Document:

exv10w38

EXHIBIT
10.38

GUARANTY

     THIS GUARANTY (this “Guaranty”) is executed and delivered effective as of January 5, 2010, by
ENERGY, INC., a Montana corporation, whose address is 8500 Station Street, Mentor, Ohio 44060
(“Guarantor”), in favor of CITIZENS BANK, having an address at 328 S. Saginaw Street, Flint,
Michigan 48502 (“Bank”).

W I T N E S S E T H:

     WHEREAS, Bank has agreed to modify a certain term loan to Great Plains Land Development
Company, Ltd., an Ohio limited liability company (“Borrower”), in the original principal amount of
Eight Hundred Ninety-Two Thousand Three Hundred and no/100 Dollars ($892,300.00) (the “Loan”),
which Loan was made pursuant to and in accordance with the Credit Agreement dated July 3, 2008 by
and between Borrower and Bank (the “Credit Agreement”); and

     WHEREAS, Borrower has executed and delivered to Bank, among other things, a Term Note dated
July 3, 2008, in the original principal amount of Eight Hundred Ninety-Two Thousand Three Hundred
and no/100 Dollars ($892,300.00) (said Term Note, as the same may from time to time be increased,
decreased, amended, modified, revised, supplemented, renewed, extended or restated, are hereinafter
collectively referred to as the “Note”), to evidence its obligation to repay the Loan made to it by
Bank and to perform all of its obligations under the Loan Documents (as herein defined); and

     WHEREAS, the Loan is secured by, among other things, a Security Agreement dated July 3, 2008,
by and between Borrower and Bank (the “Security Agreement”) and such other documents executed in
connection with the Credit Agreement, the Note or the Security Agreement (the Credit Agreement, the
Note and the Security Agreement, together with such other documents executed in connection with any
of the foregoing, as the same may from time to time be amended, modified, revised, supplemented,
substituted, renewed, extended or restated, are hereinafter collectively referred to as the “Loan
Documents”); and

     WHEREAS, Guarantor has a direct economic interest in Borrower, and Bank has agreed to modify
the Loan in consideration of this Guaranty pursuant to a Loan Modification Agreement dated of even
date herewith executed by Borrower and the other guarantors of the Loan in favor of Bank, and the
Loan will inure directly or indirectly to the benefit of Guarantor, and such benefit is sufficient
consideration for the execution and delivery of this Guaranty in favor of Bank; and

     WHEREAS, Guarantor has agreed to execute and deliver this Guaranty to Bank at the request of
Borrower in order to induce Bank to modify the Loan and to satisfy a condition precedent to
effectuating said modification of the Loan.

     NOW, THEREFORE, in consideration of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and to induce Bank to modify the
Loan, Guarantor does hereby agree with Bank as follows:

Page 1 of 7  

 

     1. Guarantor hereby irrevocably, absolutely and unconditionally, and jointly and severally
with all other guarantors of the Loan, guarantees to Bank, its successors and assigns, and all
subsequent holders of the Note, the full and prompt payment and performance of the following
(hereinafter collectively referred to as the “Obligations”): all loans, advances, debts,
liabilities, indebtedness, obligations, covenants, undertakings, promises, agreements, and duties
now or hereafter owing to Bank or any affiliate of Citizens Republic Bancorp from Borrower of any
kind or nature whatsoever, present or future, whether arising by reason of an extension of credit,
opening of a letter of credit, loan, promissory note, guarantee, endorsement, indemnification,
agreement, undertaking, contract, rate management agreement, or in any manner whatsoever, whether
direct or indirect (including those acquired by assignment, participation, purchase, negotiation,
discount or otherwise), matured or unmatured, liquidated or unliquidated, primary or secondary,
absolute or contingent, joint or several, due or to become due, now existing or hereafter arising
and whether or not contemplated by Borrower or Bank on the date hereof, including, but not limited
to, the Note or the other Loan Documents, and all amendments, modifications, revisions,
supplements, substitutions, renewals, extensions or restatements thereof, and all principal,
interest, charges, expenses, costs, fees (including reasonable attorneys’ fees), indemnification
obligations and other sums of any kind thereunder or relating thereto whatsoever. Upon failure of
Borrower to pay or perform any of the Obligations when and as the same becomes due and payable and
the same is not made by Borrower within any applicable grace period, if any, Bank may, at its sole
option, accelerate the payment of the Obligations, all accrued interest and other charges payable
thereunder, in which event Guarantor shall pay to Bank, on demand, the entire amount of the
Obligations. Bank shall not be obligated to proceed against, or exhaust any other remedies it may
have under the Loan Documents or any other documents, or resort to any other security held by Bank,
or proceeding against any other guarantor, and Bank may, at its option, proceed directly and at
once, without notice, against Guarantor, to collect and recover the full amount of the liability
hereunder or any portion thereof. Any and all payments due hereunder shall be made in lawful money
of the United States of America at 328 S. Saginaw Street, Flint, Michigan 48502, or such other
address as Bank may from time to time designate.

     2. Guarantor agrees to furnish to Bank (a) within sixty (60) days after the end of each
fiscal quarter and fiscal year, a copy of Guarantor’s Form 10-Q as filed with the U.S. Securities
and Exchange Commission for such fiscal quarter, and certified as complete and correct by the
principal financial officer of Guarantor; (b) within one hundred fifty (150) days after the end of
each fiscal year, a copy of Guarantor’s Form 10-K as filed with the U.S. Securities and Exchange
Commission for such fiscal year, and certified as complete and correct by the principal financial
officer of Guarantor; and (c) to promptly notify Bank of any pending or threatened litigation, the
outcome of which could have a material adverse effect on the assets, properties, finances or
prospects of Guarantor. Failure to comply with the requirements of this paragraph shall constitute
a default hereunder and under the Loan Documents.

     3. Guarantor acknowledges that: Guarantor has a direct economic investment or interest in
Borrower, as a partner, shareholder, member, trust beneficiary, or otherwise; that Guarantor is
making this Guaranty in Guarantor’s corporate capacity; that Guarantor shall remain liable
hereunder whether or not Guarantor retains any financial interest in Borrower; and that
Guarantor has received sufficient consideration for the execution and delivery of this
Guaranty in favor of Bank.

Page 2 of 7  

 

     4. The obligations of Guarantor under this Guaranty shall be irrevocable, absolute and
unconditional, and joint and several with all other guarantors of the Loan and shall remain in full
force and effect until the principal balance of the Note, all accrued but unpaid interest on the
Note, and all other Obligations referred to above in Section 1, shall have been irrevocably and
indefeasibly paid in full and Bank has no further obligation to make advances under the Note.

     5. The obligations of Guarantor under this Guaranty shall not be affected, modified or
impaired upon the happening of any event, including, without limitation, any of the following,
whether or not with notice to or the consent of Guarantor:

     (a) The amendment, modification, revision, supplement, substitution, renewal, extension or
restatement of any security given by Borrower to Bank to secure repayment of the indebtedness
hereby being guaranteed;

     (b) The waiver, release or termination of any of the covenants, agreements or obligations of
Borrower under the Note or Borrower and/or any other guarantor or under any of the other Loan
Documents or the Obligations;

     (c) The amendment, modification, revision, supplement, substitution, renewal, extension or
restatement (whether material or otherwise) of the Note, any other Loan Documents, the Obligations
or any obligation, covenant or agreement as set forth in the Note, in any of the other Loan
Documents or the Obligations;

     (d) Any failure, omission, delay or lack on the part of Bank to enforce, assert or exercise
any right, power or remedy conferred upon it in this Guaranty, in the Note, in any of the other
Loan Documents or the Obligations, or any other acts or omissions on the part of Bank;

     (e) The voluntary or involuntary liquidation, dissolution, sale or other disposition of all or
substantially all of the assets of Borrower or Guarantor, however effected, or receivership,
insolvency, bankruptcy, assignment for the benefit of creditors, reorganizations, arrangement,
composition with creditors or readjustment or other similar proceedings affecting Borrower,
Guarantor, any other guarantor, or any of the assets of Guarantor, or any allegation or contest of
the validity of this Guaranty, the Note, any of the other Loan Documents or the Obligations, or the
disaffirmance of the Note, any of the other Loan Documents or the Obligations in any such
proceeding;

     (f) The invalidity, illegality or unenforceability of the Note, any of the other Loan
Documents or the Obligations; or of any provision of the Note, any of the other Loan Documents or
the Obligations;

     (g) The existence, value or condition of any other security or guaranty, or failure by Bank to
perfect any lien against, or obtain any security for the Obligations or obtain any other guaranty
of the Obligations, or any action or the absence of any action by Bank in respect of such security
or guaranty (including, without limitation, the release of any such security or guaranty); or

Page 3 of 7  

 

     (h) Any other event or action that would, in the absence of this clause, result in the release
or discharge by operation of law of Guarantor from the performance or observance of any obligation,
covenant or agreement contained in this Guaranty.

     6. If after receipt of any payment of all or any part of the Obligations, Bank is for any
reason compelled to surrender such payment to any person or entity, because such payment is
determined to be void or voidable as a preference, impermissible setoff, diversion of trust funds
or for any other reason (including, without limitation, insolvency, bankruptcy, liquidation or
reorganization of Borrower or any other guarantor) then to the extent of that payment, the
Obligations shall be revived and the obligations of Guarantor under this Guaranty shall be
continued in effect without reduction or discharge for that payment, and this Guaranty shall
continue in full force notwithstanding any contrary action which may have been taken by Bank in
reliance upon such payment, and any such contrary action so taken shall be without prejudice to any
Bank’s rights under this Guaranty and shall be deemed to have been conditioned upon such payment
having become final, irrevocable and indefeasible.

     7. No setoff, counterclaim or reduction, no diminution of an obligation, and no defense of any
kind or nature that Guarantor has or may have against Borrower, Bank or any other guarantor shall
affect, modify or impair the obligations hereunder of Guarantor.

     8. For so long as this Guaranty remains in effect, Guarantor shall not have, and Guarantor
hereby expressly waives, releases and discharges during such time, any and every right of
exoneration, subrogation, contribution, reimbursement and indemnity whatsoever, and any and every
right of recourse to security for the debts and Obligations guaranteed hereby, whether against
Borrower, any other guarantor or otherwise, until the Obligations have been irrevocably and
indefeasibly paid in full. Guarantor hereby indemnifies Bank and agrees to defend and hold
harmless Bank from and against the loss, mitigation, subordination or other consequences adverse to
Bank by reason of this Guaranty being challenged as a preference or suffering any other subjugation
under any bankruptcy or other law, whether state or federal, affecting debtors, creditors and/or
the relationship between and among them. Without limiting the generality of the foregoing, for so
long as this Guaranty remains in effect, any and all debts and obligations of Borrower to Guarantor
(or any other guarantor) whether past, present or future are hereby waived, satisfied and
discharged until the Obligations have been irrevocably and indefeasibly paid in full and Bank has
no further obligations to make advances under the Note.

     9. Guarantor hereby expressly waives notice in writing or otherwise from Bank of Bank’s
acceptance of and reliance on this Guaranty. Guarantor agrees to pay and shall be liable for all
costs, expenses and fees, including all reasonable attorneys’ fees, which may be incurred by Bank
in enforcing or attempting to enforce this Guaranty against Guarantor, whether the same shall be
enforced by suit or otherwise and except as may be limited by law or judicial order or decision
entered in an action to seek recovery of such costs, expenses and fees. Guarantor hereby waives
presentment, demand, protest, notice of non-payment, notice of dishonor and all suretyship
defenses.

     10. This Guaranty shall bind Guarantor and Guarantor’s successors and assigns, and shall inure
to the benefit of Bank and its successors and assigns.

Page 4 of 7  

 

     11. If any clause or provision of this Guaranty is held illegal, invalid or unenforceable by
any court, this Guaranty shall be construed and enforced as if such illegal, invalid or
unenforceable clause or provision had not been contained herein.

     12. No remedy herein conferred upon or reserved to the Bank is intended to be exclusive of
any other available remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under this Guaranty or now or hereafter existing
at law or in equity or by statute. No delay or omission to exercise any right or power accruing
upon any default, omission or failure of performance hereunder shall impair any such right or power
or shall be construed to be a waiver thereof, but any such right and power may be exercised from
time to time and as often as may be deemed expedient by the Bank. In order to entitle the Bank to
exercise any remedy reserved to it in this Guaranty, it shall not be necessary to give any notice,
other than such notice as may be herein expressly required. If any provision contained in this
Guaranty should be breached by any party and thereafter duly waived by the other party, such waiver
shall be limited to the particular breach so waived and shall not be deemed to waive any other
breach hereunder. No waiver, amendment, release or modification of this Guaranty shall be
established by conduct, custom or course of dealing, but solely by an instrument in writing duly
executed by the parties hereto. This Guaranty may be amended only by a written agreement signed by
the parties hereto and accepted by the Bank.

     13. Guarantor hereby authorizes any attorney at law to appear in any court of record in the
State of Ohio, or in any other state or territory of the United States after the obligations of
Guarantor become due, whether by lapse of time, acceleration of maturity or otherwise, waive the
issuance and service of process, admit the maturity of the obligations of Guarantor, confess
judgment against Guarantor in favor of any holder of this Guaranty for the amount then appearing
due, together with interest thereon and costs of suit, and thereupon to release all errors and
waive all rights of appeal and stay of execution. Guarantor expressly (a) waives a conflict of
interest as to any attorney retained by Bank to confess judgment against Guarantor upon this
Guaranty, and (b) consents to the attorney retained by Bank receiving a legal fee from Bank for
legal services rendered for confessing judgment against Guarantor, upon this Guaranty. A copy of
this Guaranty, certified by Bank, may be filed in each such proceeding in place of filing the
original as a warrant of attorney. The authority and power to appear for and enter judgment
against Guarantor, additional exercises thereof or any imperfect exercise thereof, shall not be
extinguished by any judgment entered pursuant thereto.

     14. This Guaranty is a continuing and unconditional guaranty of payment and performance and
not of collection and that Guarantor’s obligations hereunder shall be primary and absolute.
Accordingly, any payments made on the Obligations will not discharge or diminish Guarantor’s
obligations and liability under this Guaranty for any remaining and succeeding obligations even
when all or part of the outstanding obligations may be a Zero ($0.00) balance from time to time.
This Guaranty shall be deemed to be a contract made under the laws of the State of Ohio and for all
purposes shall be governed by and construed in accordance with the laws of said State. Guarantor
represents and warrants that this Guaranty is being executed and delivered in the State of Ohio. If
Bank holds one or more guaranties, or hereafter receives additional guaranties from Guarantor,
Bank’s rights under all guaranties shall be cumulative. This Guaranty shall not affect or
invalidate any such other guaranties. Guarantor’s liability will be Guarantor’s aggregate liability
under the terms of this Guaranty and any such other unterminated guaranties. Guarantor shall
not sell, assign, transfer, pledge, hypothecate, encumber or otherwise dispose of in any manner

Page 5 of 7  

 

whatsoever, any right, title or interest of Guarantor, in whole or in part, in the capital or
membership interest of Borrower or any proceeds, distributions or earnings with respect thereto.

