location for
certain equipment and materials. The coal gasification process utilized in the plant resulted in
the production of certain by-products which have been classified by the federal government and the
State of Montana as hazardous to the environment.

The Company has completed its remediation of soil contaminants and in April of 2002 received a
closure letter from the Montana Department of Environmental Quality (“MDEQ”) approving the
completion of such remediation program. The Company and its consultants continue to work with the
MDEQ relating to the remediation plan for water contaminants. The MDEQ has established regulations
that allow water contaminants at a site to exceed standards if it is technically impracticable to
achieve them. Although the MDEQ has not established guidance to attain a technical waiver, the U.S.
Environmental Protection Agency (“EPA”) has developed such guidance. The EPA guidance lists factors
which render remediation technically impracticable. The Company has filed a request for a waiver
respecting compliance with certain standards with the MDEQ.

 

 

Schedule 5.18

 

EXHIBIT 1.1

[FORM OF SENIOR NOTE]

ENERGY WEST, INCORPORATED

6.16% Senior Unsecured Note due June 29, 2017

			
	 	 	 
	No. R-[___]
	 	[Date]
	$[_____]
	 	PPN: 29274A A*6

FOR VALUE RECEIVED, the undersigned, ENERGY WEST, INCORPORATED (herein called the “Company”),
a corporation organized and existing under the laws of the state of Montana promises to pay
to [_____], or
registered assigns, the principal sum of $[_____] on June 29, 2017, with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid
balance thereof at the rate of 6.16% per annum from the date hereof, payable semiannually, on June
29 and December 29 in each year, commencing with the June 29 or December 29 next succeeding the
date hereof, until the principal hereof shall have become due and payable, and (b) to the extent
permitted by law, at a rate per annum from time to time equal to the greater of (i) 8.16% or (ii)
2% over the rate of interest publicly announced by JPMorgan Chase Bank, N.A. from time to time in
New York, New York as its “base” or “prime” rate, on any overdue payment of interest and, during
the continuance of an Event of Default, on the unpaid balance hereof and on any overdue payment of
any Make-Whole Amount, payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand).

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are
to be made in lawful money of the United States of America at the principal office of JPMorgan
Chase Bank, N.A. in New York, New York or at such other place as the Company shall have designated
by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to
below.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to
the Note Purchase Agreement dated as of June 29, 2007 (as from time to time amended, the “Note
Purchase Agreement”), between the Company and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note
Purchase Agreement and (ii) to have made the representation set forth in Section 6.2 of the Note
Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender
of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of
transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized
in writing, a new Note for a like principal amount will be issued to, and registered in the name
of, the transferee. Prior to due presentment for registration of transfer, the
Company may treat the Person in whose name this Note is registered as the owner hereof for the
purpose of receiving payment and for all other purposes, and the Company will not be affected by
any notice to the contrary.

 

 

Exhibit 1.1

 

This Note is subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreement, but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any applicable Make-Whole
Amount) and with the effect provided in the Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of the parties
shall be governed by, the law of the state of New York excluding choice-of-law principles of the
law of such state that would require the application of the laws of a jurisdiction other than such
state.

	 	 	 	 	 
	 	ENERGY WEST, INCORPORATED

 	 
	 	By:  	 	 
	 	 	Name:  	David A. Cerotzke 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

 

2

Exhibit 1.1

 

EXHIBIT 1.2

[FORM OF SUBSIDIARY GUARANTY]

THIS GUARANTY (this “Guaranty”) dated as of June 29, 2007 is made by the undersigned (each, a
“Guarantor”), in favor of the holders from time to time of the Notes hereinafter referred to,
including each purchaser named in the Note Purchase Agreement hereinafter referred to, and their
respective successors and assigns (collectively, the “Holders” and each individually,
a “Holder”).

