SUBORDINATION AND INTERCREDITOR AGREEMENT
THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this "AGREEMENT") is
entered into as of this August 19, 2008, by and among the noteholders under the
Subordinated Debt Documents (as defined herein) being limited to CASTLERIGG PNG
INVESTMENTS LLC. on the date hereof (individually, a "SUBORDINATED CREDITOR" and
collectively, the "SUBORDINATED CREDITORS" and, if there is only one such
Subordinated Creditor, the term "Subordinated Creditors" and all variations
thereof; e.g. "each Subordinated Creditor," as and when used hereinbelow, shall
mean and refer to that one Subordinated Creditor); PNG VENTURES, INC., a Nevada
corporation (the "COMPANY"); and FOURTH THIRD LLC, a Delaware limited liability
company ("FOURTH THIRD"), as Agent for all Senior Lenders party to the Senior
Credit Agreements described below and as a Senior Lender.
R E C I T A L S
A. The Agent, Senior Lenders (as hereinafter defined) and the Company, as
"Parent" and a "Loan Party" thereunder, have entered into an Amended and
Restated Credit Agreement, dated as of June 26, 2008 (as the same may be
amended, supplemented or otherwise modified from time to time as permitted
hereunder, the "SENIOR CREDIT AGREEMENT"), pursuant to which, among other
things, Senior Lenders are making certain loans and financial accommodations to
New Earth LNG, LLC, a Delaware limited liability company and wholly-owned
subsidiary of the Company ("BORROWER"). All obligations of Borrower arising
under the Senior Credit Agreement are guaranteed by the Company under a
Guarantee and Collateral Agreement, dated as of June 26, 2008, executed by the
Company (among others) in favor of the Agent (as the same may be amended,
supplemented or otherwise modified from time to time as permitted hereunder, the
"SENIOR GUARANTEE AND COLLATERAL AGREEMENT"). All of the obligations of the
Company to Agent and Senior Lenders under the Senior Credit Agreement, the
Senior Guarantee and Collateral Agreement and the other Senior Debt Documents
(as hereinafter defined) are secured by the Collateral (as hereinafter defined).
B. Pursuant to a Securities Purchase Agreement, dated as of August 19, 2008
(as the same may be amended, supplemented or otherwise modified from time to
time as permitted hereunder, the "SECURITIES PURCHASE AGREEMENT"), effective on
or about the date hereof, the Company has issued to the Subordinated Creditors
its Subordinated Convertible Notes, aggregating $3,188,235 in principal amount
(as the same may be renewed, extended, amended, supplemented or otherwise
modified from time to time as permitted hereunder, individually and
collectively, the "SUBORDINATED NOTES").
C. Fourth Third and Subordinated Creditors have agreed to enter into this
Agreement for the purpose of setting forth the relative rights and priorities of
the Agent, Senior Lenders and Subordinated Creditors under the Senior Debt
Documents and the Subordinated Debt Documents (as hereinafter defined).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto hereby agree as
follows:
1. DEFINITIONS. The following terms shall have the following meanings in
this Agreement:
"AGENT" shall mean Fourth Third LLC, as Agent for the Senior Lenders, or
any other Person appointed by the holders of the Senior Debt as
administrative agent for purposes of the Senior Debt Documents and this
Agreement.
"BANKRUPTCY CODE" shall mean Chapter 11 of Title 11 of the United States
Code, as amended from time to time and any successor statute and all rules
and regulations promulgated thereunder.
"BUSINESS DAY" shall mean "Business Day" as defined in the Senior Credit
Agreements.
"COLLATERAL" shall mean (i) all real and personal property of the Company
in which a lien, security interest or mortgage has been or hereafter may be
granted or created in favor or the Agent or any Senior Lender as collateral
security for the payment or performance of any Senior Debt or any
Subordinated Debt.
"COLLECTION ACTION " shall mean (a) to initiate or join in any suit, action
or proceeding against the Company or any Collateral to enforce payment of
or make demand for all or any part of the Subordinated Debt, (b) to seek
monetary damages against the Company, or (c) to take from or for the
account of the Company, by set-off or in any other matter, all or any part
of any moneys which may now or hereafter be owing by the Company with
respect to the Subordinated Debt.
"COMPANY" shall have the meaning given to such term in the preamble.
"DISTRIBUTION" means, with respect to any indebtedness or obligation, (a)
any payment or distribution by the Company (including the Company in its
capacity as a debtor or debtor-in-possession in a Proceeding) of cash,
securities or other property, by set-off or otherwise, on account of such
indebtedness or obligation or (b) any redemption, purchase or other
acquisition of such indebtedness or obligation by the Company. The term
"DISTRIBUTION" shall expressly not include, however, any Common Stock (as
defined in the Securities Purchase Agreement) (i) into which, pursuant to
the Securities Purchase Agreement, the indebtedness represented by the
Subordinated Note may be converted, and (ii) issued pursuant to the
exercise of the Warrants (as defined in the Securities Purchase Agreement).