     15. Guarantor hereby represents and warrants to Bank that:

     (a) Guarantor is a corporation duly organized, validly existing and in full force and effect
under the laws of the State of Montana; that Guarantor has the right, power and authority to
execute, deliver and perform this Guaranty; and that Guarantor has been authorized to enter into
this Guaranty by all necessary and proper corporate action;

     (b) this Guaranty constitutes the legal, valid and binding obligation of 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 the availability of equitable remedies;

     (c) the execution, delivery and performance of this Guaranty will not violate any provision
of any applicable law or material contractual obligation of Guarantor and will not result in the
creation or imposition of any lien upon or with respect to any property or revenues of Guarantor;
and that the execution, delivery and performance of this Guaranty will not violate any provision of
Guarantor’s Articles of Incorporation, Code of Regulations or By-laws, or any other organization or
governing documents of Guarantor;

     (d) no consent or authorization of, filing with, or other act by or in respect of, any
arbitrator or governmental authority and no consent of any other person (including, without
limitation, any shareholder, director, officer or creditor of Guarantor), is required in connection
with the execution, delivery, performance, validity or enforceability of this Guaranty;

     (e) no actions, suits or proceedings before any court, tribunal, arbitrator or governmental
authority are pending or, to the knowledge of Guarantor, threatened by or against Guarantor or
against any of its properties or with respect to this Guaranty or any of the transactions
contemplated hereby; and

     (f) Guarantor shall preserve and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its organization or in any other jurisdiction required by law.

     16. GUARANTOR HEREBY, AND BANK BY ITS ACCEPTANCE HEREOF, EACH WAIVES THE RIGHT OF A JURY TRIAL
IN EACH AND EVERY ACTION ON THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS, IT BEING ACKNOWLEDGED
AND AGREED THAT ANY ISSUES OF FACT IN ANY SUCH ACTION ARE MORE APPROPRIATELY DETERMINED BY THE
COURTS. FURTHER, GUARANTOR HEREBY CONSENTS AND SUBJECTS GUARANTOR TO THE JURISDICTION OF COURTS OF
THE STATE OF OHIO AND, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, TO THE VENUE OF SUCH
COURTS IN ANY COUNTY IN WHICH BANK IS LOCATED.

     17. Except for a notice required under applicable law to be given in another manner, any
notice or other communication required or permitted to be given by this Guaranty or the other Loan
Documents or by applicable law shall be in writing and shall be deemed received (a) on the
date delivered, if sent by hand delivery to the address set forth on the first page of this Guaranty, (b)

Page 6 of 7  

 

three (3) business days following the date deposited in U.S. mail, certified or
registered, with return receipt requested, or (c) one (1) business day following the date deposited
with Federal Express or other nationally recognized overnight carrier, and in each case delivered
to the address set forth on the first page of this Guaranty. Either party may change its address
to another single address by notice given as herein provided, except any change of address notice
must be actually received in order to be effective. Notwithstanding the foregoing, routine
communications such as statements, invoices, copies of documents, and the like, may be sent by
First Class U.S. Mail.

     18. If the Loan is guaranteed by more than one guarantor, whether in this instrument or by
other instruments, the obligations of Guarantor under this Guaranty shall be joint and several with
all other guarantors.

     IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed and delivered to Bank in
the State of Ohio as of the date first above written.

WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU
DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE
POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE
CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.

	 	 	 	 	 
	 	ENERGY, INC.,

a Montana corporation

 	 
	 	By:  	/s/ Kevin J. Degenstein
 	 
	 	 	Name:  	Kevin J. Degenstein 	 
	 	 	Title:  	President and Chief Operating Officer 	 
	 

Page 7 of 7exv10w39

EXHIBIT
10.39

AMENDED AND RESTATED LOAN AGREEMENT

Dated as of December 31, 2009

by and among

ORWELL NATURAL GAS COMPANY

as the Borrower

THE GUARANTORS PARTY HERETO

and

THE HUNTINGTON NATIONAL BANK

as the Lender

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 
	 	 	Page
	EXHIBITS
	 	 	iv	 
	SCHEDULES
	 	 	v	 
	ARTICLE I DEFINITIONS.
	 	 	2	 
	1.1 Defined Terms
	 	 	2	 
	1.2 GAAP Definitions
	 	 	10	 
	1.3 Construction
	 	 	11	 
	 
	 	 	 	 
	ARTICLE II THE LOANS.
	 	 	12	 
	2.1 The Line of Credit
	 	 	12	 
	2.2 Term Loan
	 	 	12	 
	2.3 Interest Rates, Interest Payment and Certain Provisions Relating to
Interest and Fees
	 	 	13	 
	2.4 Yield-Protection, Capital Adequacy
	 	 	13	 
	2.5 Closing Fee
	 	 	15	 
	2.6 Calculation of Interest and Fees
	 	 	15	 
	2.7 Time, Place and Manner of Payments
	 	 	15	 
	2.8 Payment from Accounts Maintained by Borrower
	 	 	15	 
	2.9 Loan Account
	 	 	16	 
	 
	 	 	 	 
	ARTICLE III SET-OFF; SECURITY INTERESTS; ADDITIONAL GUARANTOR.
	 	 	16	 
	3.1 Set-Off
	 	 	16	 
	3.2 UCC Personal Property
	 	 	16	 
	3.3 Security Agreement
	 	 	16	 
	3.4 Additional Guarantor; Pledge Agreement
	 	 	17	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES.
	 	 	17	 
	4.1 Existence and Power
	 	 	17	 
	4.2 Authority
	 	 	17	 
	4.3 Validity of Documents
	 	 	17	 
	4.4 Financial Statements
	 	 	18	 
	4.5 Litigation
	 	 	18	 
	4.6 No Restrictions
	 	 	18	 
	4.7 Deferred Compensation Plans
	 	 	18	 
	4.8 Tax Returns and Payments
	 	 	18	 
	4.9 Margin Stock
	 	 	19	 
	4.10 Labor Matters
	 	 	19	 
	4.11 Title to Properties
	 	 	19	 
	4.12 Compliance with Law
	 	 	19	 
	4.13 Intellectual Property
	 	 	19	 

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	4.14 Insurance
	 	 	20	 
	4.15 No Defaults
	 	 	20	 
	4.16 Security Interest in Personal Property
	 	 	20	 
	4.17 Investment Company Act
	 	 	20	 
	4.18 Disclosure
	 	 	21	 
	4.19 Consents and Approvals
	 	 	21	 
	 
	 	 	 	 
	ARTICLE V AFFIRMATIVE COVENANTS.
	 	 	21	 
	5.1 Furnishing Information
	 	 	21	 
	5.2 Insurance
	 	 	23	 
	5.3 Payment of Taxes
	 	 	24	 
	5.4 Records
	 	 	24	 
	5.5 Inspection of Records and Properties and Audit Review
	 	 	24	 
	5.6 Good Repair
	 	 	25	 
	5.7 Maintenance of Contractual Obligations
	 	 	25	 
	5.8 Maintenance of Patents, Trademarks, Permits, Etc
	 	 	25	 
	5.9 Lender Accounts
	 	 	25	 
	5.10 Preservation of Existence and Regulatory Compliance
	 	 	25	 
	5.11 Compliance with Laws
	 	 	25	 
	5.12 Further Assurances; Power of Attorney
	 	 	26	 
	 
	 	 	 	 
	ARTICLE VI NEGATIVE COVENANTS
	 	 	26	 
	6.1 Indebtedness
	 	 	26	 
	6.2 Guaranties
	 	 	26	 
	6.3 Creation of Encumbrances; Contractual Restrictions
	 	 	27	 
	6.4 Fixed Charge Coverage Ratio
	 	 	28	 
	6.5 Restrictions on Dividends and Distributions
	 	 	28	 
	6.6 Disposition of Assets
	 	 	28	 
	6.7 Change of Business
	 	 	28	 
	6.8 ERISA
	 	 	29	 
	6.9 Mergers; Acquisitions; Consolidations
	 	 	29	 
	6.10 Loans and Advances
	 	 	29	 
	6.11 Investments
	 	 	29	 
	6.12 Transactions with Affiliates
	 	 	30	 
	6.13 Amendment of Certain Documents
	 	 	30	 
	 
	 	 	 	 
	ARTICLE VII CONDITIONS PRECEDENT
	 	 	30	 
	7.1 Conditions Precedent to the Lender Entering into this Agreement
	 	 	30	 
	 
	 	 	 	 
	ARTICLE VIII DEFAULTS AND REMEDIES
	 	 	31	 
	8.1 Events of Default
	 	 	31	 
	8.2 Remedies Upon Default
	 	 	33	 
	 
	 	 	 	 

-ii-

 

	 	 	 	 	 
	ARTICLE IX WAIVER BY LENDER.
	 	 	33	 
	9.1 Waiver of Events of Default
	 	 	34	 
	 
	ARTICLE X GENERAL PROVISIONS
	 	 	34	 
	10.1 Amendments and Waivers
	 	 	34	 
	10.2 Expenses
	 	 	34	 
	10.3 Notices
	 	 	35	 
	10.4 Successors, Assigns and Participations
	 	 	36	 
	10.5 Severability
	 	 	37	 
	10.6 Survival
	 	 	37	 
	10.7 Governing Law
	 	 	37	 
	10.8 Non-Business Days
	 	 	37	 
	10.9 Integration
	 	 	37	 
	10.10 Headings
	 	 	37	 
	10.11 Forum
	 	 	37	 
	10.12 Waiver of Jury Trial
	 	 	38	 
	10.13 Counterparts
	 	 	38	 

-iii-

 

EXHIBITS

	 	 	 
	Exhibit Reference
	 	 	 

	A
	 	Security Agreement

	 	 	 

	B
	 	Guaranty Agreement

	 	 	 

	C
	 	Pledge Agreement

	 	 	 

	D
	 	Form of Compliance Certificate

-iv-

 

SCHEDULES

	 	 	 
	Schedule Reference
	 	 	 

	4.5
	 	Litigation

	 	 	 

	4.7
	 	Pension Plans and Benefit Agreements

	 	 	 

	4.8
	 	Taxes

	 	 	 

	4.10
	 	Labor Agreements

	 	 	 

	4.11
	 	Real Property Interests

	 	 	 

	4.12
	 	Compliance with Law

	 	 	 

	4.13
	 	Intellectual Property

	 	 	 

	4.14
	 	Insurance

	 	 	 

	6.1
	 	Related Party Indebtedness

-v-

 

AMENDED AND RESTATED LOAN AGREEMENT

     THIS AMENDED AND RESTATED LOAN AGREEMENT (together with all amendments, supplements,
extensions, renewals, restatements and substitutions thereto and thereof, the “Agreement”) dated as
of December 31, 2009, effective as of November 30, 2009, by and among ORWELL NATURAL GAS COMPANY,
an Ohio corporation, as the borrower (the “Borrower”), RICHARD M. OSBORNE, an individual and
resident of the State of Ohio (“Osborne”), ONG Marketing, Inc., an Ohio corporation (“ONG”),
LIGHTNING PIPELINE COMPANY, an Ohio corporation (“Lightning”), LIGHTNING PIPELINE COMPANY II, INC.,
an Ohio corporation (“Lightning II”) (and together with Osborne, ONG, Lightning and any additional
parties hereafter joining this Agreement as a guarantor, being referred to collectively as the
“Guarantors” and each individually as a “Guarantor”) and THE HUNTINGTON NATIONAL BANK, as the
lender (the “Lender”).

WITNESSETH:

     WHEREAS, the Borrower and the Lender are party to that certain Business Loan Agreement dated
December 9, 2008 (the “Existing Loan Agreement”).

     WHEREAS, pursuant to the Existing Loan Agreement, the Borrower and Osborne executed and
delivered in favor of the Lender (i) that certain Promissory Note dated December 9, 2008 in the
state principal amount of $4,603,320.98 (the “Term Note”), and (ii) that certain Promissory Note
dated December 9, 2008 in the state principal amount of $1,500,000.00 (the “Line of Credit Note”).

     WHEREAS, certain Events of Default have occurred and are continuing under the Existing Loan
Agreement, and the Lender has sent notice of such defaults to the Borrower and terminated the
ability of the Borrower and Osborne to borrow, repay and reborrow loans under the terms of the Line
of Credit Note.

     WHEREAS, the principal outstanding under the Term Note and the Line of Credit Note was due and
payable on November 30, 2009, which was maturity date of each such promissory note, and the
principal balance and accrued interest under such notes is now due and payable.

     WHEREAS, the Borrower and Osborne have requested that the Lender (i) waive the Events of
Default set forth in the Lender’s default letter dated September 4, 2009 and certain other Events
of Default, (ii) extend the maturity date for payment of principal under the Term Note and the Line
of Credit Note, (iii) make Osborne a guarantor of the obligations under the Term Note and Line of
Credit Note rather than a co-borrower, and (iv) consent to the acquisition of the Borrower by
Energy, Inc. by means of a merger of a wholly-owned subsidiary of Energy West, Incorporated (a
wholly-owned subsidiary of Energy, Inc.) into Lightning, the sole shareholder of the Borrower.

 

 

     WHEREAS, the Lender is willing to make such credit accommodations but only upon the terms and
conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of mutual promises contained herein and other valuable
consideration and with the intent to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I DEFINITIONS.

     1.1 Defined Terms.

          As used herein the following terms shall have the meaning specified unless the context
otherwise requires:

     “Accessions” means all accessions, as that term is defined in the UCC.

     “Account” means all accounts, as that term is defined in the UCC, due the Borrower,
whether now owned or hereafter created or acquired.

     “Account Debtor” means a Person who owes money to the Borrower as evidenced by an
Account.

     “Affiliate” means as to any Person, any other Person directly or indirectly through
one or more intermediaries Controlling, Controlled by, or under direct or indirect common Control
with such Person. A Person shall be deemed to Control another Person if the Controlling Person
owns ten percent (10%) or more of any class of voting securities, partnership interests or other
equity interests of the Controlled Person or possesses, indirectly or directly, the power to direct
or cause the direction of the management or policies of the Controlled Person, whether through the
ownership of voting securities, by contract or otherwise.

     “Agreement” shall have the meaning set forth in the first paragraph hereof.