W I T N E S S E T H:

WHEREAS, Energy West, Incorporated a Montana corporation (the “Company”), and the initial
Holders have entered into a Note Purchase Agreement dated as of June 29, 2007 (the Note Purchase
Agreement as amended, restated or otherwise modified from time to time in accordance with its terms
and in effect, the “Note Purchase Agreement”);

WHEREAS, the Note Purchase Agreement provides for the issuance by the Company of $13,000,000
aggregate principal amount of Notes (as defined in the Note Purchase Agreement);

WHEREAS, the Company directly or indirectly owns all or a substantial portion of the issued
and outstanding capital stock of each Guarantor and, by virtue of such ownership and otherwise,
each Guarantor will derive substantial benefits from the purchase by the Holders of the Company’s
Notes;

WHEREAS, it is a condition precedent to the obligation of the Holders to purchase the Notes
that each Guarantor shall have executed and delivered this Guaranty to the Holders; and

WHEREAS, each Guarantor desires to execute and deliver this Guaranty to satisfy the conditions
described in the preceding paragraph;

NOW, THEREFORE, in consideration of the premises and other benefits to each Guarantor, and of
the purchase of the Company’s Notes by the Holders, and for other good and valuable consideration,
the receipt and sufficiency of which are acknowledged, each Guarantor makes this Guaranty as
follows:

1) Definitions. Any capitalized terms not otherwise herein defined shall have the
meanings attributed to them in the Note Purchase Agreement.

 

 

Exhibit 1.2

 

2) Guaranty. Each Guarantor, jointly and severally with each other Guarantor,
unconditionally and irrevocably guarantees to the Holders the due, prompt and complete payment by
the Company of the principal of, make-whole amount, if any, prepayment premium, if any, breakage
amount, if any, and interest on, and each other amount due under, the Notes or the Note Purchase
Agreement, when and as the same shall become due and payable
(whether at stated maturity or by required or optional prepayment or by acceleration or
otherwise) in accordance with the terms of the Notes and the Note Purchase Agreement (the Notes and
the Note Purchase Agreement being sometimes hereinafter collectively referred to as the “Note
Documents” and the amounts payable by the Company under the Note Documents, and all other monetary
obligations of the Company thereunder (including any attorneys’ fees and expenses), being sometimes
collectively hereinafter referred to as the “Obligations”). This Guaranty is a guaranty of payment
and not just of collectibility and is in no way conditioned or contingent upon any attempt to
collect from the Company or upon any other event, contingency or circumstance whatsoever. If for
any reason whatsoever the Company shall fail or be unable duly, punctually and fully to pay such
amounts as and when the same shall become due and payable, each Guarantor, without demand,
presentment, protest or notice of any kind, will forthwith pay or cause to be paid such amounts to
the Holders under the terms of such Note Documents, in lawful money of the United States, at the
place specified in the Note Purchase Agreement, or perform or comply with the same or cause the
same to be performed or complied with, together with interest (to the extent provided for under
such Note Documents) on any amount due and owing from the Company. Each Guarantor, promptly after
demand, will pay to the Holders the reasonable costs and expenses of collecting such amounts or
otherwise enforcing this Guaranty, including, without limitation, the reasonable fees and expenses
of counsel. Notwithstanding the foregoing, the right of recovery against each Guarantor under this
Guaranty is limited to the extent it is judicially determined with respect to any Guarantor that
entering into this Guaranty would violate Section 548 of the United States Bankruptcy Code or any
comparable provisions of any state law, in which case such Guarantor shall be liable under this
Guaranty only for amounts aggregating up to the largest amount that would not render such
Guarantor’s obligations hereunder subject to avoidance under Section 548 of the United States
Bankruptcy Code or any comparable provisions of any state law.