"ENFORCEMENT ACTION" shall mean (a) to take from or for the account of the
Company by set-off or in any other manner, the whole or any part of any
moneys which may now or hereafter be owing by the Company with respect to
the Subordinated Debt, (b) to ▇▇▇ for payment of, or to initiate or
participate with others in any suit, action or proceeding against the
Company to (i) enforce payment of or to collect the whole or any part of
the Subordinated Debt or (ii) commence judicial enforcement of any of the
rights and remedies under the Subordinated Debt Documents or applicable law
with respect to the Subordinated Debt, (c) to notify account debtors or
directly collect accounts receivable or other payment rights of the Company
or (d) take any action under the provisions of any state or federal law,
including, without limitation, the UCC, or under any contract or agreement,
to enforce against, foreclose upon, take possession of or sell any property
or assets of the Company or any Collateral; PROVIDED, HOWEVER, that the
term "ENFORCEMENT ACTION" shall not include (i) an exercise of rights and
remedies for specific performance or equitable relief to compel the Company
to comply with any non-payment obligations under the Subordinated Debt
Documents so long as it is not accompanied by (a) a Collection Action or
(b) a claim for relief or any other Enforcement Action against or with
respect to any Collateral, or (ii) any suit or action initiated or
maintained by the Subordinated Creditors solely to prevent the running of
any applicable statute of limitations or other similar restriction on
claims.
"FOURTH THIRD LOAN DOCUMENTS" shall mean the Senior Credit Agreement and
all other agreements, documents and instruments executed from time to time
in connection therewith, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof.
"PERMITTED REFINANCING" shall mean any refinancing of the outstanding
Senior Debt under the Fourth Third Loan Documents provided that the
financing documentation entered into by the Company in connection with such
Permitted Refinancing constitutes Permitted Refinancing
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Senior Debt Documents.
"PERMITTED REFINANCING SENIOR DEBT DOCUMENTS" shall mean any financing
documentation which replaces the Fourth Third Loan Documents and pursuant
to which the outstanding Senior Debt under the Fourth Third Loan Documents
is refinanced, as such financing documentation may be amended, supplemented
or otherwise modified from time to time in compliance with this Agreement,
but specifically excluding any such financing documentation to the extent
that it contains provisions violating Section 3.1 hereof.
"PERSON" means any natural person, corporation, general or limited
partnership, limited liability company, firm, trust, association,
government, governmental agency or other entity, whether acting in an
individual, fiduciary or other capacity.
"PROCEEDING" shall mean any voluntary or involuntary insolvency,
bankruptcy, receivership, custodianship, liquidation, dissolution,
reorganization, assignment for the benefit of creditors, appointment of a
custodian, receiver, trustee or other officer with similar powers or any
other proceeding for the liquidation, dissolution or other winding up of a
Person.
"REORGANIZATION SUBORDINATED SECURITIES" shall mean any debt or equity
securities issued in substitution of all or any portion of the Subordinated
Debt, in each case that are subordinated in right of payment, performance,
liens and otherwise to the Senior Debt (or any debt and/or equity
securities issued in substitution of all or any portion of the Senior Debt)
to at least the same extent that the Subordinated Debt (and the liens
securing the Subordinated Debt) are subordinated to the Senior Debt (and
the liens securing the Senior Debt) pursuant to the terms of this
Agreement.
"SECURED CLAIM" shall mean a "secured claim" within the meaning of such
term in Section 506(a) of the Bankruptcy Code (as presently in effect).
"SENIOR DEBT" shall mean all obligations, liabilities and indebtedness of
every nature of the Company under the Senior Debt Documents from time to
time owed to Agent or any Senior Lender under the Senior Debt Documents,
including, without limitation, the principal amount of all debts, claims
and indebtedness, credit exposure and related obligations arising from any
hedging agreements, accrued and unpaid interest and all fees, costs and
expenses, whether primary, secondary, direct, contingent, fixed or
otherwise, heretofore, now and from time to time hereafter owing, due or
payable, whether before or after the filing of a Proceeding under the
Bankruptcy Code together with (a) any amendments, modifications, renewals
or extensions thereof to the extent not prohibited by the terms of this
Agreement and (b) any interest accruing thereon after the commencement of a
Proceeding, without regard to whether or not such interest is an allowed
claim; PROVIDED, HOWEVER, that in no event shall the principal amount of
the Senior Debt (excluding any interest or fees added to principal) exceed
the amount that is the excess of (i) $38,000,000, over (ii) the amount of
any prepayments or repayments under the Senior Credit Agreement
(specifically excluding, however, any such prepayments or repayments
occurring solely as a result of a Permitted Refinancing) (the "SENIOR DEBT
LIMIT"). The sum of (i) the amount of principal outstanding under the
Senior Debt Documents that is in excess of the Senior Debt Limit (including
pursuant to any refinancing other than a Permitted Refinancing), together
with interest on such excess principal and fees attributable to such excess
principal shall not be considered Senior Debt for purposes of this
Agreement (such amount, "EXCLUDED SENIOR DEBT").