     “Authorized Officer” means (a) the Chairman/Chief Executive Officer, or (b) the
President/Chief Operating Officer of each of the Loan Parties, each of which individuals is
authorized to act on behalf of such Loan Party Borrower. The Lender shall be entitled to rely on
the incumbency certificate delivered pursuant to Section 7.1 for the initial designation of each
Authorized Officer. Additions or deletions to the list of Authorized Officers may be made by the
Borrower at any time by delivering to the Lender a revised fully executed incumbency certificate in
form and substance satisfactory to the Lender.

     “Benefit Arrangement” means an “employee benefit plan”, within the meaning of Section
3(3) of ERISA, which is not a Plan or Multiemployer Plan and which is maintained or otherwise
contributed to by the Borrower or any ERISA Affiliate for the benefit of employees of the Borrower
or any ERISA Affiliate.

     “Borrower” shall have the meaning set forth in the initial paragraph of this
Agreement.

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     “Business Day” means a day other than a Saturday or Sunday on which the Lender’s
principal office is open for the conduct of normal banking business.

     “Capital Adequacy Event” shall have the meaning set forth in Section 2.4(b) hereof.

     “Capital Compensation Amount” shall have the meaning set forth in Section 2.4(b)
hereof.

     “Capital Expenditure” shall mean any expenditure which would be classified as a
capital expenditure in accordance with GAAP.

     “Capitalized Lease” means any lease of property by any Person which, in accordance
with GAAP, would be treated as a capital item on the balance sheet of such Person.

     “Change of Control” means (a) the occurrence of any event (whether in one or more
transactions) which results in the transfer of control of the Borrower such that either Osborne, or
following the merger described in Section 6.9, Energy, Inc., fails to own, directly or indirectly
and with full right to direct voting of such shares, all the ownership interests of each other
Corporate Loan Party, or (b) any merger, consolidation or sale of substantially all of the property
or assets or any Loan Party, other than as permitted under Section 6.9. For purposes of this
definition, “control of a Loan Party” means the power, direct or indirect, to vote 51% or more of
the ownership interests having ordinary voting power for the election of directors (or the
individuals performing similar functions) of any Loan Party.

     “Chattel Paper” means chattel paper, as that term is defined in the UCC, held by the
Borrower, whether now owned or existing or hereafter created or acquired.

     “Closing Date” means December ___, 2009, or such other date as is mutually agreeable
to the parties hereto.

     “Closing Fee” means the Closing Fee described in Section 2.5 hereof.

     “Collateral” means collectively the real and personal property in which the Borrower
or any other Loan Party has granted to or will in the future grant to or for the benefit of the
Lender a security interest or other lien to secure the payment of the Obligations and the
Borrower’s and the other Loan Parties’ prompt and complete performance under the Loan Documents,
all as further described in Article III hereof.

     “Commercial Tort Claims” means all commercial tort claims, as that term is defined in
the UCC, of the Borrower, whether now owned or existing or hereafter created or acquired.

     “Compliance Certificate” means the certificate(s) to be executed by an Authorized
Officer and delivered to the Lender pursuant to Section 5.1(c) hereof which certificates shall be
substantially in the form of Exhibit “D” hereto.

     “Control and its derivatives” means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a Person, whether through the

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ownership of voting securities, partnership interests or other equity interest, by contract or
otherwise, including the power to elect a majority of the directors of a corporation or
trustees of a trust, as the case may be.

     “Copyrights” means all copyrights, copyright registrations, copyright applications for
registrations, all rights corresponding thereto throughout the world, the right to recover for all
past, present and future infringements thereof, and all other rights of any kind whatsoever
accruing thereunder or pertaining thereto.

     “Corporate Loan Party” means individually and “Corporate Loan Parties” means
collectively, the Borrower and the Guarantors, excluding Osborne.

     “Debt” means all liabilities, obligations and indebtedness, whether now or hereafter
owing, arising, due or payable, including but not limited to (i) indebtedness in the nature of
loans, letters of credit, capital leases, obligations under derivative contracts (including
interest rate swaps) and guarantees of the obligation of third parties, and (ii) all liabilities of
any person secured by a lien on Borrower’s property.

     “Default” means any condition, event, omission or act which, with the giving of notice
or the passage of time or both, would constitute an Event of Default.

     “Deposit Accounts” means all deposit accounts, as that term is defined in the UCC, of
the Borrower, whether now owned or existing or hereafter created or acquired.

     “Documents” means all documents, as that term is defined in the UCC, held by the
Borrower, whether now owned or hereafter acquired or created.

     “Dollars” or “$” means the legal tender of the United States of
America.

     “EBITDA” means for any period the sum of the Borrower’s Net Income, plus (to the
extent deducted in computing Net Income) the sum of interest expense, any provision for federal,
state and local income taxes, depreciation expense, amortization expense and all non-cash charges,
minus extraordinary non-operating income and any gain from any non-recurring transactions, the
foregoing determined in accordance with GAAP.

     “Effective Date” means November 30, 2009, upon the occurrence of each of the
conditions precedent set forth in Section 7.1 hereof.

     “Encumbrance” means any encumbrance, mortgage, lien, charge, pledge, security
interest, priority payment, conditional sales agreement right, or other title retention agreement
right including but not limited to any right under a Capitalized Lease and Encumbrances of the type
listed in Section 6.3 hereof, in, upon or against any asset of the Borrower.

     “Energy, Inc.” means Energy, Inc., a Montana corporation.

     Environmental Law shall mean all applicable federal, state, local, tribal, territorial
and foreign Laws (including common law), constitutions, statutes, treaties, regulations, rules,

-4-

 

ordinances and codes and any consent decrees, settlement agreements, judgments, orders, directives,
policies or programs issued by or entered into with a Governmental Authority pertaining or relating to: (i) pollution or pollution control; (ii) protection of human health
from exposure to regulated substances; (iii) protection of the environment and/or natural
resources; (iv) employee safety in the workplace; (v) the presence, use, management, generation,
manufacture, processing, extraction, treatment, recycling, refining, reclamation, labeling,
packaging, sale, transport, storage, collection, distribution, disposal or release or threat of
release of regulated substances; (vi) the presence of contamination; (vii) the protection of
endangered or threatened species; and (viii) the protection of environmentally sensitive areas.

     “Equipment” means all equipment, as that term is defined in the UCC, of the Borrower,
whether now owned or hereafter created or acquired.

     “ERISA” means the Employee Retirement Income Security Act of 1974 as now in effect and
as hereafter from time to time amended, supplemented or otherwise modified, or any successor
statute, and the rules and regulations promulgated thereunder.

     “ERISA Affiliate” means any member of a controlled group of corporations under Section
414(b) of the Internal Revenue Code of which any Loan Party is a member, and any trade or business
(whether or not incorporated) under common control with a Loan Party under Section 414(c) of the
Internal Revenue Code, and all other entities which, together with the Borrower, are or were
treated as a single employer under Sections 414(m) or 414(o) of the Internal Revenue Code.

     “Event of Default” means any one or more of the events described in Section 8.1 of
this Agreement.

     “Fees” means the Closing Fee and all other fees due the Lender hereunder.

     “Fiscal Quarter” means each successive three month fiscal period of the Borrower
beginning on each January 1, April 1, July 1, and October 1 and ending respectively on the
succeeding March 31, June 30, September 30 and December 31.

     “Fiscal Year” means each successive fiscal period of the Borrower beginning January 1
and ending the succeeding December 31.

     “Fixed Charge Coverage Ratio” means the ratio of EBITDA to the sum of (i) scheduled
principal payments on Debt and capital leases, plus (ii) interest expense, plus (iii) federal,
state and local income tax expense, plus (iv) dividends and distributions, each of the foregoing
determined in accordance with GAAP as of the last day of each fiscal quarter of the Borrower for
the four fiscal quarters then ending.

     “Fixtures” means all fixtures, as that term is defined in the UCC, of the Borrower
located on or attached to any land or leasehold interest of the Borrower, whether now owned or
hereafter acquired or created.

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     “GAAP” means generally accepted accounting principles which shall include, but not be
limited to, the official interpretations thereof as defined by the Financial Accounting Standards
Board, its predecessors and its successors.

     “General Intangibles” means all general intangibles, as that term is defined in the
UCC, of the Borrower, whether now owned or hereafter acquired or created.

     “Goods” means all goods, as that term is defined in the UCC, held by the Borrower,
whether now owned or hereafter acquired and wherever located.

     “Governmental Authority” means the government of the United States or the government
of any state or locality therein, any political subdivision or any governmental,
quasi-governmental, judicial, public or statutory instrumentality, authority, body or entity, or
other regulatory bureau, authority, body or entity of the United States or any state or locality
therein, including the Federal Deposit Insurance Corporation, the Office of the Comptroller of the
Currency and the Board of Governors of the Federal Reserve System, and any central bank of any
other country or any comparable authority.

     “Governmental Rule” means any law, statute, rule, regulation, permit, license, treaty,
ordinance, order, writ, injunction, decree, judgment, guideline, award, standard, directive or
decision of any governmental authority, whether in existence on the Closing Date or whether issued,
enacted or adopted after the Closing Date, and any change therein or in the interpretation or
application thereof following the Closing Date.

     “Guaranty” or “Guarantee”, or the plural thereof, whether capitalized
or not, means any obligation, direct or indirect, by which a Person undertakes to guaranty, assume
or remain liable for the payment or performance of another Person’s obligations, including but not
limited to (a) endorsements of negotiable instruments, (b) discounts with recourse, (c) agreements
to pay or perform upon a second Person’s failure to pay or perform, (d) retention of liability on
any obligation assumed by a second Person, (e) agreements to maintain the capital, working capital
solvency or general financial condition of a second Person and (f) agreements for the purchase or
other acquisition of products, materials, supplies or services, if in any case payment therefor is
to be made regardless of the non-delivery of such products, materials or supplies or the
non-furnishing of such services.

     “Guarantor” means each of the parties set forth in the initial paragraph of this
Agreement and their respective heirs, personal representatives, successors and permitted assigns,
and each other Person who joins this Agreement as a Guarantor after the date hereof.

     “Guaranty Agreement” means the Amended and Restated Continuing Agreement of Guaranty
and Suretyship in substantially the form set forth as Exhibit “B” hereto, executed and
delivered by the Guarantors, and all extensions, renewals, amendments, substitutions and
replacements thereto and thereof.

     “Hazardous Substance” means any (i) substance which is defined as such or regulated in
any manner by any Environmental Law and (ii) petroleum products, including crude oil and any
fraction thereof.

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     “Hazardous Waste” means any waste defined as such by any Environmental Law.

     “Indebtedness” as applied to any Person means all liabilities for borrowed money or
credit advanced of such Person, whether secured or unsecured, evidenced by a bond, note,
debenture, Capitalized Lease, deferred purchase price arrangement, title retention device,
reimbursement agreement, reimbursement obligations under any standby letters of credit, any
Guarantees for borrowed money, book entry or otherwise, including but not limited to the
Obligations; provided, however, that Indebtedness shall not include such Person’s
accounts payable or other routine trade indebtedness not evidenced by a promissory note or similar
type instrument and which is incurred in the ordinary course of such Person’s business if those
accounts payable and routine trade indebtedness do not constitute obligations to repay borrowed
money.

     “Instruments” means all instruments, as that term is defined in the UCC, held by the
Borrower, whether now owned or hereafter acquired or created.

     “Intellectual Property” means all of the Borrower’s Copyrights, Patents, trademarks,
tradenames, service marks or applications for any of the foregoing, whether now owned or hereafter
acquired or created.

     “Interest Hedge Agreement” means any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate insurance or any other agreement or
arrangement designed to provide protection against fluctuations in interest rates, together with
all extensions, renewals, restatements, amendments, substitutions and replacements to and of any of
the foregoing.

     “Inventory” means all inventory, as that term is defined in the UCC, of the Borrower,
whether now owned or existing or hereafter created or acquired.

     “Investment Property” means all investment property, as that term is defined in the
UCC, of the Borrower, whether now owned or existing or hereafter created or acquired.

     “Letters of Credit” means that certain Letter of Credit No. OSB.005931 issued by the
Lender for the account of the Borrower in the stated amount of $3,500, and any other letters of
credit at any time issued by the Lender for the account of the Borrower.

     “Line of Credit Loans” means loans made by the Lender not in excess of $1,500,000
which are evidenced by the Line of Credit Note.

     “Line of Credit Note” shall have the meaning set forth in the recitals to this
Agreement, together with all amendments, supplements, extensions, renewals, restatements,
amendments, substitutions and replacements thereto and thereof.

     “Line of Credit Termination Date” means November 28, 2010.

     “Loan Account” means the loan account maintained by the Lender as more fully described
in Section 2.9 hereof.

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     “Loan Documents” means any and all agreements among the Borrower, the Lender or for
the benefit of the Lender relating to the Obligations or the Collateral, including, without
limitation, this Agreement, the Notes, the Security Documents, and the Guaranty Agreement.

     “Loans” means individually or collectively, the Line of Credit Loans and the Term
Loan.

     “Loan Party” means individually and “Loan Parties” means collectively, the
Borrower and the Guarantors.

     “Material Adverse Change” means any circumstance or event which (i) has a material
adverse effect upon the validity or enforceability of any Loan Document, (ii) is material and
adverse to the business, properties, assets, financial condition or results of operations of the
Borrower, (iii) impairs materially the ability of the Loan Parties to duly and punctually pay or
perform the Obligations, or (iv) impairs materially the ability of the Lender to enforce its legal
remedies pursuant to the Loan Documents.

     “Material Adverse Effect” means an effect that results in or causes a Material Adverse
Change.

     “Money” means all money, as that term is defined in the UCC, of the Borrower or any
Loan Party, whether now owned or hereafter acquired.

     “Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA to which the affected Person or any ERISA Affiliate of such Person is making or accruing an
obligation to make contributions or has within any of the preceding five (5) plan years made or
accrued an obligation to make contributions.

     “Net Income” means, for the relevant accounting period of the Borrower, all ordinary
income and ordinary gains less all ordinary expenses and ordinary losses from operations of the
Loan Parties, determined and combined in accordance with GAAP.

     “Notes” means, individually or collectively, the Line of Credit Note and the Term
Note, as the same may be amended, modified, extended or restated from time to time with the written
consent of the Lender.

     “Obligations” means collectively, (i) all unpaid principal and accrued and unpaid
interest with respect to the Loans, (ii) all accrued and unpaid Fees, (iii) any other amounts due
hereunder or under the Notes or any of the other Loan Documents or Letter of Credit (and related
applications therefor) including all reimbursements, indemnities, costs, expenses, prepayment
premiums, yield protection obligations, break-funding costs and other obligations of Borrower to
the Lender or any indemnified party hereunder and thereunder, (iv) all obligations under any
Interest Hedge Agreement with the Lender or an Affiliate of the Lender, and (v) all reasonable
out-of-pocket costs and expenses incurred by the Lender in connection with this Agreement, the
other Loan Documents and the Letters of Credit, including but not limited to the reasonable fees
and expenses of the Lender’s counsel which the Borrower is responsible to pay pursuant to the terms
of this Agreement and the other Loan Documents.