3) Guarantor’s Obligations Unconditional. The obligations of each Guarantor under
this Guaranty shall be primary, absolute and unconditional obligations of each Guarantor, shall not
be subject to any counterclaim, set-off, deduction, diminution, abatement, recoupment, suspension,
deferment, reduction or defense based upon any claim each Guarantor or any other person may have
against the Company or any other person, and to the full extent permitted by applicable law shall
remain in full force and effect without regard to, and shall not be released, discharged or in any
way affected by (other than a release of Guarantor herefrom pursuant to Section 9.6(b) of the Note
Purchase Agreement), any circumstance or condition whatsoever (whether or not each Guarantor or the
Company shall have any knowledge or notice thereof), including:

(a) any termination, amendment or modification of or deletion from or addition or
supplement to or other change in any of the Note Documents or any other instrument or
agreement applicable to any of the parties to any of the Note Documents;

(b) any furnishing or acceptance of any security, or any release of any security, for
the Obligations, or the failure of any security or the failure of any person to perfect any
interest in any collateral;

 

2

Exhibit 1.2

 

(c) any failure, omission or delay on the part of the Company to conform or comply with
any term of any of the Note Documents or any other instrument or agreement referred to in
paragraph (a) above, including, without limitation, failure to give notice to any Guarantor
of the occurrence of a “Default” or an “Event of Default” under any Note Document;

(d) any waiver of the payment, performance or observance of any of the obligations,
conditions, covenants or agreements contained in any Note Document, or any other waiver,
consent, extension, indulgence, compromise, settlement, release or other action or inaction
under or in respect of any of the Note Documents or any other instrument or agreement
referred to in paragraph (a) above or any obligation or liability of the Company, or any
exercise or non-exercise of any right, remedy, power or privilege under or in respect of any
such instrument or agreement or any such obligation or liability;

(e) any failure, omission or delay on the part of any of the Holders to enforce, assert
or exercise any right, power or remedy conferred on such Holder in this Guaranty, or any
such failure, omission or delay on the part of such Holder in connection with any Note
Document, or any other action on the part of such Holder;

(f) any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement,
readjustment, assignment for the benefit of creditors, composition, receivership,
conservatorship, custodianship, liquidation, marshaling of assets and liabilities or similar
proceedings with respect to the Company, any Guarantor or to any other person or any of
their respective properties or creditors, or any action taken by any trustee or receiver or
by any court in any such proceeding;

(g) any discharge, termination, cancellation, frustration, irregularity, invalidity or
unenforceability, in whole or in part, of any of the Note Documents or any other agreement
or instrument referred to in paragraph (a) above or any term hereof;

(h) any merger or consolidation of the Company or any Guarantor into or with any other
corporation, or any sale, lease or transfer of any of the assets of the Company or any
Guarantor to any other person;

(i) any change in the ownership of any shares of capital stock of the Company or any
change in the corporate relationship between the Company and any Guarantor, or any
termination of such relationship;

(j) any release or discharge, by operation of law, of any Guarantor from the
performance or observance of any obligation, covenant or agreement contained in this
Guaranty; or

(k) any other occurrence, circumstance, happening or event whatsoever, whether similar
or dissimilar to the foregoing, whether foreseen or unforeseen, and any other circumstance
which might otherwise constitute a legal or equitable defense or
discharge of the liabilities of a guarantor or surety or which might otherwise limit
recourse against any Guarantor.

 

3

Exhibit 1.2

 

4) Full Recourse Obligations. The obligations of each Guarantor set forth herein
constitute the full recourse obligations of such Guarantor enforceable against it to the full
extent of all its assets and properties.

5) Waiver. Each Guarantor unconditionally waives, to the extent permitted by
applicable law, (a) notice of any of the matters referred to in Section 3, (b) notice to such
Guarantor of the incurrence of any of the Obligations, notice to such Guarantor or the Company of
any breach or default by such Guarantor or the Company with respect to any of the Obligations or
any other notice that may be required, by statute, rule of law or otherwise, to preserve any rights
of the Holders against such Guarantor, (c) presentment to or demand of payment from the Company or
the Guarantor with respect to any amount due under any Note Document or protest for nonpayment or
dishonor, (d) any right to the enforcement, assertion or exercise by any of the Holders of any
right, power, privilege or remedy conferred in the Note Purchase Agreement or any other Note
Document or otherwise, (e) any requirement of diligence on the part of any of the Holders, (f) any
requirement to exhaust any remedies or to mitigate the damages resulting from any default under any
Note Document, (g) any notice of any sale, transfer or other disposition by any of the Holders of
any right, title to or interest in the Note Purchase Agreement or in any other Note Document and
(h) any other circumstance whatsoever which might otherwise constitute a legal or equitable
discharge, release (other than a release of such Guarantor herefrom pursuant to Section 9.6(b) of
the Note Purchase Agreement) or defense of a guarantor or surety (other than the defense of
payment) or which might otherwise limit recourse against such Guarantor.