"SENIOR DEBT DOCUMENTS" shall mean the Fourth Third Loan Documents and,
after the consummation of any Permitted Refinancing, the Permitted
Refinancing Senior Debt Documents.
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"SENIOR DEFAULT" shall mean any "Event of Default" under the Senior Debt
Documents resulting from the failure of the Borrower to pay, on a timely
basis, any principal, interest, fees or other obligations under the Senior
Debt Documents, including, without limitation, any default in payment of
Senior Debt after acceleration thereof.
"SENIOR LENDERS" shall mean the holders of the Senior Debt.
"SUBORDINATED DEBT" shall mean all of the obligations of the Company under
the Subordinated Debt Documents to the Subordinated Creditors or evidenced
by or incurred pursuant to the Subordinated Debt Documents.
"SUBORDINATED DEBT DOCUMENTS" shall mean (i) the Securities Purchase
Agreement, the Subordinated Note, the Warrants and all other documents,
agreements and instruments now existing or hereinafter entered into by the
Company in connection therewith, and (ii) each document, if any
("SUBORDINATED COLLATERAL DOCUMENTS") which now or hereafter may be
executed and delivered by the Company that creates a lien, security
interest or mortgage on any property to secure all or any portion of the
obligation, indebtedness or liabilities of the Company under any of the
documents referred to in clause (i) of this definition.
"UCC" shall mean the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
2. SUBORDINATION.
2.1. SUBORDINATION OF SUBORDINATED DEBT TO SENIOR DEBT. The Company
covenants and agrees, and each Subordinated Creditor by its acceptance of the
Subordinated Debt Documents (whether upon original issue or upon transfer or
assignment) likewise covenants and agrees, notwithstanding anything to the
contrary contained in any of the Subordinated Debt Documents, that the payment
of any and all of the Subordinated Debt shall be subordinate and subject in
right and time of payment, to the extent and in the manner hereinafter set
forth, to the prior payment in full in cash (or other consideration acceptable
to Agent in its sole discretion) of all Senior Debt (but not any Excluded Senior
Debt). Each holder of Senior Debt, whether now outstanding or hereafter created,
incurred, assumed or guaranteed, shall be deemed to have acquired Senior Debt in
reliance upon the provisions contained in this Agreement.
2.2. LIQUIDATION, DISSOLUTION, BANKRUPTCY. In the event of any
Proceeding involving the Company:
(a) All Senior Debt shall first be paid in full in cash (or other
consideration acceptable to Agent in its sole discretion) before any
Distribution (other than Reorganization Subordinated Securities), whether in
cash, securities or other property, shall be made to the Subordinated Creditors
on account of any Subordinated Debt.
(b) Any Distribution (other than Reorganization Subordinated
Securities), whether in cash, securities or other property which would
otherwise, but for the terms hereof, be payable or deliverable in respect of the
Subordinated Debt shall be paid or delivered directly to Agent (to be held
and/or applied by Agent in accordance with the terms of the Senior Debt
Documents) until all Senior Debt is paid in full in cash (or other consideration
acceptable to Agent in its sole discretion). Each Subordinated Creditor
irrevocably authorizes, empowers and directs any debtor, debtor in possession,
receiver, trustee, liquidator, custodian, conservator or other Person having
authority, to pay or otherwise deliver all such Distributions to Agent. Each
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Subordinated Creditor also irrevocably authorizes and empowers Agent and
appoints Agent its attorney-in-fact, in the name of such Subordinated Creditor,
to demand, ▇▇▇ for, collect and receive any and all such Distributions, at
Company's expense. This power of attorney is coupled with an interest and is
irrevocable.
(c) Each Subordinated Creditor agrees not to initiate, prosecute or
participate in any claim, action or other proceeding challenging the
enforceability, validity, perfection or priority of the Senior Debt or any liens
and security interests securing the Senior Debt. Agent agrees not to initiate,
prosecute or participate in any claim, action or other proceeding challenging
the enforceability, validity, perfection or priority of the Subordinated Debt or
any liens and security interests securing the Subordinated Debt.