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     “Patents” means all patents and patent applications including, without limitation, all
rights corresponding thereto throughout the world, all reissues, divisions, continuations,
continuations-in-part, substitutes, renewals, restatements and extensions thereof, all improvements
thereon, and all other rights of any kind whatsoever accruing thereunder or pertaining thereto, and
the right to recover for all past, present and future infringements thereof.

     “Payment Intangibles” means all payment intangibles, as that term is defined in the
UCC, of the Borrower, whether now owned or existing or hereafter created or acquired.

     “PBGC” means the Pension Benefit Guaranty Corporation established pursuant to ERISA or
any entity succeeding to any or all of its functions under ERISA.

     “Permitted Encumbrances” has the meaning set forth in Section 6.3.

     “Person” means any individual, partnership, corporation, trust, joint venture or
unincorporated organization and any government or department or agency thereof.

     “Plan” means any employee pension benefit plan, other than a Multiemployer Plan which
is covered by Title IV of ERISA and which either (i) is maintained for the employees of the
Borrower or any ERISA Affiliate or (ii) has at any time within the preceding five years been
maintained by the Borrower and/or any entity which was an ERISA Affiliate at such time for their
respective employees of which the Borrower is a member, whether such plan is now in existence or is
hereafter created or assumed.

     “Pledge Agreement” means the Pledge Agreement of Osborne referred to in Section 3.4
hereof in substantially the form set forth as Exhibit “C” hereto, and all extensions,
renewals, restatements, amendments, substitutions and replacements thereto and thereof.

     “Prohibited Transaction” means a “prohibited transaction” as that term is defined in
Section 406 of ERISA and the regulations promulgated thereunder.

     “Real Property” means the real property and improvements thereto including without
limitation that real property described on Schedule 4.11 attached hereto which the Loan
Parties currently own or lease, and any other real property hereafter acquired or leased by the
Loan Parties.

     “Regulation D, T, U and/or X” means respectively, Regulation D, Regulation T,
Regulation U and/or Regulation X promulgated by the Board of Governors of the Federal Reserve
System, as such regulations are now in effect and as they may hereafter be amended.

     “Related Party Indebtedness” means any Indebtedness of the Borrower, excluding salary,
benefits, perquisites and reimbursement of expenses, which is owed by the Borrowers to officers and
shareholders of the Borrower as set forth on Schedule 6.1.

     “Reportable Event” means a “reportable event” as that term is defined in Section
4043(b) of ERISA and the regulations promulgated thereunder.

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     “Securities” means all securities, as that term is defined in the UCC, of the
Borrower, whether now owned or existing or hereafter created or acquired.

     “Security Agreement” means the Amended and Restated Security Agreement referred to in
Section 3.4 hereof substantially in the form set forth as Exhibit “A” hereto, and all
extensions, renewals, restatements, amendments, substitutions and replacements thereto and thereof.

     “Security Documents” means any or all of the Security Agreement, the Pledge Agreement
and all additional documents and instruments entered into from time to time for the purpose of
securing the Obligations and any and all ancillary documents and instruments relating to any of the
foregoing, such as financing statements.

     “Solvent” means the condition which exists when any Person (i) owns assets whose value
(both at fair market value and present fair saleable value) is, on the date of determination,
greater than the amount of such Person’s liabilities (including without limitation contingent and
unliquidated liabilities), (ii) is able to pay all of its obligations as they mature, and (iii) has
capital sufficient to carry on its present business and transactions and all business and
transactions in which it is about to engage.

     “Subsidiary” means either (i) any corporation more than 50% of the outstanding voting
securities of which are owned or controlled, directly or indirectly, by a Loan Party, or (ii) any
other entity or organization which is so owned or controlled.

     “Supporting Obligations” means all supporting obligations, as that term is defined in
the UCC, of the Borrower, whether now owned or existing or hereafter created or acquired.

     “Term Loan” means the term loan made by the Lender in the original principal amount of
$4,603,320.98 which is evidenced by the Term Note.

     “Term Note” shall have the meaning set forth in the recitals to this Agreement,
together with all amendments, supplements, extensions, renewals, restatements, amendments,
substitutions and replacements thereto and thereof.

     “Termination Proceedings” means termination proceedings under Section 4042 of ERISA or
any successor section of ERISA.

     “TSCA” means the Toxic Substance Control Act of 1976, 15 U.S.C. §2601 et
seq. and the regulations adopted pursuant thereto, 40 CFR Part 710, all as the same may be
amended.

     “Unfunded Benefit Liability” means with respect to any Plan, the amounts described in
Section 4001(a)(18) of ERISA.

     “UCC” means the Uniform Commercial Code as adopted and in effect from time to time in
the State of Ohio, except when the provisions of the UCC as adopted in another jurisdiction are
applicable due to the location of any collateral in such other jurisdiction.

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     “Withdrawal Liability” means “withdrawal liability” as defined by the provisions of
Part 1 of Subtitle E to Title IV of ERISA.

     1.2 GAAP Definitions.

               Accounting terms used herein but not defined herein shall have the meanings ascribed to them
under GAAP in effect at the time of the execution of this Agreement.

     1.3 Construction. 

               Unless the context of this Agreement otherwise clearly requires, the following rules of
construction shall apply to this Agreement and each of the other Loan Documents:

          (i) Number; Inclusion. References to the plural include the singular, the
singular the plural and the part the whole, “or” has the inclusive meaning represented by
the phrase “and/or,” and “including” has the meaning represented by the phrase “including
without limitation.”

          (ii) Determination. References to “determination” of or by the Lender shall be
deemed to include good faith reasonable estimates by the Lender (in the case of quantitative
determinations) and good faith reasonable beliefs by the Lender (in the case of qualitative
determinations), and such determination shall be conclusive absent manifest error.

          (iii) Discretion and Consent. Whenever the Lender is granted the right herein
to act in its sole discretion or to grant or withhold consent such right shall be exercised
in good faith.

          (iv) Documents Taken as a Whole. The words “hereof,” “herein,” “hereunder”,
“hereto” and similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document as a whole and not to any particular provision of this
Agreement or such other Loan Document.

          (v) Headings. The article, section and other headings contained in this
Agreement or such other Loan Documents and the Table of Contents (if any) preceding this
Agreement or such other Loan Document are for reference purposes only and shall not control
or affect the construction of this Agreement or such other Loan Document or the
interpretation thereof in any respect.

          (vi) Implied References. Article, section, subsection, item, clause, schedule
and exhibit references are to this Agreement or to such other Loan Document, as the case may
be, unless otherwise specified.

          (vii) Persons. Reference to any Person includes such Person’s successors and
assigns, but, if applicable, only if such successors and assigns are permitted by this
Agreement or such other Loan Document, as the case may be, and reference to a Person in a
particular capacity excludes such Person in any other capacity.

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     (viii) Government Rule and Agreements. Reference to any Government Rule,
agreement or contract includes such Governmental Rule, agreement or contract as the same may
be amended, supplemented, modified, extended, waived, consolidated, replaced or renewed from
time to time, but only to the extent permitted by, and effected in accordance with, the
terms thereof and of this Agreement and the other Loan Documents.

     (ix) From, To and Through. Relative to the determination of any period of
time, “from” means “from and including”, “to” means “to but excluding”, and “through” means
“through and including”.

     (x) Shall; Will. References to “shall” and “will” are intended to have the
same meaning.

     (xi) UCC Terms. All terms used in the Uniform Commercial Code and not
specifically defined in this Agreement or in any other Loan Document shall herein have the
meanings assigned to such terms in the Uniform Commercial Code as from time to time in
effect in the State of Ohio.

     (xii) Writing; Written. References to “writing” include printing, typing,
lithography and other means of reproducing words in a tangible visible form. References to
“written” include “printed”, “typed”, “lithographed” and other adjectives relating to words
reproduced in a tangible visible form consistent with the preceding sentence and also
include electronic images and images stored on computer disks, magnetic tape and like media.

ARTICLE II THE LOANS.

     2.1 The Line of Credit.

2.1a Line of Credit Loans. The Lender agrees, subject to the terms and conditions hereof
and relying upon the representations and warranties herein set forth, that the Borrower shall have
the right to continue to have outstanding the Line of Credit Loans from the date hereof until the
Line of Credit Termination Date; provided however, if Borrower elects to prepay some or all the
Line of Credit Loans, such amounts may not thereafter be re-borrowed. The Borrower shall execute a
Note Modification Agreement in form and content acceptable to the Lender evidencing the extension
of the maturity date of the Line of Credit Note; provided however, that the parties hereby
acknowledge and agree that no novation is intended or shall result from such modification.

2.1b Line of Credit Note. The obligation of the Borrower to repay, on or before the Line
of Credit Termination Date, the aggregate unpaid principal amount of all advances made by the
Lender, shall be evidenced by the Line of Credit Note. The principal amount actually due and owing
the Lender under the Line of Credit Note shall be the aggregate unpaid principal amount of all Line
of Credit Loans made by the Lender, all as shown on the Loan Account established pursuant to
Section 2.9 hereof. As of the date of this Agreement, the outstanding principal balance of the
Line of Credit Loans is $1,499,169.80.

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     2.2 Term Loan.

2.2a Term Loan; Term Note. The obligation of the Borrower to repay, on or before November
28, 2010, the unpaid principal amount of the Term Loan shall be evidenced by the Term Note. The
principal amount actually due and owing the Lender under the Term Note made payable to it shall be
the unpaid principal amount of the Term Loan due the Lender, all as shown
on the Loan Account established pursuant to Section 2.9 hereof. As of the date of this Agreement,
the outstanding principal balance of the Term Loan is $4,310,412.83.

2.2b Principal Payments on Term Loan.

     (i) Scheduled Principal Payments. Principal and interest on the Term Loan
shall be repaid in consecutive monthly installments, each in the amount of $35,330.61,
commencing on December 31, 2009 and on the last day of each month thereafter through and
including October 31, 2010, with the final payment on November 28, 2010, being equal to the
outstanding principal balance of the Term Loan plus accrued and unpaid interest. The
Borrower shall execute a Note Modification Agreement in form and content acceptable to the
Lender evidencing the extension of the maturity date of the Term; provided however, that the
parties hereby acknowledge and agree that no novation is intended or shall result from such
modification.

     (ii) Voluntary Prepayments. The Borrower, subject to the terms hereof, shall
have the right, at its option, to prepay the Term Loan without penalty (other than any
breakage costs associated with payment of a loan bearing interest at the LIBO Rate other
than at the end of the applicable LIBO Rate Interest Period) in whole at any time or in part
from time to time. Each voluntary prepayment shall be in the minimum principal amount of
$100,000. The Borrower shall give the Lender not less than one (1) Business Day’s prior
written notice of each prepayment specifying the aggregate principal amount to be prepaid
and the date of prepayment. Notice of prepayment having been given as aforesaid, the
principal amount specified in such notice shall be due and payable on the prepayment date.
Each voluntary prepayment of principal on the Term Loan shall be applied to the principal
balance outstanding on the Term Loan in the inverse order of scheduled maturities.

     2.3 Interest Rates, Interest Payment and Certain Provisions Relating to Interest and Fees.

          The Borrower shall pay interest on the principal amount of the Loans from time to time
outstanding hereunder, from the date thereof until payment in full, at the rates of interest set
forth in the Line of Credit Note and the Term Note, as the case may be. In addition thereto, the
Borrower shall pay late charges and default rate interest, each if applicable, in accordance with
the terms of the respective Notes.

-13-

 

     2.4 Yield-Protection, Capital Adequacy.

2.4a Yield Protection. Notwithstanding other provisions of this Section 2.4:

     (i) If any Governmental Rule (including, without limitation, Regulation D), or if any
change in the interpretation thereof by any Governmental Authority charged with the
administration thereof, shall:

     (A) subject the Lender to any tax, levy, impost, charge, fee, duty, deduction
or withholding of any kind with respect to payments of principal or interest or
other amounts due hereunder (other than any tax imposed or based
upon the income of the Lender and payable to any Governmental Authority in the
United States of America or any state thereof); or

     (B) change the basis of taxation of the Lender with respect to payments of
principal or interest or other amounts due hereunder (other than any change which
affects, and only to the extent that it affects, the taxation by the United States
or any state thereof of the total net income of the Lender); or

     (C) impose, modify or deem applicable any reserve, special deposit or similar
requirements against assets held by the Lender applicable to the Loans made
hereunder (other than such requirements which are included in the determination of
the applicable rate of interest hereunder); or

     (D) impose upon the Lender any other obligation or condition with respect to
this Agreement,

and the result of any of the foregoing is to increase the cost to the Lender, reduce the income
receivable by the Lender, reduce the rate of return on the Lender’s capital, or impose any expenses
upon the Lender, all with respect to any of the Loans (or any portion thereof) by an amount which
the Lender reasonably deems material:

     (1) the Lender shall notify the Borrower of the happening of such event;

     (2) the Borrower shall pay to the Lender, on demand, such amount as will
compensate the Lender for such reduction in its rate of return; and

     (3) the Borrower may pay the affected portion of the Lender’s Loans in full
without the payment of any additional amount, including prepayment premiums or
penalties, other than amounts payable on account of the Lender’s out-of-pocket
losses (including funding loss, if any, as provided in Subsection 2.4e) which are
not otherwise provided for in subparagraph (2) immediately above.

     (ii) A certificate as to the increased cost or reduced amount as a result of any event
mentioned in this Subsection 2.4a shall be submitted by the Lender to the Borrower

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in accordance with the provisions hereof. Such certificate shall be evidence as to the amount
of such increased cost or reduced amount absent manifest error.

2.4b Capital Adequacy. If, (i) any adoption of or any change in or in the interpretation
of any Governmental Rule by the applicable Governmental Authority, or (ii) compliance with any
Governmental Rule of any Governmental Authority exercising control over banks or financial
institutions generally or any court of competent jurisdiction, requires that the Loans (including,
without limitation, obligations in respect of any Loans) hereunder be treated as an asset or
otherwise be included for purposes of calculating the appropriate amount of capital to be
maintained by the Lender or any corporation controlling the Lender (a “Capital Adequacy
Event”), the result of which is to reduce the rate of return on the Lender’s capital as a
consequence of the Loans to a level below that which the Lender could have achieved but for
such Capital Adequacy Event, taking into consideration the Lender’s policies with respect to
capital adequacy, by an amount which the Lender reasonably deems to be material, the Lender shall
deliver to the Borrower a statement of the amount necessary to compensate the Lender or the
reduction in the rate of return on its capital attributable to the Loans (the “Capital
Compensation Amount”). The Lender shall from time to time notify the Borrower of the amount so
determined. Each such notification shall, absent manifest error, be evidence of the amount of the
Capital Compensation Amount set forth therein, and such Capital Compensation Amount shall be due
and payable by the Borrower to the Lender within ten (10) days after such notice is given. As soon
as practicable after any Capital Adequacy Event, the Lender shall submit to the Borrower estimates
of the Capital Compensation Amounts that would be payable as a function of the Lender’s Loans
hereunder.