6) Subrogation, Contribution, Reimbursement or Indemnity. Until all Obligations have
been indefeasibly paid in full, each Guarantor agrees not to take any action pursuant to any rights
which may have arisen in connection with this Guaranty to be subrogated to any of the rights
(whether contractual, under the United States Bankruptcy Code, as amended, including Section 509
thereof, under common law or otherwise) of any of the Holders against the Company or against any
collateral security or guaranty or right of offset held by the Holders for the payment of the
Obligations. Until all Obligations have been indefeasibly paid in full, each Guarantor agrees not
to take any action pursuant to any contractual, common law, statutory or other rights of
reimbursement, contribution, exoneration or indemnity (or any similar right) from or against the
Company which may have arisen in connection with this Guaranty. So long as any Obligations remain
outstanding, if any amount shall be paid by or on behalf of the Company to any Guarantor on account
of any of the rights waived in this Section 6, such amount shall be held by such Guarantor in
trust, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Holders (duly endorsed by such Guarantor to the Holders, if
required), to be applied against the Obligations, whether matured or unmatured, in such order as
the Holders may determine. The provisions of this Section 6 shall survive the term of this
Guaranty and the payment in full of the Obligations.

 

4

 

7) Effect of Bankruptcy Proceedings, etc. This Guaranty shall continue to be
effective or be automatically reinstated, as the case may be, if at any time payment, in whole or
in part, of any of the sums due to any of the Holders pursuant to the terms of the Note
Purchase Agreement or any other Note Document is rescinded or must otherwise be restored or
returned by such Holder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization
of the Company or any other person, or upon or as a result of the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to the Company or other person
or any substantial part of its property, or otherwise, all as though such payment had not been
made. If an event permitting the acceleration of the maturity of the principal amount of the Notes
shall at any time have occurred and be continuing, and such acceleration shall at such time be
prevented by reason of the pendency against the Company or any other person of a case or proceeding
under a bankruptcy or insolvency law, each Guarantor agrees that, for purposes of this Guaranty and
its obligations hereunder, the maturity of the principal amount of the Notes and all other
Obligations shall be deemed to have been accelerated with the same effect as if any Holder had
accelerated the same in accordance with the terms of the Note Purchase Agreement or other
applicable Note Document, and such Guarantor shall forthwith pay such principal amount, Make-Whole
Amount, if any, and interest thereon and any other amounts guaranteed hereunder without further
notice or demand.

8) Term of Agreement. This Guaranty and all guaranties, covenants and agreements of
each Guarantor contained herein shall continue in full force and effect and shall not be discharged
until such time as all of the Obligations shall be paid and performed in full and all of the
agreements of such Guarantor hereunder shall be duly paid and performed in full; provided that each
Guarantor shall be automatically and immediately released herefrom without any further act by any
Person as provided in Section 9.6(b) of the Note Purchase Agreement.

9) Representations and Warranties. Each Guarantor represents and warrants to each
Holder that:

(a) such Guarantor is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has the requisite power and authority to own
and operate its property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged;

(b) such Guarantor has the requisite power and authority and the legal right to execute
and deliver, and to perform its obligations under, this Guaranty, and has taken all
necessary action to authorize its execution, delivery and performance of this Guaranty;

(c) this Guaranty constitutes a legal, valid and binding obligation of such Guarantor
enforceable in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors’ rights generally and by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law);

 

5

Exhibit 1.2

 