(d) Each Subordinated Creditor, in its capacity as the holder of a
Secured Claim, agrees that Agent and Senior Lenders may consent to the use of
cash collateral or provide (or consent to any other Person providing) financing
to the Company (or trustee) on such terms and conditions and in such amounts as
Agent and Senior Lenders, in their sole discretion, may decide and, in
connection therewith, the Company (or trustee) may grant to Agent and Senior
Lenders (or such other Person providing financing) liens and security interests
upon all of its property, which liens and security interests (i) shall secure
payment of all Senior Debt (whether such Senior Debt arose prior to the
commencement of any Proceeding or at any time thereafter) and all other
financing provided by Senior Lenders (or such other Persons providing financing)
during the Proceeding and (ii) shall be superior in priority to the liens and
security interests, if any, in favor of such Subordinated Creditor on the
property of the Company, provided, that (A) the financing (x) does not compel
such Company to seek confirmation of a specific plan of reorganization for which
all or substantially all of the material terms are set forth in the financing
documentation or a related document or (y) that the financing documentation or
cash collateral order does not expressly require the liquidation of the
Collateral prior to a default under the financing documentation or cash
collateral order. Each Subordinated Creditor, in its capacity as the holder of
Secured Claim, agrees that it will not object to or oppose, and will consent to,
a sale or other disposition of any property securing all of any part of the
Senior Debt free and clear of security interests, liens or other claims of such
Subordinated Creditor under Section 363 of the Bankruptcy Code or any other
provision of the Bankruptcy Code if Agent and Senior Lenders have consented to
such sale or disposition, provided that such Subordinated Creditor shall have
the right to object to the further use of the proceeds of such sale or other
disposition unless such proceeds are applied to permanently reduce the amount of
Senior Debt outstanding. Each Subordinated Creditor, in its capacity as the
holder of a Secured Claim, agrees not to: (1) assert any rights, to the extent
adverse, in the commercially reasonable opinion of the Agent, to the interests
of the Agent and the Senior Lenders, under Sections 362, 363 or 364 of the
Bankruptcy Code with respect to the Collateral, including any rights it may have
to "adequate protection" of such Subordinated Creditor's interest in any
Collateral in any Proceeding or objecting to or opposing any use of cash,
financing, security or priority described in clauses (i) and (ii) above;
PROVIDED, if the Agent or any Senior Lender is granted adequate protection in
the form of additional collateral in connection with any cash collateral use or
debtor-in-possession financing, then the Subordinated Creditors may seek or
request adequate protection in the form of a Lien on such additional collateral,
which Lien will be subordinated to the Liens securing the Senior Debt (and such
cash collateral use or debtor-in-possession financing on the same basis) as the
other Liens securing the Subordinated Debt are so subordinated to the Senior
Debt under this Agreement; (2) oppose or object to any adequate protection
sought by or granted to Agent or any Senior Lender with respect to the
Collateral; (3) initiate or prosecute or join with any other Person to initiate
or prosecute any claim, action or other proceeding opposing a motion by Agent to
lift the automatic stay; (4) vote in favor of any chapter 11 plan that seeks
confirmation under Section
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1129(b)(2)(A) of the Bankruptcy Code, solely to the extent such vote is required
to satisfy Section 1129(a)(10) of the Bankruptcy Code (i.e., each Subordinated
Creditor agrees not to vote in favor of such plan if its allowed secured claim
is deemed impaired and no other impaired class has accepted the plan, determined
without including acceptance of the plan by any insider); (5) seek the dismissal
or conversion of a Proceeding, (6) seek the appointment of a trustee, receiver
or examiner in a Proceeding; or (7) seek to have the automatic stay of Section
362 of the Bankruptcy Code (or any similar stay under any other applicable law)
lifted or modified with respect to the Collateral; provided, however, that each
Subordinated Creditor may object to any financing under Section 364 in its
capacity as the holder of a Secured Claim to the extent that the principal
amount, together with the aggregate principal amount of Senior Debt outstanding
immediately after giving effect to any payment thereof with the proceeds of such
financing, exceeds the Senior Debt Limit. Any claim of any Subordinated Creditor
arising during a Proceeding, including a claim under Section 507(b) of the
Bankruptcy Code, shall constitute Subordinated Debt under this Agreement. Except
for any claim based upon a breach of this Agreement, each Subordinated Creditor
waives any claim it may now or hereafter have arising out of Agent's or Senior
Lenders' election, in any Proceeding instituted under the Bankruptcy Code, of
the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any
borrowing or grant of a security interest under Section 364 or use of cash
collateral under Section 363 of the Bankruptcy Code by the Company, as debtor in
possession. Notwithstanding anything in this Section 2.2(d) to the contrary but
subject to the other provisions of this Agreement (including Section 2.2(c)), in
any Proceeding involving the Company, a Subordinated Creditor may exercise
rights and remedies generally available to holders of unsecured claims against
any of the Company and otherwise in accordance with the Subordinated Debt
Documents and applicable law. In furtherance of the foregoing, each Subordinated
Creditor shall be entitled to file any pleadings, objections, motions or
agreements which assert rights or interests available to unsecured creditors of
the Company arising under either the Bankruptcy Code or applicable
non-bankruptcy law, in each case if not otherwise in contravention of the
express terms of this Agreement, including any right to object to the sale or
use of property under Section 363 of the Bankruptcy Code and/or any financing
under Section 364 of the Bankruptcy Code solely to the extent such objection
could be asserted by the holder of an unsecured claim against the Company.