     2.5 Closing Fee. 

          The Borrower agrees to pay the Lender a nonrefundable Closing Fee for the waivers and
amendments set forth herein in the amount of $35,000, payable on the Closing Date, which amount
shall be deemed to be earned as of the Closing Date.

     2.6 Calculation of Interest and Fees.

          The calculation of the amount of interest and Fees due and owing to the Lender shall be made
by the Lender and shall be evidenced by the Lender posting the amount of interest and Fees due it
hereunder to the Loan Account established pursuant to Section 2.9 hereof and shall be presumptively
correct, absent manifest error.

     2.7 Time, Place and Manner of Payments.

          All payments to be made by the Borrower under the Line of Credit Note and the Term Note or of
the Fees and all other amounts due the Lender hereunder shall be made at the office designated by
the Lender. All payments to be made by the Borrower under this Agreement shall be paid in Dollars
in immediately available funds no later than 11:00 a.m. (Pittsburgh, Pennsylvania time) on the date
such payment is due. If the date on which any payment is due is not a Business Day, such payment
shall be due and payable on the next

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succeeding day which is a Business Day and such extension of
time shall be included in computing any interest in respect of such payment.

     2.8 Payment from Accounts Maintained by Borrower.

          In the event that any payment of principal, interest, Fees or any other amount due the Lender
under the Loan Documents is not paid when due, the Lender is hereby authorized to effect such
payment by debiting any demand deposit account of the Borrower maintained with the Lender. This
right of debiting accounts of the Borrower is in addition to any right of set off accorded the
Lender hereunder or by operation of law.

     2.9 Loan Account.

          The Lender shall open and maintain on its books a Loan Account in the name of the Borrower
with respect to Disbursements made, repayments, prepayments, the computation
and payment of interest and the Fees and the computation of other amounts due and sums paid to
the Lender pursuant to this Agreement. Except in the case of manifest error, such Loan Account
shall be presumptively correct and binding on the Borrower as to the amount at any time due to the
Lender from the Borrower pursuant to this Agreement.

ARTICLE III SET-OFF; SECURITY INTERESTS; ADDITIONAL GUARANTOR.

     3.1 Set-Off.

          To secure the repayment of the Obligations, the Borrower hereby gives to the Lender a lien and
security interest upon and in any property, credits, securities or monies which may at any time be
delivered to, or be in the possession of, or owed by the Lender or any Affiliate of Lender in any
capacity whatever (exclusive of funds held in trust by the Borrower on behalf of employees or
others by the Lender) including the balance of any deposit account maintained by the Borrower with
the Lender. The Borrower hereby authorizes the Lender at its option, upon the occurrence and
during the continuation of an Event of Default, to apply at the discretion of the Lender, any and
all such property, credits, securities or monies now or hereafter in the hands of the Lender
belonging or owed to the Borrower to the payment of Obligations.

     3.2 UCC Personal Property.

          To secure the repayment of the Obligations, and in addition to and not in limitation of the
liens and security interests granted by the Loan Parties in favor of the Lender under the other
Loan Documents, the Borrower hereby grants to the Lender, a lien and security interest in all of
its Equipment (and any Accessions thereto), Fixtures, Goods (excluding Inventory), Accounts,
Chattel Paper (whether tangible or electronic), Instruments (including promissory notes),
Documents, Money, Deposit Accounts, Letter of Credit Rights (whether or not the letter of credit is
evidenced by a writing), Commercial Tort Claims, Securities and all other Investment Property,
Supporting Obligations, any other contract rights or rights to the payment of money, insurance
claims and General Intangibles (including Payment Intangibles), whether now owned or in existence
or hereafter acquired or created, wherever located and all products and proceeds thereof.

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     3.3 Security Agreement.

          To further evidence the grant of the lien and security interest referred to in Section 3.2
hereof, the Borrower will execute and deliver to the Lender a Security Agreement substantially in
the form of Exhibit “A” hereto, and agree that the Lender may file any and all Uniform
Commercial Code financing statements deemed appropriate by the Lender in connection therewith.

     3.4 Additional Guarantor; Pledge Agreement.

          Within five (5) business days of the date the Lightning Merger described in Section 6.9 is
effected, (A) Energy, Inc. shall execute and delivery a Guaranty Agreement in substantially in the
form of Exhibit “B” hereto and join this Agreement as an additional Corporate Loan Party by
delivering the documents required under Section 7.1(vii), (viii), (xii) and such additional
documents as Lender may reasonably request, and the Borrower and the then-existing other
Guarantors delivering the documents required under Section 7.1(xiii); and (B) Osborne shall
execute and deliver to the Lender a Pledge Agreement substantially in the form of Exhibit
“C” hereto, pursuant to which he pledges capital stock of Energy, Inc. having a market value of
at least $3,000,000, and Osborne shall at such time also deliver to the Lender the related stock
certificates and undated blank stock powers with respect to such ownership interests of Energy,
Inc. If the events described in (A) and (B) above have not occurred within sixty (60) days after
the Closing Date, the Borrower and/or the Guarantors shall provide the Lender with additional
liquid collateral acceptable to the Lender in its discretion having a fair market value of at least
$3,000,000.

ARTICLE IV REPRESENTATIONS AND WARRANTIES.

     To induce the Lender to enter into this Agreement and to make the Loans herein provided for,
each Loan Party, jointly and severally, represents and warrants to the Lender that:

     4.1 Existence and Power.

          Each Corporate Loan Party is a corporation, partnership or limited liability company, duly
organized and validly existing under the laws of its jurisdiction of organization, and is
authorized to do business in each jurisdiction where, because of the nature of its activities or
the ownership of its properties or both, such qualification is required except where the failure to
be so qualified would not constitute a Material Adverse Effect. Each Corporate Loan Party’s
principal place of business and executive office is located 8500 Station Street, Suite 100, Mentor,
Ohio 44060.

     4.2 Authority.

          Each Loan Party is duly authorized to execute and deliver this Agreement and the other Loan
Documents to which it is a party. All necessary action to authorize the execution and delivery by
each Corporate Loan Party of this Agreement and the other Loan Documents to which it is a party has
been properly taken. Each Corporate Loan Party is and hereafter will

- 17 -

 

continue to be duly
authorized to perform all of the terms and provisions of this Agreement and the other Loan
Documents to which it is a party.

     4.3 Validity of Documents. 

          This Agreement, the Notes and the other Loan Documents to be executed by each Corporate Loan
Party, constitute legal, valid and binding obligations of such Corporate Loan Party enforceable in
accordance with their respective terms and the terms of this Agreement, except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditor’s rights generally and except as such
enforceability may be limited by the availability of equitable remedies.

     4.4 Financial Statements.

          The Borrower has delivered to the Lender audited combined financial statements of the Borrower
for the Fiscal Year ended December 31, 2008, consisting of balance sheets and
statements of income, retained earnings and cash flow. To the best of the Borrower’s knowledge
such financial statements accurately reflect in all material respects the liabilities of the as of
December 31, 2008, other than liabilities under executory contracts which in accordance with GAAP
are not required to be set forth in such financial statements.

     4.5 Litigation.

          Except as set forth in Schedule 4.5hereto, there are no actions, suits, proceedings,
investigations or governmental proceedings pending or, to the knowledge of any Corporate Loan
Party, threatened against the such Corporate Loan Party the results of which, individually or in
the aggregate, if adversely determined, could reasonably be expected to have a Material Adverse
Effect.

     4.6 No Restrictions.

          Neither the execution, delivery nor performance of this Agreement, the consummation of the
loan transactions herein contemplated nor compliance with the terms and provisions hereof or of the
Notes, the Security Documents or the other Loan Documents to which it is a party (a) will conflict
with or result in a breach of any of the terms, conditions or provisions of (i) the certificate of
incorporation, by-laws, certificate of limited partnership, partnership agreement, certificate of
formation, limited liability company agreement or other organizational document of any Corporate
Loan Party, (ii) any Governmental Rule or (iii) any agreement, indenture or other instrument to
which any Corporate Loan Party is a party or by which any Corporate Loan Party is bound or to which
any Corporate Loan Party is subject the result of which would have a Material Adverse Effect on any
Corporate Loan Party’s business or (b) results in the creation, imposition or continuation of any
lien or Encumbrance (except a Permitted Encumbrance) of any nature whatsoever upon any of the
property or assets of any Corporate Loan Party pursuant to the terms of any agreement, indenture or
other instrument.

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     4.7 Deferred Compensation Plans.

          Except as set forth on Schedule 4.7, the Borrower has (i) no Plans or Benefit
Agreements and (ii) has no ERISA Affiliate which has any such Plans or Benefit Agreements.

     4.8 Tax Returns and Payments.

          Each Corporate Loan Party has filed all tax returns required by law to be filed and has paid
all taxes, assessments and other governmental charges levied upon such Corporate Loan Party or any
of its properties, assets, income or franchises which are due and payable, other than those
presently payable without penalty or interest. The charges, accruals and reserves on the books of
such Corporate Loan Party, in respect of Federal and state income taxes for all fiscal periods to
date are, in the opinion of such Corporate Loan Party, adequate, and such Corporate Loan Party does
not know of any unpaid assessments for additional Federal or state income taxes for any such fiscal
period.

     4.9 Margin Stock.

          None of the Corporate Loan Parties is engaged in the business of purchasing or selling margin
stock or extending credit to others for the purpose of purchasing or carrying margin stock (as
defined in Regulations T, U or X issued by the Board of Governors of the Federal Reserve System),
and no part of the proceeds of any borrowing hereunder will be used to purchase or carry any margin
stock or for any other purpose which would violate any of the margin regulations of such Board of
Governors.

     4.10 Labor Matters.

          Except as set forth on Schedule 4.10, no Corporate Loan Party is a party to any
collective bargaining agreement, and, to the best of each Corporate Loan Party’s knowledge, there
are no strikes, work stoppages, material grievances, disputes or controversies with any union or
any other organization of such Corporate Loan Party’s employees, or threats of strikes, work
stoppages or any asserted pending demands for collective bargaining by any union or organization.

     4.11 Title to Properties.

          Except as set forth on Schedule 4.11, each Corporate Loan Party has good title to its
properties and assets, free and clear of all mortgages, pledges, liens and other Encumbrances,
except the Permitted Encumbrances. All of each Corporate Loan Party’s real property interests,
whether fee or leasehold, as of the Closing Date are set forth on Schedule 4.11.

     4.12 Compliance with Law.

          Except as set forth on Schedule 4.12, each Corporate Loan Party has duly complied
with, and, to the best of such Corporate Loan Party’s knowledge, its properties and operations are
in compliance in all respects with, the provisions of all Governmental Rules to which such
Corporate Loan Party is subject, except for such non-compliance as would not have,

- 19 -

 

or reasonably be
expected to result in, a Material Adverse Effect. To the best of each Corporate Loan Party’s
knowledge, such Corporate Loan Party has all licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its properties or the conduct of its business, except
where the failure to obtain the same would not have, or reasonably be expected to result in, a
Material Adverse Effect.

     4.13 Intellectual Property.

          To each Corporate Loan Party’s knowledge, such Corporate Loan Party owns or licenses all the
material Patents, patent applications, trademarks, trademark applications, permits, service marks,
trade names, Copyrights, copyright applications, licenses, franchises, authorizations and other
intellectual property rights that are necessary for the operation of its businesses, without
infringement upon or conflict with the rights of any other Person with respect thereto. To the
best knowledge of each Corporate Loan Party, no slogan or other advertising, device, product,
process, method, substance, part or component or other material now employed, or now contemplated
to be employed, by such Corporate Loan Party infringes upon or conflicts with any rights owned by
any other Person, and no claim or litigation regarding
any of the foregoing is pending or threatened. All of each Corporate Loan Party’s material
Patents, trademarks, permits, service marks, trade names, Copyrights, licenses, franchises and
authorizations are listed on Schedule 4.13.

     4.14 Insurance. 

          Each Corporate Loan Party currently maintains insurance which meets or exceeds the
requirements of Section 5.3 hereof and the applicable insurance requirements set forth in the other
Loan Documents, and such insurance is provided by reputable and financially sound insurers. All of
such insurance policies are valid and in full force and effect. No notice has been given or claim
made, and, to such Corporate Loan Party’s knowledge, no grounds exist to cancel or void any of such
policies or to reduce the coverage provided thereby. All of each Corporate Loan Party’s existing
insurance coverage is described on Schedule 4.14.

     4.15 No Defaults.

          No event has occurred and is continuing and no condition exists which constitutes an Event of
Default. No Corporate Loan Party is in violation of (i) any term or provision of its certificate
of incorporation, by-laws, certificate of limited partnership, partnership agreement, certificate
of formation, limited liability company agreement or other organizational documents or (ii) any
material agreement or instrument to which it is a party or by which it or any of its properties may
be bound or subject.

     4.16 Security Interest in Personal Property.

          Upon the execution of this Agreement and the other Loan Documents, the Lender’s security
interest in the Borrower’s personal property set forth in Sections 3.2 and 3.3 hereof (to the
extent a security interest can be perfected therein pursuant to the UCC or applicable federal law)
(a) will be and continue to be a prior perfected security interest under the UCC and applicable
federal law entitled to all the rights, benefits and priorities provided by the

- 20 -

 

UCC and applicable
federal law, and (b) will be and will continue to be superior and prior to the rights of all
Persons to the full extent provided by the UCC and applicable federal law subject only to Permitted
Encumbrances. All filing fees and other expenses in connection with each such action shall be paid
by the Borrower, and the Lender shall be reimbursed by the Borrower for any such reasonable fees
and expenses incurred by the Lender.

     4.17 Investment Company Act.

          No Corporate Loan Party is required to register under the provisions of the Investment Company
Act of 1940, as amended, and neither the entering into or performance by any Corporate Loan Party
of this Agreement, the Notes, the Security Agreement or any other Loan Document violates any
provision of such Act or requires any consent, approval or authorization of, or registration with,
the Securities and Exchange Commission or any other Governmental Authority pursuant to any
provisions of such Act.

     4.18 Disclosure.

          Neither this Agreement nor any other document, certificate or written statement furnished to
the Lender by or on behalf of any Corporate Loan Party contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements contained herein
and therein not misleading. As of the Closing Date, there is no fact known to any Authorized
Officer which materially and adversely affects the business, operations, affairs, condition,
prospects, properties or assets of such Corporate Loan Party which has not been set forth in this
Agreement or in the other documents, certificates and statements (financial or otherwise) furnished
to the Lender by or on behalf of such Corporate Loan Party prior to or on the date hereof.