(d) the execution, delivery and performance of this Guaranty will not (i) contravene,
result in any breach of, or constitute a default under, or result in the creation of any
Lien in respect of any property of such Guarantor under any indenture, mortgage,
deed of trust, loan, credit agreement, corporate charter or by-laws, or any other
agreement evidencing Debt, (ii) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of such Guarantor
under, any other agreement or instrument to which such Guarantor is bound or by which such
Guarantor or any of its properties may be bound or affected, except as could not reasonably
be expected to have a Material Adverse Effect, (iii) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to such Guarantor, except as could
not reasonably be expected to have a Material Adverse Effect, or (iv) violate any provision
of any statute or other rule or regulation of any Governmental Authority applicable to such
Guarantor, except as could not reasonably be expected to have a Material Adverse Effect;

(e) no consent, approval or authorization of, or registration, filing or declaration
with, any Governmental Authority is required in connection with the execution, delivery or
performance by such Guarantor of this Guaranty;

(f) no litigation, investigation or proceeding of or before any arbitrator or
governmental authority is pending or, to the knowledge of such Guarantor, threatened by or
against such Guarantor or any of its properties or revenues (i) with respect to this
Guaranty or any of the transactions contemplated hereby or (ii) that could reasonably be
expected to have a material adverse effect upon the business, operations or financial
condition of such Guarantor and its Subsidiaries taken as a whole;

(g) such Guarantor (after giving due consideration to any rights of contribution) has
received fair consideration and reasonably equivalent value for the incurrence of its
obligations hereunder or as contemplated hereby and after giving effect to the transactions
contemplated herein, (i) the fair value of the assets of such Guarantor (both at fair
valuation and at present fair saleable value) exceeds its liabilities, (ii) such Guarantor
is able to and expects to be able to pay its debts as they mature, and (iii) such Guarantor
has capital sufficient to carry on its business as conducted and as proposed to be
conducted.

10) Notices. All notices and communications provided for hereunder shall be in
writing and sent (a) by facsimile if the sender on the same day sends a confirming copy of such
notice by a recognized overnight delivery service (charges prepaid), (b) by registered or certified
mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery
service (with charges prepaid), addressed (a) if to the Company or any Holder at the address or
telecopy number set forth in the Note Purchase Agreement or (b) if to a Guarantor, in care of the
Company at the Company’s address or telecopy number set forth in the Note Purchase Agreement, or in
each case at such other address or telecopy number as the Company, any Holder or such Guarantor
shall from time to time designate in writing to the other parties. Any notice so addressed shall
be deemed to be given when actually received.

 

6

Exhibit 1.2

 

11) Survival. All warranties, representations and covenants made by each Guarantor
herein or in any certificate or other instrument delivered by it or on its behalf
hereunder shall be considered to have been relied upon by the Holders and shall survive the
execution and delivery of this Guaranty, regardless of any investigation made by any of the
Holders. All statements in any such certificate or other instrument shall constitute warranties
and representations by such Guarantor hereunder.

12) Jurisdiction and Process; Waiver of Jury Trial.

(a) Each Guarantor irrevocably submits to the non exclusive jurisdiction of any New
York State or federal court sitting in the Borough of Manhattan, The City of New York, over
any suit, action or proceeding arising out of or relating solely to this Agreement or the
Notes. To the fullest extent permitted by applicable law, each Guarantor irrevocably waives
and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is
not subject to the jurisdiction of any such court, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding brought in
any such court and any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.

(b) Each Guarantor consents to process being served in any suit, action or proceeding
solely of the nature referred to in Section 12(a) by mailing a copy thereof by registered or
certified or priority mail, postage prepaid, return receipt requested, or delivering a copy
thereof in the manner for delivery of notices specified in Section 10, to it. Each
Guarantor agrees that such service upon receipt (i) shall be deemed in every respect
effective service of process upon it in any such suit, action or proceeding and (ii) shall,
to the fullest extent permitted by applicable law, be taken and held to be valid personal
service upon and personal delivery to it. Notices hereunder shall be conclusively presumed
received as evidenced by a delivery receipt furnished by the United States Postal Service or
any reputable commercial delivery service.

(c) Nothing in this Section 12 shall affect the right of any holder of a Note to serve
process in any manner permitted by law, or limit any right that the holders of any of the
Notes may have to bring proceedings against any Guarantor in the courts of any appropriate
jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in
any other jurisdiction.