(e) Each Subordinated Creditor agrees to execute, verify, deliver
and file any proofs of claim in respect of the Subordinated Debt requested by
Agent in connection with any such Proceeding and hereby irrevocably authorizes,
empowers and appoints Agent its agent and attorney-in-fact to execute, verify,
deliver and file such proofs of claim upon the failure of any Subordinated
Creditor promptly to do so prior to 10 days before the expiration of the time to
file any such proof of claim; PROVIDED, that Agent shall have no obligation to
execute, verify, deliver, and/or file any such proof of claim.
(f) The Senior Debt shall continue to be treated as Senior Debt and
the provisions of this Agreement shall continue to govern the relative rights
and priorities of Senior Lenders and the Subordinated Creditors even if all or
part of the Senior Debt or the security interests securing the Senior Debt are
subordinated, set aside, avoided, invalidated or disallowed in connection with
any such Proceeding and this Agreement shall be reinstated if at any time any
payment of any of the Senior Debt is rescinded or must otherwise be returned by
any holder of Senior Debt or any representative of such holder.
(g) The parties acknowledge and agree that (i) the claims and
interests of Agent and the Senior Lenders under the Senior Debt Documents are
substantially different from the claims and interests of the Subordinated
Creditors under the Subordinated Debt Documents and (ii) such claims and
interests should be treated as separate classes for purposes of Section 1122 of
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the Bankruptcy Code.
(h) It is acknowledged and agreed that this Agreement shall
constitute a "subordination agreement" within the meaning of Section 510(a) of
the Bankruptcy Code.
2.3. SUBORDINATED DEBT PAYMENT RESTRICTIONS.
(a) Notwithstanding the terms of the Subordinated Debt Documents,
but subject to the provisions of Section 2.3(c) through Section 2.3(e) below,
the Company hereby agrees that it may not make, directly or indirectly, and each
Subordinated Creditor hereby agrees that it will not accept, any Distribution
(other than Reorganization Subordinated Securities) with respect to the
Subordinated Debt until the Senior Debt is paid in full in cash (or other
consideration acceptable to Agent in its sole discretion).
(b) The provisions of this Section 2.3 shall not apply to a payment
with respect to which Section 2.2(b) is applicable.
(c) Nothing contained in this Agreement shall prevent the Company
from making, or any Subordinated Creditor from receiving, at any time or from
time to time, any payments of accrued interest on the Subordinated Notes and any
penalty payments provided for in Section 4(q) of the Securities Purchase
Agreement (but for avoidance of any doubt, no payments of principal, regardless
of stated maturity or demand for payment, except as expressly permitted under
SUBSECTION (D) below) as and when due and payable in accordance with the terms
of the Subordinated Notes and the Securities Purchase Agreement as in effect on
the date hereof (without giving effect to any provisions of the Subordinated
Notes or the Securities Purchase Agreement which would have the effect of
increasing the amount or frequency of payment thereof) EXCEPT: (i) during the
pendency of any Proceeding or (ii) if prior to any such payment being made the
Subordinated Creditors and the Company have received written notice from Agent
that a Senior Default has occurred and is continuing, unless and until
Subordinated Creditors and the Company have received written notice from Agent
that such Senior Default has been waived (which Agent agrees to provide promptly
after the Senior Lenders have waived such Senior Default).
(d) Notwithstanding the foregoing provisions of subsection (a) above
or any other term of this Agreement to the contrary, upon the consummation of
any private investment in the public equity of the Company, or any similar
transaction involving the sale or exchange of equity securities, debt or
convertible debt of the Company occurring subsequent to the date hereof,
PROVIDED that the Senior Lenders receive from the Company, on behalf of the
Borrower, sufficient proceeds therefrom in prepayment of the Senior Debt, to
cause the unpaid principal amount of the Senior Debt to be reduced to Thirty
Million Dollars ($30,000,000) or less, the Company may pay to Subordinated
Creditors, and the Subordinated Creditors shall be entitled to receive from the
Company to the extent of any remaining proceeds, the then outstanding amount of
the Subordinated Debt.