     4.19 Consents and Approvals.

          Except for the filing of Security Documents with the appropriate government office, no order,
authorization, consent, license, validation or approval of, or notice to, filing, recording, or
registration with any Governmental Authority, or the exemption by any such Governmental Authority,
is required to authorize, or is required in connection with, (i) the execution, delivery and
performance of any of the Loan Documents to which any Corporate Loan Party is a party or (ii) the
legality, binding effect or enforceability of any such Loan Document to which any Corporate Loan
Party is a party.

ARTICLE V AFFIRMATIVE COVENANTS.

     The Corporate Loan Parties agree, jointly and severally, that, from the date hereof and
thereafter until all of the Obligations are indefeasibly paid in full:

     5.1 Furnishing Information.

          The Corporate Loan Parties will maintain a system of accounting established and administered
in accordance with GAAP, consistently applied, and will set aside on their

- 21 -

 

respective books all
such proper reserves as shall be required by GAAP. Further, the Borrower will deliver to the
Lender:

     (a) within forty-five (45) days after the end of each of the first fiscal
quarter of Energy, Inc. commencing with the fiscal quarter ended December 31, 2009,
(i) an unaudited consolidated balance sheet as of the end of such quarter, including
consolidating schedules for the Borrower, and (ii) the related unaudited
consolidated statements of income, retained earnings and cash flows for such
quarter, including consolidating schedules for the Borrower, each of which shall be
prepared in accordance with GAAP consistently applied, all presenting fairly the
financial condition of the Energy, Inc. and the Borrower in such reasonable detail
as the Lender may reasonably request from time to time and certified (subject to
normal year-end adjustments) as to fairness of presentation, GAAP and consistency by
an Authorized Officer.

     (b) within ninety (90) days after the end of each Fiscal Year of Energy, Inc.,
Borrower’s audited financial statements of Energy, Inc. including (i) its
consolidated balance sheet as at the end of such year, including consolidating
schedules for the Borrower, and (ii) Energy Inc.’s consolidated statements of
income, retained earnings and cash flows for such year, including consolidating
schedules for the Borrower, each setting forth, in comparative form, corresponding
figures for the immediately preceding Fiscal Year, all prepared in reasonable detail
and certified without qualification by Hein & Associates LLP or such other
independent certified public accountants selected by Energy, Inc. and reasonably
acceptable to the Lender;

     (c) at the time of the delivery of the financial statements described in (a)
and (b) above, a Compliance Certificate substantially in the form of Exhibit
“D” hereto evidencing calculation of the financial covenants of the Borrower and
signed by an Authorized Officer stating that the signer has reviewed the terms of
this Agreement, the Notes, the Security Documents and the other Loan Documents and
has made, or caused to be made under his supervision, a review of the transactions
and condition of the Corporate Loan Parties during the accounting period covered by
such financial statements and that such review has not disclosed the existence
during such accounting period, and that the signer does not have knowledge of the
existence, as at the date of such Compliance Certificate, of any condition or event
which constitutes a Default or an Event of Default or, if any such condition or
event existed or exists, specifying the nature and period of existence thereof and
what action the Borrower has taken or is taking or proposes to take with respect
thereto;

     (d) promptly after any officer of any Corporate Loan Party has learned of the
occurrence or existence of or an event or circumstances which would reasonably be
expected to result in a Default or an Event of Default, or of an event or set of
circumstances which has had or which are reasonably likely to have a Material
Adverse Effect or which has caused a Material Adverse Change,

- 22 -

 

telephonic notice
thereof specifying the details thereof, the effect thereof and the action which such
Corporate Loan Party has taken, is taking or proposes to take with respect thereto,
which notice, if oral, shall be promptly confirmed in writing within five days by an
Authorized Officer of such Corporate Loan Party;

     (e) promptly after any Corporate Loan Party becomes aware of the commencement
thereof, written notice of any action, suit, proceeding or investigation, or any
written threat thereof, which, if determined adversely to such Corporate Loan Party,
would reasonably be expected to result in a Material Adverse Change;

     (f) promptly after receipt thereof, a copy of any order, writ, decree,
judgment, decision or injunction issued by any Governmental Authority in any
proceeding, action, suit or investigation to which any Corporate Loan Party is a
party which is reasonably likely to have a Material Adverse Effect;

     (g) promptly after receipt or knowledge thereof, (1) a copy of any notice the
Borrower or other fiduciary or administrator of any Plan receives from the PBGC
relating to the intention of the PBGC to terminate any Plan or to appoint a trustee
to administer any such Plan, (2) notice of any Reportable Event, (3) information
concerning any unfunded accumulated benefit obligations for any Plan, (4) any notice
of assessment of Withdrawal Liability, (5) a copy of any Notice of Intent to
Terminate any Plan, and (6) any other information reasonably requested by the Lender
from time to time relating to Plans and Benefit Arrangements;

     (h) in the event any Corporate Loan Party gives to or receives notice from any
Governmental Authority of any release of Hazardous Substances or receives any
environmental complaint from any person or entity, including any state agency
responsible in whole or in part for environmental matters in the state in which its
Real Property is located or the United States Environmental Protection Agency which,
in either case, is likely to cause a Material Adverse Change, then such Corporate
Loan Party shall, within five (5) Business Days, give written notice of same to the
Lender detailing non-privileged and non-confidential facts and circumstances giving
rise to the Release or environmental complaint. Such information is to be provided
to allow the Lender to protect its mortgage lien and security interests in the Real
Property and is not intended to create any obligation upon the Lender with respect
thereto; and

     (i) promptly after request, deliver to the Lender such other information and
data with respect to any Corporate Loan Party, its operations, business, affairs and
financial condition as from time to time may be reasonably requested by the Lender.

- 23 -

 

     5.2 Insurance.

          Each Corporate Loan Party shall maintain at all times adequate insurance to the reasonable
satisfaction of the Lender with the insurers shown on Schedule 4.14 or other financially
sound and reputable insurers reasonably acceptable to the Lender, against such risks of loss as are
customarily insured against and in amounts customarily carried by Persons owning, leasing or
operating similar properties, including but not limited to: (i) fire and theft and extended
coverage insurance in an amount at least equal to the total full replacement costs of its insurable
property; (ii) liability insurance on account of injury to persons or property; and (iii) insurance
which complies with all applicable workers’ compensation, unemployment and similar laws, all of the
foregoing to be acceptable to the Lender at all times during the term hereof. Each Corporate Loan
Party shall cause all such insurance to be issued with a mortgagee and lender’s loss payable
endorsement (with respect to the property polices) and an additional insured endorsement (with
respect to the liability policies) in favor of the Lender, providing for at least 30 days’ written
notice to the Lender prior to cancellation, and the Corporate Loan Parties shall cause certificates
of insurance acceptable to the Lender to be delivered to the Lender prior to the initial
Disbursement and a duplicate original of the insurance policies to be delivered to the Lender
promptly after the Closing Date. Anything hereinabove to the contrary notwithstanding, and subject
to the fulfillment of the conditions set forth below, the Lender shall remit to the
Corporate Loan Parties insurance proceeds received by Lender during any calendar year under
insurance policies procured and maintained by the Corporate Loan Parties which insure Borrowers’
insurable properties to the extent such insurance proceeds do not exceed $100,000 in the aggregate
during such calendar year. In the event the aggregate amount of insurance proceeds received by the
Lender for any occurrence exceeds $100,000 in any calendar year, then the Lender shall not be
obligated to remit the insurance proceeds to the Corporate Loan Parties unless the Corporate Loan
Parties shall provide the Lender with evidence reasonably satisfactory to the Lender that the
insurance proceeds will be used by the Corporate Loan Parties to repair, replace or restore the
insured property which was the subject of the insurable loss. In the event Corporate Loan Parties
have previously received (or, after giving effect to any proposed remittance by the Lender to the
Corporate Loan Parties would receive) insurance proceeds which equal or exceed $100,000 in the
aggregate during any calendar year, then the Lender may, in its sole discretion, either remit the
insurance proceeds to the Corporate Loan Parties upon the Corporate Loan Parties providing the
Lender with evidence reasonably satisfactory to the Lender that the insurance proceeds will be used
by the Corporate Loan Parties to repair, replace or restore the insured property which was the
subject of the insurable loss, or apply the proceeds to the Obligations, as aforesaid. The
agreement of the Lender to remit insurance proceeds in the manner above provided shall be subject
in each instance to satisfaction of each of the following conditions: (x) No Event of Default or
Default shall then have occurred, and (y) the Corporate Loan Parties shall use such insurance
proceeds to repair, replace or restore the insurable property which was the subject of the
insurable loss and for no other purpose.

     5.3 Payment of Taxes.

          Each Corporate Loan Party will pay or cause to be paid all taxes, assessments and other
governmental charges levied upon any of its properties or assets or in respect of its business,
income or profits before the same become delinquent, except that (unless any material

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item of
property would be lost, forfeited or materially damaged as a result thereof) no such charge need be
paid if it is being contested in good faith and by appropriate proceedings promptly initiated and
diligently conducted and if an appropriate reserve, as shall be required by GAAP, shall have been
made therefor.

     5.4 Records.

          The Corporate Loan Parties will maintain proper books of record and account in accordance with
sound accounting practice in which full, true and correct entries shall be made of all their
properties and assets and its dealings and business affairs.

     5.5 Inspection of Records and Properties and Audit Review.

          Each Corporate Loan Party will, on reasonable prior notice prior to the existence of an Event
of Default (or in the absence of prior notice following and during the continuation of an Event of
Default), permit the Lender’s employees or representatives to visit any of its properties, and to
discuss its affairs and accounts with, and be advised about them by, the management of such
Corporate Loan Party, all at such reasonable times, and as often as the Lender may reasonably
request. Lender reserves the right to perform an audit review of the Borrower’s Accounts and
accounts payable. The Corporate Loan Parties shall permit the Lender
to conduct and complete field examinations, in form, substance and scope satisfactory to
Lender, of the Borrower’s Accounts and working capital assets, which field examinations shall be
(i) prior to the occurrence of an Event of Default, be conducted not more than once in any calendar
year, and (ii) after and during the continuation of an Event of Default, such number of times as
determined by the Lender in its discretion.

     5.6 Good Repair.

          Each Corporate Loan Party will do all things reasonably necessary to maintain, preserve,
protect and keep its property in such state of repair, working order and condition, as is necessary
for the operation of the business of such Corporate Loan Party, subject to normal wear and tear and
obsolesence.

     5.7 Maintenance of Contractual Obligations.

          Each Corporate Loan Party shall maintain in full force and effect all leases for its real
properties and all leases for personal property and perform under all of its other contracts, if
the failure to maintain such lease or perform under any such contract would result in a Material
Adverse Change.

     5.8 Maintenance of Patents, Trademarks, Permits, Etc.

          Each Corporate Loan Party shall maintain in full force and effect, and investigate and
prosecute all infringements of, all Patents, trademarks, trade names, Copyrights and other
Intellectual Property and all licenses, franchises, permits and other authorizations necessary for
the ownership and operation of its properties and business in each case where the failure to take
such action would have a Material Adverse Effect.

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     5.9 Lender Accounts.

          The Borrower shall maintain all of its primary deposit accounts with the Lender, and in the
event that the Borrower in its discretion arranges for its Account Debtors to remit payments to a
post office box at a financial institution, such post office box and the related deposit account
shall be maintained with the Lender.

     5.10 Preservation of Existence and Regulatory Compliance.

          Each Corporate Loan Party will, at its own cost and expense, do all things necessary to
preserve and keep in full force and effect its existence under the laws of its jurisdiction of
organization. Further, each Corporate Loan Party will maintain, preserve and renew all rights,
powers and privileges which are necessary in the operation of its business.

     5.11 Compliance with Laws.

          Each Corporate Loan Party will perform and promptly comply in all material respects, and cause
all property of such Corporate Loan Party to be maintained, used and operated in all material
respects, in accordance with all Governmental Rules (including, without limitation, zoning
ordinances, building codes and Environmental Laws of every duly constituted
Governmental Authority applicable to such Corporate Loan Party, or any of its properties)
except for those alleged violations which are being contested in good faith and by appropriate
proceedings promptly initiated and diligently conducted and if an appropriate provision, as shall
be required by GAAP, shall have been made therefor. Further, no Corporate Loan Party shall be
deemed to be in violation of this Section 5.11 as the result of any failure to comply with a
Governmental Rule which would not individually or in the aggregate have a Material Adverse Effect.

     5.12 Further Assurances; Power of Attorney.

          At any time and from time to time, upon the Lender’s reasonable request, the Borrower shall
make, execute and deliver to the Lender, and where appropriate shall cause to be recorded or filed,
and from time to time thereafter to be re-recorded and refiled, at such time and in such offices
and places as shall be deemed desirable by the Lender, any and all such further Security Documents,
certificates and other documents and instruments as the Lender in its sole but reasonable
discretion may consider necessary or desirable in order to effectuate, complete, perfect, continue
or preserve the obligations of the Borrower hereunder or under the other Loan Documents and the
Encumbrances created hereby and thereby. The Borrower hereby appoints the Lender, and any of its
officers, directors, employees and authorized agents, with full power of substitution, upon any
failure by the Borrower to take or cause to be taken any action described in the preceding
sentence, to make, execute, record, file, re-record or refile any and each such Security Document,
instrument, certificate and document for and in the name of the Borrower. The power of attorney
granted pursuant to this Section 5.12 is coupled with an interest and shall be irrevocable until
all of the Obligations are indefeasibly paid in full.

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ARTICLE VI NEGATIVE COVENANTS.

     From the date hereof and thereafter until all of the Obligations are indefeasibly paid in
full:

     6.1 Indebtedness.

          The Borrower shall not create, assume, incur or in any manner become or remain liable in
respect to, any Indebtedness, except for:

     (i) the Obligations,

     (ii) Indebtedness incurred under Capitalized Leases and purchase money obligations in
an aggregate amount not to exceed $500,000 at any one time outstanding, and

     (iii) the Related Party Indebtedness set forth on Schedule 6.1 hereto, and

     6.2 Guaranties.

          Except as set forth on Schedule 6.2, the Borrower shall not directly or indirectly
guarantee the Indebtedness or obligation of any other Person, except for (i) Guarantees of
Indebtedness for Capitalized Leases and purchase money obligations to the extent permitted
under Section 6.1(ii), and (ii) Guarantees resulting from endorsement of negotiable
instruments for collection in the ordinary course of business.