(d) EACH GUARANTOR WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO
THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR
THEREWITH.

13) Miscellaneous. Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law,
each Guarantor hereby waives any provision of law that renders any provisions hereof prohibited or
unenforceable in any respect. The terms of this Guaranty shall be binding upon,
and inure to the benefit of, each Guarantor and the Holders and their respective successors
and assigns. No term or provision of this Guaranty may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by each Guarantor and the Required
Holders. The section and paragraph headings in this Guaranty and the table of contents are for
convenience of reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof, and all references herein to numbered sections, unless otherwise indicated, are
to sections in this Guaranty. This Guaranty shall in all respects be governed by, and construed in
accordance with, the laws of the State of New York, including all matters of construction, validity
and performance.

 

7

Exhibit 1.2

 

IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed as of the day
and year first above written.

	 	 	 	 	 
	 	ENERGY WEST RESOURCES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	ENERGY WEST PROPANE, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	ENERGY WEST DEVELOPMENT, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

8

Exhibit 1.2

 

FORM OF JOINDER TO SUBSIDIARY GUARANTY

The undersigned (the “Guarantor”), joins in the Subsidiary Guaranty dated as of June 29, 2007
from the Guarantors named therein in favor of the Holders, as defined therein, and agrees to be
bound by all of the terms thereof and represents and warrants to the Holders that:

(a) the Guarantor is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has the requisite power and authority to own
and operate its property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged;

(b) the Guarantor has the requisite power and authority and the legal right to execute
and deliver this Joinder to Subsidiary Guaranty (“Joinder”) and to perform its obligations
hereunder and under the Subsidiary Guaranty and has taken all necessary action to authorize
its execution and delivery of this Joinder and its performance of the Subsidiary Guaranty;

(c) the Subsidiary Guaranty constitutes a legal, valid and binding obligation of the
Guarantor enforceable in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity or at law);

(d) the execution, delivery and performance of this Joinder and performance of the
Subsidiary Guaranty will not (i) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any property of such
Guarantor under any indenture, mortgage, deed of trust, loan, credit agreement, corporate
charter or by-laws, or any other agreement evidencing Debt, (ii) contravene, result in any
breach of, or constitute a default under, or result in the creation of any Lien in respect
of any property of such Guarantor under, any other agreement or instrument to which such
Guarantor is bound or by which such Guarantor or any of its properties may be bound or
affected, except as could not reasonably be expected to have a Material Adverse Effect,
(iii) conflict with or result in a breach of any of the terms, conditions or provisions of
any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to such Guarantor, except as could not reasonably be expected to have a Material
Adverse Effect, or (iv) violate any provision of any statute or other rule or regulation of
any Governmental Authority applicable to such Guarantor, except as could not reasonably be
expected to have a Material Adverse Effect;

(e) no consent, approval or authorization of, or registration, filing or declaration
with, any Governmental Authority is required in connection with the execution, delivery or
performance by such Guarantor of this Joinder or the Subsidiary Guaranty;

 

9

Exhibit 1.2

 

(f) except as disclosed in writing to the holders, no litigation, investigation or
proceeding of or before any arbitrator or governmental authority is pending or, to the
knowledge of the Guarantor, threatened by or against the Guarantor or any of its properties
or revenues (i) with respect to this Joinder, the Subsidiary Guaranty or any of the
transactions contemplated hereby or (ii) that could reasonably be expected to have a
material adverse effect on the business, operations or financial condition of the Guarantor
and its subsidiaries taken as a whole;

(g) such Guarantor (after giving due consideration to any rights of contribution) has
received fair consideration and reasonably equivalent value for the incurrence of its
obligations hereunder or as contemplated hereby and after giving effect to the transactions
contemplated herein, (i) the fair value of the assets of such Guarantor (both at fair
valuation and at present fair saleable value) exceeds its liabilities, (ii) such Guarantor
is able to and expects to be able to pay its debts as they mature, and (iii) such Guarantor
has capital sufficient to carry on its business as conducted and as proposed to be
conducted.