(e) Nothing contained herein shall prevent Subordinated Creditor at
any time in accordance with the terms of the Subordinated Notes and the Warrants
from (i) exercising any right to convert the Subordinated Notes into equity as
provided in the Subordinated Notes, any anti-dilution adjustment rights or
rights to conversion of the Subordinated Notes, rights to receive replacement
securities for or to an adjustment of the convertibility provisions and
conversion ratios as set forth in the Subordinated Notes (whether upon merger,
sale of the company or otherwise), or other rights to receive securities from
time to time upon conversion of the
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Subordinated Notes, so long as none of the foregoing involves the payment of
money by the Company; or (ii) exercising any outstanding Warrants to acquire
Common Stock.
2.4. SUBORDINATED DEBT STANDSTILL PROVISIONS.
(a) Until the Senior Debt is paid in full in cash (or other
consideration acceptable to Agent in its sole discretion), no Subordinated
Creditor shall, without the prior written consent of Agent, take any Enforcement
Action with respect to the Subordinated Debt or any Collateral, PROVIDED,
HOWEVER, that the Subordinated Creditors may take any Collection Action with
respect to the Subordinated Debt (but not against any Collateral or any other
property or assets securing Subordinated Debt) upon the acceleration of all or
any portion of the Senior Debt.
(b) Notwithstanding the foregoing, each Subordinated Creditor may
file proofs of claim against the Company in any Proceeding involving the
Company. Any Distributions or other proceeds of any Enforcement Action obtained
by any Subordinated Creditor (other than Reorganization Subordinated Securities)
shall in any event be held in trust by it for the benefit of Agent and Senior
Lenders and promptly be paid or delivered to Agent for the benefit of Senior
Lenders in the form received until all Senior Debt is paid in full in cash (or
other consideration acceptable to Agent in its sole discretion).
(c) Notwithstanding anything contained herein to the contrary, if
within 20 days of any acceleration of the Senior Debt by Senior Lenders such
acceleration is rescinded (whether or not any existing Senior Default has been
cured or waived), then all Collection Actions taken by the Subordinated
Creditors in reliance on such acceleration shall likewise be rescinded.
(d) Notwithstanding anything in this Agreement to the contrary, no
provision herein shall prevent any Subordinated Creditor from furnishing a
notice under the Subordinated Debt Documents or this Agreement to the Company or
Agent to preserve or enforce its rights with respect thereto, including (without
limitation) notices to the Company of the existence of a Subordinated Default.
(e) Notwithstanding anything in this Agreement to the contrary, if
at any time hereafter, the Company fails to pay, when due (other than because of
a bona fide payment dispute then being prosecuted in good faith by the Company),
any payment in respect of the Subordinated Notes otherwise then permitted to be
paid pursuant to said Section 2.3(c) or Section 2.3(d) above, Subordinated
Creditors may take Enforcement Action with respect to the Subordinated Debt to
collect such payment(s) then due, PROVIDED that the Subordinated Creditors first
shall have given Agent at least 90 days prior written notice of such payment
default and their intent to take Enforcement Action pursuant hereto in respect
thereof; and, PROVIDED, FURTHER, that, as to any payments then permitted to be
paid under Section 2.3(c) above, subsequent thereto, either within such 90 day
period or thereafter (including during the pendency of any such Enforcement
Action being taken by Subordinated Creditors), the Company and the Subordinated
Creditors do not receive from Agent the written notice that a Senior Default has
occurred and is continuing, in which case Subordinated Creditors shall delay the
commencement of, or desist in, any such Enforcement Action in respect of such
payments unless and until Subordinated Creditors and the Company have received
written notice from Agent that such Senior Default has been waived (which Agent
agrees to provide promptly after the Senior Lenders have waived such Senior
Default).
2.5. INCORRECT PAYMENTS. If any Distribution on account of the
Subordinated Debt is made by the Company or accepted by any Subordinated
Creditor in violation of this Agreement, such
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Distribution shall not be commingled with any of the assets of such Subordinated
Creditor, shall be held in trust by such Subordinated Creditor for the benefit
of Agent and Senior Lenders and shall be promptly paid over to Agent for
application (in accordance with the Senior Debt Documents) to the payment of the
Senior Debt then remaining unpaid, until all of the Senior Debt is paid in full.