     6.3 Creation of Encumbrances; Contractual Restrictions.

          The Borrower will not create, assume, incur or suffer to exist or allow to be created, assumed
or incurred or suffered to exist any Encumbrance upon any of its properties, now owned or hereafter
acquired, nor acquire nor agree to acquire any kind of property subject to an Encumbrance,
provided, however, that the foregoing restrictions shall not prevent such Loan Party from:

     (i) creating Encumbrances in favor of or for the benefit of the Lender to secure
repayment of the Obligations;

     (ii) creating Encumbrances in favor of lessors under Capitalized Leases or to secure
purchase money Indebtedness permitted hereunder; provided, that any such Encumbrance
be limited solely to assets being leased or acquired;

     (iii) permitting or incurring Encumbrances for taxes or assessments or governmental
charges or levies on any of the properties of the Borrower if such taxes, assessments,
governmental charges or levies shall not at the time be due and payable or can thereafter be
paid without penalty or are being contested in good faith by appropriate proceedings and
with respect to which the Borrower has created reserves which are

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determined by the Borrower
to be adequate by the application of GAAP consistently applied;

     (iv) making pledges or deposits to secure the Borrower’s obligations under workmen’s
compensation laws or similar legislation;

     (v) incurring Encumbrances arising out of judgments or awards against the Borrower with
respect to which it is currently engaged in proceedings for review or appeal and with
respect to which it shall have secured a stay of execution pending such proceedings for
review or appeal;

     (vi) in the ordinary course of business, granting security interests in favor of
lessors of personal property, which property is the subject of a true lease between such
lessor and such Person; and

     (vii) permitting Encumbrances consisting of zoning restrictions, easements,
restrictions on the use of real property and other matters of record or minor irregularities
in titles thereto which do not, in the sole discretion of the Lender, impair the value of
such property in a material amount.

     Each Encumbrance of the type listed in items (i) through (vii) inclusive immediately above is
a “Permitted Encumbrance”.

     In addition to the foregoing restrictions on creation of Encumbrances, the Borrower shall not
at any time directly or indirectly enter into or assume any agreement (other than this
Agreement and the other Loan Documents), or adopt any charter or other governing document
provision, prohibiting the creation or assumption of any Encumbrance upon any of the property or
assets of the Loan Parties, with the exception of negative pledge provisions included in Capital
Leases and purchase money financing agreements which restrict Encumbrances on the equipment being
leased or financed under such agreements.

     6.4 Fixed Charge Coverage Ratio.

          Commencing with the fiscal quarter of the Borrower ending March 31, 2010, the Borrower shall
not allow the Fixed Charge Coverage Ratio, as calculated at of the end of fiscal quarter of the
Borrower for the four fiscal quarters ending, to be less than 1.0 to 1.0.

     6.5 Restrictions on Dividends and Distributions.

          The Borrower shall not make any dividend, distribution, redemption or repurchase (other than
dividends and distributions of shares of capital stock which do not violate Section 8.1j) with
respect to the shares of capital stock or pursuant to any option, or put agreement if, (i) at the
time of such payment, an Event of Default or Default has occurred and is continuing or would be
caused by such payment, or (ii) the payment would cause the aggregate amount of all dividends,
distributions, redemptions and repurchases in any fiscal year of the Borrower to exceed sixty
percent (60%) of the Net Income of the Borrower for such fiscal year.

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     6.6 Disposition of Assets.

          The Borrower shall not sell, convey, assign, lease, abandon or otherwise transfer or dispose
of, voluntarily or involuntarily, any of its properties or assets, whether tangible or intangible,
real or personal, including without limitation, sales, assignments, discounts or other dispositions
of Accounts, contract rights, Chattel Paper, Equipment or General Intangibles, with or without
recourse, and sale/leaseback transactions, except for:

     (i) sales of Inventory in the ordinary course of business;

     (ii) sales, assignments, transfers or leases in the ordinary course of business of
assets other than Real Property, subject to the Mortgages, which are no longer necessary or
required in the conduct of such Loan Party’s business;

     (iii) sales, transfers or leases of assets in the ordinary course of business which are
replaced by substitute assets acquired or leased by such Loan Party; provided,
however,that such substitute assets shall be subject to a first and prior
lien and security interest in favor of the Lender to the extent they are not subject to an
Encumbrance in favor of the seller or lessor of such assets to the extent permitted
hereunder; and

     (iv) sales, transfers or leases of any Real Property which is not encumbered by a
Mortgage, so long as the value of such assets disposed of during the term hereof does not
exceed $500,000.

     6.7 Change of Business.

          The Borrower shall not engage in any business operation other than (i) the business it is
engaged in on the date hereof, and (ii) such other similar and related business operations as could
be engaged in utilizing the Borrower’s then existing assets and personnel.

     6.8 ERISA.

          At any time permit any Plan of any Loan Party to (a) engage in any “prohibited transaction” as
such term is defined in Section 4975 of the Internal Revenue Code of 1986, as amended, (b) incur
any “accumulated funding deficiency” as such term is defined in Section 302 of ERISA, whether or
not waived, or (c) be terminated in a manner which could result in the imposition of a lien on the
property of such Loan Party pursuant to Section 4068 of ERISA.

     6.9 Mergers; Acquisitions; Consolidations.

          The Borrower will not merge with or consolidate into any other Person or permit any Person to
consolidate with or merge into the Borrower, or acquire all or a substantial part of the assets,
capital stock or membership interests of any other Person or permit any Person to acquire all or a
substantial part of the assets or capital stock of the Borrower; provided however, a wholly
owned subsidiary of Energy West, Inc. shall be permitted to merge with and into Lightning, with
Lightning being the surviving corporation (the “Lightning Merger”), the result of which will be the
Borrower becoming an indirect, wholly-owned subsidiary of Energy, Inc.

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     6.10 Loans and Advances.

          Except for (i) loans or advances to employees which do not exceed in the aggregate $25,000 at
any one time outstanding, and (ii) investments permitted pursuant to Section 6.11, the Borrower is
prohibited from making loans or advances to any Person, except in its capacity as trustee or
manager of any pension, profit sharing or retirement plan for its employees.

     6.11 Investments.

          The Borrower shall not at any time purchase, acquire or own any stock, bonds, notes, or
securities of, or any partnership interest (whether general or limited) in, or any other interest
in, or make any capital contribution to, any other Person, or become a joint venture partner in any
joint venture, or agree, become or remain liable to do any of the foregoing, except for:

     (i) debt securities having a maturity of not more than one year issued or guaranteed by
the United States government or by an agency or instrumentality thereof;

     (ii) certificates of deposit, bankers acceptances and time deposits, which in each case
mature within one year from the date of purchase thereof;

     (iii) commercial paper maturing in 270 days or less from the date of issuance which, at
the time of acquisition by such Loan Party either (A) is accorded the highest
rating by Standard and Poor’s Rating Group, a division of McGraw-Hill, Inc. or Moody’s
Investors Service, Inc. or (B) is issued by the Lender; and

     (iv) direct obligations of the United States of America or any agency or
instrumentality of the United States of America, the payment or guarantee of which
constitutes a full faith and credit obligation of the United States of America, in each case
maturing in 12 months or less from the date of acquisition.

     6.12 Transactions with Affiliates.

          The Borrower shall not enter into or carry out any material transaction (including, without
limitation, purchasing property or services or selling property or services) with an Affiliate
unless such transaction: (i) is not otherwise prohibited by this Agreement or any of the other
Loan Documents, (ii) is entered into in the ordinary course of such Loan Party’s business and upon
fair and reasonable arm’s-length terms and conditions which are fully disclosed to the Lender
beforehand, and (iii) is in accordance with all applicable Governmental Rules.

     6.13 Amendment of Certain Documents.

          Without twenty (20) days prior written notice to the Lender, each Corporate Loan Party shall
not amend such Corporate Loan Party’s certificate of incorporation, by-laws, certificate of limited
partnership, partnership agreement, certificate of formation, limited liability company agreement
or other organizational document of such Corporate Loan Party, and if such

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amendment would be
adverse to the Lender as determined by the Lender in good faith, obtaining the Lender’s prior
written consent. Notwithstanding the foregoing, Lightning shall be permitted to amend its
organizational documents in connection with the Lightning Merger.

ARTICLE VII CONDITIONS PRECEDENT.

     7.1 Conditions Precedent to the Lender Entering into this Agreement.

          The obligations of the Lender to grant the waivers set forth in this Agreement and extend the
maturity date of the Term Loan and Line of Credit Loans as provided for in this Agreement are
subject to the performance by the Borrower of its obligations under this Agreement and to the
satisfaction of the following further conditions:

     (i) Agreement. Receipt by the Lender of originals of this Agreement executed
by the Loan Parties hereto together with all Schedules hereto.

     (ii) Security Agreement. Receipt by the Lender of originals of the Security
Agreement executed by the Borrower in substantially in the form of Exhibit “A”
hereto.

     (iii) Guaranty Agreement. Receipt by the Lender of originals of the Guaranty
Agreement executed by the Guarantors in substantially in the form of Exhibit “B”
hereto.

     (iv) Insurance. Receipt by the Lender of certificates of insurance policies
with respect to the Borrower’s insurance policies, containing, as to the casualty insurance
policies, mortgagee and lender loss payable endorsements satisfactory to the Lender and
which in all other respects comply with the requirements of Section 4.14 and 5.2 and
the insurance requirements set forth in the other Loan Documents.

     (v) Lien Searches. Receipt by the Lender of lien searches satisfactory to the
Lender.

     (vi) [Intentionally Omitted].

     (vii) Loan Party Action; Resolutions. Receipt by the Lender of a certified
copy of the action of each of the Borrower and each other Corporate Loan Party authorizing
the borrowings hereunder and the execution, delivery and performance of this Agreement, the
Notes and the Security Documents, and any other Loan Document.

     (viii) Incumbency Certificate. Receipt by the Lender of an incumbency
certificate with respect to each Corporate Loan Party which (A) certifies the names of the
Authorized Officers authorized to sign this Agreement, the Notes, the Security Documents,
the other Loan Documents and all supplemental documentation and (B) contains the true
signature of each such person.

     (ix) Certificate of Authorized Officer. Receipt by the Lender of a certificate
executed by an Authorized Officer certifying that each Corporate Loan Party’s

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organizational
documents (copies of which are attached thereto) remain in full force and effect.

     (x) Fees. Receipt by the Lender of all Fees and expenses due the Lender on or
before the Closing Date.

     (xi) Material Adverse Change. No Material Adverse Change has occurred and is
continuing.

     (xii) Opinion of Loan Parties’ Counsel. Receipt by the Lender of a signed
favorable opinions of counsel for the Loan Party in form and substance satisfactory to the
Lender.

     (xiii) Payment of Costs and Expenses. Receipt by the Lender of reimbursement
for all fees, costs and expenses incurred by the Lender, including fees and expenses of
counsel, outstanding appraisal and field examination fees and all other accrued professional
fees related to the Lender’s loans with the Loan Parties.

ARTICLE VIII DEFAULTS AND REMEDIES.

     8.1 Events of Default.

          Each of the following events shall constitute an Event of Default:

8.1a Payment Default. Default by any Loan Party, or any guarantor or surety thereof, in
the payment of principal or interest of any Loan, Note or other Obligation when due.

8.1b Nonpayment of Other Indebtedness. Any Indebtedness of any Loan Party is not paid at
maturity or becomes or is declared to be due and payable prior to its expressed maturity by reason
of any default by such Loan Party in the performance or observance of any obligation or condition
or which represents a purchase money obligation or any agreement relating to such obligation and
the effect of such default is to accelerate the maturity of such Indebtedness or the holder thereof
shall cause such Indebtedness to become due prior to the stated maturity thereof or such Loan Party
shall not pay such Indebtedness at maturity.

8.1c Insolvency.

     (i) Involuntary Proceedings. A proceeding shall have been instituted in a
court having jurisdiction seeking a decree or order for relief in respect of any Loan Party
or any Subsidiary of any Loan Party in an involuntary case under the Federal bankruptcy
laws, or any other similar applicable Federal or state law, now or hereafter in effect, or
for the appointment of a receiver, liquidator, trustee, sequestrator or similar official for
any Loan Party or any Subsidiary of any Loan Party or for a substantial part of their
respective property, or for the winding up or liquidation of its affairs, and such shall
remain uncontested or uncontroverted for a period of 30 days and shall remain undismissed or
unstayed and in effect for a period of 60 days.

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     (ii) Voluntary Proceedings. Any Loan Party or any Subsidiary of any Loan Party
shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the
filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent
seeking reorganization under the Federal bankruptcy laws, or any other similar applicable
Federal or state law now or hereinafter in effect, or shall consent or acquiesce to the
filing of any such petition, or shall consent to or acquiesce in the appointment of a
receiver, liquidator, trustee, sequestrator or similar official for any Loan Party or any
Subsidiary of any Loan Party, as the case may be, or for a substantial part of their
respective property, or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due, or action
shall be taken by any Loan Party or any Subsidiary of any Loan Party in furtherance of any
of the foregoing.

8.1d Termination of Existence. Except as permitted under Section 6.10, any Loan Party
shall terminate its existence or cease to exist.

8.1e Adverse Judgments. Any court shall render a final judgment or judgments against any
Loan Party in an aggregate amount of $500,000 or more in excess of any amount not covered by
insurance and such judgment or judgments shall not be stayed, discharged, vacated or set aside
within thirty (30) days after entry; or any property of any Loan Party shall be attached under a
claim or claims in an aggregate amount of $500,000.

8.1f ERISA. (i) Any Plan of the Borrower shall be terminated, or (ii) a trustee shall be
appointed by the appropriate United States Court to administer any such Plan, or (iii) the PBGC
shall institute proceedings to terminate any such Plan or to appoint a trustee to administer any
such Plan, or (iv) any notice assessing Withdrawal Liability with respect to any Multiemployer
Plan shall have been received by the Borrower or any ERISA Affiliate and the Borrower’s liability
as a result of the foregoing exceeds $500,000.

8.1g Failure to Comply with Covenants; Loan Documents. Default in the performance by any
Loan Party of the covenants set forth in Section 3.4, Article V or Article VI hereof or in any
other Loan Document.

8.1i Misrepresentation. Any representation or warranty made by any Loan Party herein or
any schedule, statement, report, notice or writing furnished by any Loan Party to the Lender
pursuant hereto or pursuant to any other Loan Document is untrue in any material respect on the
date as of which the facts set forth are stated or certified.

8.1j Change of Control. Any Change of Control shall occur.

8.1k Material Adverse Effect. Any change in any Loan Party’s condition or affairs
(financial or otherwise) occurs or exists which in the Lender’s opinion has a Material Adverse
Effect.