Capitalized Terms used but not defined herein have the meanings ascribed in the Subsidiary
Guaranty.

IN WITNESS WHEREOF, the undersigned has caused this Joinder to Subsidiary Guaranty to be duly
executed as of
 __________,
 _____.

	 	 	 	 	 
	 	[Name of Guarantor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

10

Exhibit 1.2

 

EXHIBIT 4.4(a)

FORM OF OPINION OF COUNSEL

FOR THE COMPANY

The opinions of Rogers & Hool LLP, counsel for the Company and the Subsidiary Guarantors, and
Browning, Kaleczyc, Berry and Hoven, P.C., special Montana counsel for the Company and the
Subsidiary Guarantors, shall be to the effect that:

1. Each of the Company and each Subsidiary Guarantor is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of incorporation, and each
has all requisite corporate power and authority to own and operate its properties, to carry on its
business as now conducted, and, in the case of the Company, to enter into and perform the Note
Purchase Agreement and to issue and sell the Notes and, in the case of each Subsidiary Guarantor,
to enter into and perform the Subsidiary Guaranty.

2. The Note Purchase Agreement and the Notes have been duly authorized by proper corporate
action on the part of the Company, have been duly executed and delivered by an authorized officer
of the Company, and constitute the legal, valid and binding agreements of the Company, enforceable
in accordance with their terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer,
moratorium or similar laws of general application relating to or affecting the enforcement of the
rights of creditors or by equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.

3. The Subsidiary Guaranty has been duly authorized by proper corporate action on the part of
each Subsidiary Guarantor, has been duly executed and delivered by an authorized officer each such
Subsidiary Guarantor, and constitutes the legal, valid and binding obligation of each Subsidiary
Guarantor, enforceable in accordance with its terms, except to the extent the enforcement thereof
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws of general application relating to or affecting the enforcement of the
rights of creditors or by equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.

4. In any action or proceeding arising out of or relating to the Agreement, the Notes or the
Subsidiary Guaranty in any federal court sitting in the State of Montana or any Montana state
court, such court would recognize and give effect to the governing law provisions of such documents
choosing the laws of the State of New York; or alternatively, if Montana law were deemed to govern
the Agreement, the Notes and the Subsidiary Guaranty, each such agreement would be enforceable
against the Company or the Subsidiary Guarantors, as the case may be, in accordance with its terms,
except to the extent the enforcement thereof may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws of general application relating
to or affecting the enforcement of the rights of creditors or by
equitable principles, regardless of whether enforcement is sought in a proceeding in equity or
at law.

 

Exhibit 4.4(a)

 

5. Based on the representations set forth in the Agreement, the offering, sale and delivery of
the Notes and delivery of the Subsidiary Guaranty do not require the registration of the Notes or
the Subsidiary Guaranty under the Securities Act of 1933, as amended, or the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.

6. No authorization, approval or consent of, and no designation, filing, declaration,
registration and/or qualification with, any Governmental Authority is necessary or required in
connection with the execution, delivery and performance by the Company of the Note Purchase
Agreement or the offering, issuance and sale by the Company of the Notes, and no authorization,
approval or consent of, and no designation, filing, declaration, registration and/or qualification
with, any Governmental Authority is necessary or required in connection with the execution,
delivery and performance by any Subsidiary Guarantor of the Subsidiary Guaranty.

7. The issuance and sale of the Notes by the Company, the performance of the terms and
conditions of the Notes and the Note Purchase Agreement by the Company and the execution and
delivery of the Note Purchase Agreement by the Company do not conflict with, or result in any
breach or violation of any of the provisions of, or constitute a default under, or result in the
creation or imposition of any Lien on, the property of the Company pursuant to the provisions of
(i) the articles of incorporation or bylaws of the Company, (ii) any loan agreement known to such
counsel to which the Company is a party or by which the Company or its property is bound, (iii) any
other Material agreement or instrument known to such counsel to which the Company is a party or by
which the Company or its property is bound, (iv) any law (including usury laws) or regulation
applicable to the Company, or (v) to the knowledge of such counsel, any order, writ, injunction or
decree of any court or Governmental Authority applicable to the Company.