2.6. SUBORDINATION OF LIENS AND SECURITY INTERESTS; AGREEMENT NOT TO
CONTEST; AGREEMENT TO RELEASE LIENS. Until the Senior Debt has been paid in full
in cash (or other consideration acceptable to Agent in its sole discretion), all
liens and security interests of the Subordinated Creditors in the Collateral
shall be and hereby are subordinated for all purposes and in all respects to the
liens and security interests of Agent and Senior Lenders in the Collateral,
regardless of the time, manner or order of perfection of any such liens and
security interests and whether such liens and security interests of Agent are
set aside, avoided or unperfected. Each Subordinated Creditor agrees that it
will not at any time contest the validity, perfection, priority or
enforceability of the Senior Debt, the Senior Debt Documents, or the liens and
security interests of Agent and Senior Lenders in the Collateral securing the
Senior Debt. In the event that Agent or Senior Lenders release or agree to
release any of their liens or security interests in the Collateral in connection
with the sale or other disposition thereof or any of the Collateral is sold,
disposed of or retained pursuant to a foreclosure or similar action, each
Subordinated Creditor shall (or shall cause its agent to) promptly deliver (and
execute as appropriate) to Agent such termination statements and releases as
Agent shall reasonably request to effect the termination or release of the liens
and security interests of such Subordinated Creditor in such Collateral so long
as (A) the net proceeds of such sale, disposition, foreclosure or similar action
are applied to the permanent payment of the Senior Debt, (B) any proceeds from
such sale or other disposition received by the Agent in excess of the Senior
Debt Limit shall be promptly delivered to the Subordinated Creditors (subject to
any prior rights of third parties) and (C) such release by the Subordinated
Creditors shall not extend to the proceeds from such sale or other disposition.
In furtherance of the foregoing, each Subordinated Creditor hereby irrevocably
appoints Agent its attorney-in-fact, with full authority in the place and stead
of such Subordinated Creditor and in the name of such Subordinated Creditor or
otherwise, to deliver (and execute as appropriate) any document or instrument
which such Subordinated Creditor may be required to deliver pursuant to this
subsection 2.6.
2.7. APPLICATION OF PROCEEDS FROM SALE OR OTHER DISPOSITION OF THE
COLLATERAL. In the event of any sale, transfer or other disposition (including a
casualty loss or taking through eminent domain) of the Collateral, the proceeds
resulting therefrom (including insurance proceeds) shall be distributed and
applied as follows: (a) FIRST, to Agent to be applied in accordance with the
terms of the Senior Debt Documents until such time as the Senior Debt (other
than Excluded Senior Debt) is paid in full in cash (or other consideration
acceptable to Agent in its sole discretion); (b) SECOND, to the Subordinated
Creditors to be applied in accordance with the Subordinated Debt Documents until
the Subordinated Debt (subject to the limitation set forth in Section 3.2 below)
is paid in full in cash (or other consideration acceptable to each Subordinated
Creditor in its sole discretion); (c) THIRD, to Agent to be applied in
accordance with the terms of the Senior Debt Documents until such time as all
other Senior Debt not paid pursuant to clause (a) is paid in full in cash (or
such other consideration acceptable to Agent in its sole discretion); and (d)
FOURTH, to the Subordinated Creditors to be applied in accordance with the
Subordinated Debt Documents until such time as all other Subordinated Debt not
paid pursuant to clause (b) is paid in full in cash (or such other consideration
acceptable to the Subordinated Creditors in their sole discretion).
2.8. SALE, TRANSFER OR OTHER DISPOSITION OF SUBORDINATED DEBT.
(a) No Subordinated Creditor shall sell, assign, pledge, dispose of
or otherwise transfer all or any portion of the Subordinated Debt or any
Subordinated Debt Document: (i) unless, prior to the consummation of any such
action, the transferee thereof shall execute and
9
deliver to Agent an agreement substantially identical to this Agreement,
providing for the continued subordination of the Subordinated Debt and liens
securing same to the Senior Debt and the liens, security interests and mortgages
securing same as provided herein and for the continued effectiveness of all of
the rights of Agent and Senior Lenders arising under this Agreement and (ii)
unless, following the consummation of any such action, there shall be no more
than ten holders of the Subordinated Debt; PROVIDED, that for purposes of this
clause (ii) holders of the Subordinated Debt that are affiliates of each other
shall be considered one holder.
(b) Notwithstanding the failure of any transferee to execute or
deliver an agreement substantially identical to this Agreement, the
subordination effected hereby shall survive any sale, assignment, pledge,
disposition or other transfer of all or any portion of the Subordinated Debt,
and the terms of this Agreement shall be binding upon the successors and assigns
of the Subordinated Creditors, as provided in Section 10 hereof.