     Notwithstanding the foregoing Sections 8.1a through 8.1k, with respect to Osborne, ONG and
Lightning II (but not with respect to the other Loan Parties), and with respect to Richard M.
Osborne, as Trustee of the Richard M. Osborne Trust aka the Richard M. Osborne Trust Agreement
Dated January 13, 1995, as amended, it shall not constitute an Event of Default if any

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of the
conditions set forth in Section 8.1 shall exist with respect to Osborne, ONG or Lightning II, or
with respect to Richard M. Osborne, as Trustee of the Richard M. Osborne Trust aka the Richard M.
Osborne Trust Agreement Dated January 13, 1995, as amended.

     8.2 Remedies Upon Default.

8.2a Termination of Commitments. If one or more of the Events of Default occur then (i) if
such Event of Default is set forth in Subsection 8.1c or Subsection 8.1d hereof, the Notes shall
become immediately due and payable, without necessity of demand, presentation, protest, notice of
dishonor or notice of default; or (ii) if such Event of Default is set forth in any of the
remaining subsections of Section 8.1 (other than Subsections 8.1c or 8.1d), the Lender, at its
option without notice to the Borrower, may declare the Borrower in default hereunder, in which
event the Notes shall become immediately due and payable, without necessity of any further demand,
presentation, protest, notice of dishonor or further notice of default.

8.2b Consequences of an Event of Default. Upon the occurrence of an Event of Default, the
Lender shall have the right to demand immediate payment in full of the Obligations under this
Agreement and shall have the full panoply of rights and remedies granted to it under this
Agreement, the Security Documents, and all those rights and remedies granted by law to creditors.
The Lender may proceed to protect and enforce its rights 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 of the Loan Documents, 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. No right, power or remedy conferred upon the Lender by this Agreement or by any other Loan
Document 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. No exercise of any one
right or remedy shall be deemed a waiver of other rights or remedies.

ARTICLE IX WAIVER BY LENDER.

     9.1 Waiver of Events of Default.

          The Lender hereby waives the Events of Default under the Notes as set forth in the Lender’s
letter to the Borrower dated September 4, 2009 to the Borrower, which consist of (i) entry of
judgment against Osborne (whether in his individual capacity or in his capacity as Trustee
of the Richard M. Osborne Trust aka the Richard M. Osborne Trust Agreement Dated January 13, 1995,
as amended), by RBS Citizens Bank and garnishment proceedings made upon the Lender by such creditor
with respect to such judgments, and (ii) failure of Osborne to make payments when due to the Lender
on a separate loan obligation of Osborne to the Lender. In addition to the foregoing, the Lender
hereby waives (x) the Borrower’s violation of the fixed charge coverage ratio under the Existing
Loan Agreement for all period prior to the Closing Date, and (y) the failure of the Borrower and
Osborne to make payment of principal under the Term Note and the Line of Credit Note when such
amounts were due and payable on November 30, 2009. The foregoing waivers are limited to the
specific matters and periods referenced and do not extend to any other defaults, nor do such
waivers constitute any agreement on the part of

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the Lender to grant any such waivers in the future.
The Lender hereby withdraws the acceleration of the Loans as set forth in its September 4, 2009
default letter without prejudice to any future acceleration upon the occurrence of an Event of
Default.

ARTICLE X GENERAL PROVISIONS.

     10.1  Amendments and Waivers.

          The Lender and the Borrower, on behalf of the Loan Parties, may, subject to the provisions of
this Section 10.1, from time to time enter into written supplemental agreements to this Agreement
and the other Loan Documents for the purpose of adding or deleting any provisions or otherwise
changing, varying or waiving in any manner the rights of the Lender, or the obligor thereunder or
the conditions, provisions or terms hereof or thereof or waiving any Event of Default thereunder or
consenting to an action of the Borrower, but only to the extent specified in such written
agreements. Notwithstanding the foregoing, the Borrower and the Lender shall not extend the Line
of Termination Date or the maturity date for the final payment of principal on the Term Loan
without the written consent of Osborne.

Any such supplemental agreement shall be binding upon the Borrower, the Loan Parties, the Lender,
all future holders of the Notes and all Participants. In the case of any waiver, each of the
Borrower, the Loan Parties and the Lender shall be restored to its former position and rights, and
any Event of Default waived shall be deemed to be cured and not continuing, but no such waiver
shall extend to any subsequent or other Event of Default, or impair any right consequent thereon.

     10.2 Expenses.

          The Borrower shall pay:

     (i) All reasonable costs and expenses of the Lender (including without limitation the
reasonable fees and disbursements of the Lender’s counsel and costs
incurred by the Lender in performing its due diligence), incurred in connection with
the preparation, negotiation, execution and delivery of this Agreement and the other Loan
Documents and any and all other documents and instruments prepared in connection herewith,
including but not limited to all amendments, extensions, modifications, replacements,
waivers, consents and other documents and instruments prepared or entered into from time to
time;

     (ii) All reasonable costs and expenses of the Lender (including without limitation the
reasonable fees and disbursements of the Lender’s counsel) in connection with (A) the
enforcement of this Agreement and the other Loan Documents arising pursuant to an Event of
Default, and (B) defending or prosecuting any actions, suits or proceedings relating to any
of the Loan Documents.

All of such costs and expenses shall be payable by the Borrower to the Lender upon demand or as
otherwise agreed upon by the Lender and the Borrower, and shall constitute Obligations under this
Agreement. The Borrower further agrees to pay, and save the Lender harmless from any and all
liability for, any stamp or other taxes (other than taxes on the Lender’s income or gross

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revenues
or capital stock taxes) which may be payable with respect to the execution or delivery of this
Agreement or the issuance of the Notes. The Borrower’s obligation to pay such costs and expenses
shall survive the termination of this Agreement and the repayment of the Obligations.

     10.3 Notices.

10.3a Notice to the Loan Parties. All notices required to be delivered to any Loan Party
pursuant to this Agreement shall be in writing and shall be sent to the following addresses or
numbers, as appropriate, by hand delivery, recognized national overnight courier service with all
charges prepaid, telegram, telecopier or by United States certified mail, postage prepaid:

Orwell Natural Gas Company

8500 Station Street, Suite 113

Mentor, OH 44060

Attn: Richard M. Osborne

Telecopier No.: (440) 255-8645

with a copy to:

Dworken & Bernstein, Co., LPA

60 South Park Place

Painesville, OH 44077

Attn: Melvyn E. Resnick

Telecopier No.: (440) 352-4969

10.3b Notice to the Lender. All notices required to be delivered to the Lender pursuant to
this Agreement shall be in writing and shall be sent to the following addresses or numbers, as
appropriate, by hand delivery, recognized national overnight courier service with all charges
prepaid, telegram, telecopier or by United States certified mail, postage prepaid:

The Huntington National Bank

Centre City Tower, Suite 1000

650 Smithfield Street

Pittsburgh, PA 15222

Attn: Bruce G. Shearer

Telecopier No.: (412) 667-6443

with a copy to:

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Buchanan Ingersoll & Rooney PC

One Oxford Centre

301 Grant Street, 20th Floor

Pittsburgh, PA 15219

Attn: Thomas Galey

Telecopier No.: (412) 562-1041

10.3c Effectiveness of Notices. All such notices shall be deemed to have been given on the
date of receipt by the addressee (or, if the date of receipt is not a Business Day, on the first
Business Day after the date of receipt), as evidenced by (i) a receipt executed by the addressee
(or a responsible person in his or her office) or the records of the Person delivering such
communication or a notice to the effect that such addressee refused to claim or accept such
communication, if sent by messenger, U.S. mail or express delivery service, or (ii) a receipt
generated by the Sender’s telecopier showing that such communication was sent to the appropriate
number on a specified date, if sent by telecopier. The Loan Parties and the Lender may each
change the address for service of notice upon it by a notice in writing to the other parties
hereto.

     10.4 Successors, Assigns and Participations.

10.4a Successors and Assigns. This Agreement shall be binding upon Loan Parties and the
Lender, and their respective successors and assigns, and shall insure to the benefit of Loan
Parties and the Lender and the successors and assigns of the Lender. The foregoing sentence
notwithstanding, the Loan Parties shall not assign or transfer their respective rights or duties
hereunder. Each assignment by the Lender (i) shall be in a minimum amount of $1,000,000; (ii)
shall be allocated pro rata among the Line of Credit Loans, the Term Loan and the Letters of
Credit; and (iii) shall be evidenced in a manner in form and substance satisfactory to the Lender.

10.4b Participations. The Lender may, in the ordinary course of its commercial lending
business and in accordance with applicable law, at any time sell, to one or more participants,
participating interests in any Line of Credit Loan, the Term Note, or the Letters of Credit owing
to the Lender, the interest of the Lender in any Line of Credit Note, Term Note, or the Letters of
Credit held by the Lender, or any other interest of the Lender hereunder. In the event of any such
sale by the Lender of participating interests to a participant, the Lender’s obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, the Lender shall
remain solely responsible for the performance thereof, and the Lender shall remain the holder of
any such Line of Credit Note, Term Note, or the Letters of Credit for all purposes under this
Agreement (including voting rights hereunder).

     10.5 Severability.

          Any provision of this Agreement 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 portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

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     10.6 Survival.

          All representations, warranties, covenants and agreements of Loan Parties contained herein in
the Notes or in the other Loan Documents or made in writing in connection herewith or therewith
shall survive the issuance of the Notes and shall continue in full force and effect so long as the
Borrower may borrow hereunder and so long thereafter until payment in full of all the Notes and the
Obligations.

     10.7 Governing Law.

          This Agreement, each Note and each other Loan Document shall be a contract made under,
governed by and construed in accordance with the laws of the State of Ohio without reference to the
provision thereof regarding conflicts of law except where such law is superseded by applicable
Federal law.

     10.8 Non-Business Days.

          Except as otherwise specifically required pursuant to the terms of this Agreement, whenever
any payment hereunder or under the Notes is due and payable on a day which is not a Business Day,
such payment may be made on the next succeeding Business Day, and such extension of time shall in
each such case be included in computing interest in connection with such payment.

     10.9 Integration.

          This Agreement constitutes the entire agreement between the parties relating to this financing
transaction and it supersedes all prior understandings and agreements, whether written or oral,
between the parties hereto concerning the subject matter of this Agreement.

     10.10 Headings.

          Article, Section and other headings used in this Agreement are intended for convenience only
and shall not affect the meaning or construction of this Agreement.

     10.11 Forum.

          The parties hereto agree that any action or proceeding arising out of or relating to this
Agreement, the Notes or the other Loan Documents may be commenced in the Court of Common Pleas of
Lake County, Ohio, or in the District Court of the United States for the Northern District of Ohio
and each party agrees that a summons and complaint commencing an action or proceeding in either of
such courts shall be properly served and shall confer personal jurisdiction if served personally or
by certified mail to the party at its respective address set forth in Section 10.3, or as otherwise
provided under the laws of the State of Ohio. Further, the parties hereby specifically consent to
the non-exclusive personal jurisdiction of the Court of Common Pleas of Lake County, Ohio, and the
District Court of the United States for the Northern District of Ohio, and waive and hereby
acknowledge that the parties are estopped from raising any claim that any such court lacks personal
jurisdiction over such party so as to prohibit either such court

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from adjudicating any issues
raised in a complaint filed with any such court against the Borrower, the Lender concerning this
Agreement.

     10.12 Waiver of Jury Trial.

          Each of the Loan Parties, and the Lender hereby knowingly, voluntarily and intentionally
waives any rights they may have to a trial by jury in respect of any litigation based hereon, or
arising out of, under, or in connection with, this Agreement or any other Loan Document, or any
course of conduct, course of dealing, statements (whether verbal or written) or actions of the Loan
Parties and the Lender relating hereto or thereto. Each Loan Party acknowledges and agrees that it
has received full and sufficient consideration for this provision (and each other provision of each
other Loan Document to which it is a party) and that this provision is a material inducement for
the Lender, the Lender to enter into this Agreement and each such other Loan Document.

     10.13 Counterparts.

          This Agreement and any amendment, modification, extension or renewal hereto or hereof may be
executed in several counterparts and by each party on a separate counterpart, each of which, when
so executed and delivered, shall be an original, but all of which together shall constitute but one
and the same instrument. In proving this Agreement or any amendment, modification, extension or
renewal, it shall not be necessary to produce or account for more than one such counterpart signed
by the other party against whom enforcement is sought.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

- 39 -

 

[SIGNATURE PAGE TO AMENDED AND RESTATED LOAN AGREEMENT]

     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this
Agreement to be executed by their respective duly Authorized Officers as of the date first above
written.

	 	 	 	 	 	 	 
	 

	 	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	WITNESS/ATTEST:

	 	 	 	ORWELL NATURAL GAS COMPANY.	 	 
	 
	 	 	 	 	 	 
	By: /s/ Thomas J. Smith

	 	 	 	By: /s/ Richard M. Osborne

	 	(Seal)
	 

	 	 	 	 	 	 
	Name: Thomas J. Smith

Title:   President and COO

	 	 	 	Name: Richard M. Osborne

Title:   Chairman and CEO
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	GUARANTORS:	 	 
	 
	 	 	 	 	 	 
	WITNESS/ATTEST:

	 	 	 	ONG MARKETING, INC.	 	 
	 
	 	 	 	 	 	 
	By: /s/ Thomas J. Smith

	 	 	 	By: /s/ Richard M. Osborne

	 	(Seal)
	 

	 	 	 	 	 	 
	Name: Thomas J. Smith

Title:   President and COO

	 	 	 	Name: Richard M. Osborne

Title:   Chairman and CEO
	 	 
	 
	 	 	 	 	 	 
	WITNESS/ATTEST:

	 	 	 	LIGHTNING PIPELINE
COMPANY, INC.	 	 
	 
	 	 	 	 	 	 
	By: /s/ Thomas J. Smith

	 	 	 	By: /s/ Richard M. Osborne

	 	(Seal)
	 

	 	 	 	 	 	 
	Name: Thomas J. Smith

Title:   President and COO

	 	 	 	Name: Richard M. Osborne

Title:   Chairman and CEO
	 	 

- 40 -

 

[SIGNATURE PAGE TO AMENDED AND RESTATED LOAN AGREEMENT]

	 	 	 	 	 	 	 
	WITNESS/ATTEST:

	 	 	 	LIGHTNING PIPELINE
COMPANY II, INC.	 	 
	 
	 	 	 	 	 	 
	By: /s/ Thomas J. Smith

	 	 	 	By: /s/ Richard M. Osborne

	 	(Seal)
	 

	 	 	 	 	 	 
	Name: Thomas J. Smith

Title: President and COO

	 	 	 	Name: Richard M. Osborne

Title: Chairman and CEO
	 	 
	 
	 	 	 	 	 	 
	/s/ Thomas J. Smith

	 	 	 	/s/ Richard M. Osborne
	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	RICHARD M. OSBORNE
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	THE HUNTINGTON NATIONAL BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	By: /s/ Bruce G. Shearer

	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Bruce G. Shearer

Title: Senior Vice President
	 	 

- 41 -

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