8. The execution, delivery and performance of the Subsidiary Guaranty will not conflict with,
or result in any breach or violation of any of the provisions of, or constitute a default under, or
result in the creation or imposition of any Lien on, the property of any Subsidiary Guarantor
pursuant to the provisions of (i) the articles of incorporation or bylaws of such Subsidiary
Guarantor, (ii) any loan agreement known to such counsel to which such Subsidiary Guarantor is a
party or by which such Subsidiary Guarantor or its property is bound, (iii) any other Material
agreement or instrument known to such counsel to which the Subsidiary Guarantor is a party or by
which the Subsidiary Guarantor or its property is bound, (iv) any law (including usury laws) or
regulation applicable to the Subsidiary Guarantor, or (v) to the knowledge of such counsel, any
order, writ, injunction or decree of any court or Governmental Authority applicable to the
Subsidiary Guarantor.

9. Neither the Company nor any Subsidiary is (i) a “public utility” as defined in the Federal
Power Act, as amended, or (ii) an “investment company” or a company “controlled” by an “investment
company,” as such terms are defined in the Investment Company Act of 1940, as amended.

10. Based on the representations set forth in the Note Purchase Agreement, the issuance of the
Notes and the intended use of the proceeds of the sale of the Notes do not violate or conflict with
Regulation U, T or X of the Board of Governors of the Federal Reserve System.

The opinion of Rogers & Hool LLP shall cover such other matters relating to the sale of the Notes
as the Purchasers may reasonably request. With respect to matters of fact on which such opinion is
based, such counsel shall be entitled to rely on appropriate certificates of public officials and
officers of the Company and with respect to matters governed by the laws of any jurisdiction other
than the United States of America, the laws of the State of Montana or Wyoming, such counsel may
rely upon the opinions of counsel deemed (and stated in their opinion to be deemed) by them to be
competent and reliable.. The opinion shall state that subsequent transferees and assignees of the
Notes and Foley & Lardner LLP may rely thereon.

 

2

Exhibit 4.4(a)

 

EXHIBIT 4.4(b)

FORM OF OPINION OF SPECIAL COUNSEL

TO THE PURCHASERS

The opinion of Foley & Lardner LLP, special counsel to the Purchasers, shall be to the effect
that:

1. The Agreement and the Notes constitute the legal, valid and binding agreements of the
Company, enforceable in accordance with their terms, except to the extent that enforcement thereof
may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
fraudulent transfer, moratorium or similar laws of general application relating to or affecting the
enforcement of the rights of creditors or by equitable principles, regardless of whether
enforcement is sought in a proceeding in equity or at law.

2. The Subsidiary Guaranty constitutes the legal, valid and binding agreement of each
Subsidiary Guarantor, enforceable in accordance with its terms, except to the extent that
enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, fraudulent transfer, moratorium or similar laws of general application relating to or
affecting the enforcement of the rights of creditors or by equitable principles, regardless of
whether enforcement is sought in a proceeding in equity or at law.

3. Based on the representations set forth in the Agreement, the offering, sale and delivery of
the Notes and delivery of the Subsidiary Guaranty do not require the registration of the Notes or
the Subsidiary Guaranty under the Securities Act of 1933, as amended, or the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.

4. No approval, consent or withholding of objection on the part of, or filing, registration or
qualification with, any Federal governmental body is necessary in connection with the execution and
delivery of the Note Agreement or the Notes.

Foley & Lardner LLP may rely upon the opinion of Browning, Kaleczyc, Berry and Hoven, P.C., special
Montana counsel for the Company as to the due authorization, execution and delivery of the
Agreement, the Notes and the Subsidiary Guaranty. Such opinion shall state that the opinion of
Browning, Kaleczyc, Berry and Hoven, P.C. is satisfactory in form and scope to it, and that, in its
opinion, the Purchasers and it are justified in relying thereon and shall cover such other matters
relating to the sale of the Notes as the Purchasers may reasonably request.

 

Exhibit 4.4(b)

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