2.9. LEGENDS. Until the termination of this Agreement in accordance
with Section 16 hereof, each Subordinated Creditor will cause to be clearly,
conspicuously and prominently inserted on the face of any Subordinated Debt
Document, as well as any renewals or replacements thereof, the following legend:
"This instrument and the rights and obligations
evidenced hereby and any security interests or other liens
securing such obligations are subordinate in the manner
and to the extent set forth in that certain Subordination
and Intercreditor Agreement (the "SUBORDINATION
AGREEMENT") dated as of August 19, 2008 among Castlerigg
PNGr Investments LLC., as collateral agent, PNG Ventures,
Inc. (the "COMPANY"), and Fourth Third LLC ("AGENT"), to
the indebtedness (including interest) owed by the Company,
and the security interests and liens securing such
indebtedness, pursuant to and in connection with that
certain Amended and Restated Credit Agreement, dated as of
June 26, 2008, among the Agent, the lenders named therein
and the Company, among others (the "SENIOR CREDIT
AGREEMENT"), and the Loan Documents referred to therein as
such Senior Credit Agreement and Loan Documents have been
and hereafter may be amended, supplemented or otherwise
modified from time to time and to indebtedness refinancing
the indebtedness under that agreement as contemplated by
the Subordination Agreement; and each holder of this
instrument, by its acceptance hereof, irrevocably agrees
to be bound by the provisions of the Subordination
Agreement."
3. MODIFICATIONS.
3.1. MODIFICATIONS TO SENIOR DEBT DOCUMENTS. Senior Lenders may at
any time and from time to time without the consent of or notice to the
Subordinated Creditors, without incurring liability to the Subordinated
Creditors and without impairing or releasing the obligations of the Subordinated
Creditors under this Agreement, change the manner or place of payment or extend
the time of payment of or renew or alter any of the terms of the Senior Debt, or
amend in any manner any agreement, note, guaranty or other instrument evidencing
or securing or otherwise relating to the Senior Debt; PROVIDED that, without the
prior written consent of the Required Subordinated Creditors (as hereinafter
defined), the Senior Lenders shall not agree to any amendment, modification or
supplement to, or waiver or departure from, the Senior Debt Documents the effect
of which is to (a) increase the principal of the Senior Debt to an amount in
excess of the Senior Debt Limit, (b) increase the interest rate with respect to
the Senior Debt by more than 300 basis points, except in connection with the
imposition of a default rate of interest of up to 2.0% in accordance with the
terms of the Senior Debt Documents, (c) extend the final maturity of the Senior
Debt (as set forth in the Fourth Third Loan Documents in effect on the date
hereof), except that the final maturity of the Senior Debt under each Senior
Credit Agreement
10
may be extended by up to two years, or (d) directly prohibit or restrict the
payment of principal of, interest on, or other amounts payable with respect to,
the Subordinated Debt, in a manner that is more restrictive then the
prohibitions and restrictions currently contained in the Senior Credit
Agreements.
3.2. MODIFICATIONS TO SUBORDINATED DEBT DOCUMENTS.
(a) Until the Senior Debt has been paid in full in cash (or other
consideration acceptable to Agent in its sole discretion), and notwithstanding
anything to the contrary contained in the Subordinated Debt Documents, no
Subordinated Creditor shall, without the prior written consent of Agent, agree
to any amendment, modification or supplement to the Subordinated Debt Documents
that would (i) impose or make more burdensome any event of default or covenant
under the Subordinated Debt Documents, (ii) increase the principal amount of the
Subordinated Debt, (iii) increase the rate of interest on the Subordinated Debt
by more than 300 basis points or (iv) directly prohibit or restrict the payment
of any amounts payable with respect to the Senior Debt.
(b) No Subordinated Creditor shall accept or enter into any
agreement or instrument pursuant to which the Company provides collateral
security for the Subordinated Debt or pursuant to which Borrower or any other
"Loan Party" (as defined in the Senior Credit Agreement; herein, a "LOAN PARTY")
provides a security interest in any Collateral unless such agreement or
instrument has been approved by the Agent in writing, such approval not to be
unreasonably withheld. Any such agreement or instrument that is substantially
similar to the security documents providing collateral security for the Senior
Debt shall be approved by the Agent so long as such security document indicates
that it is subject to this Agreement in a manner and to an extent reasonably
satisfactory to the Agent. In no event shall any Subordinated Creditor accept or
enter into any agreement or instrument pursuant to which the Company or any Loan
Party provides a security interest in or mortgage on any property of the
Company, in each case, in which the Agent does not have a first priority
perfected security interest. Prior to the Company, any Loan Party or any
Subordinated Creditor entering into any agreement or instrument that would
create a lien, security interest or mortgage in any Collateral in favor of a
collateral agent securing any Subordinated Debt, the Company, the Loan Party
affected and the Subordinated Creditors shall cause such collateral agent to
become a party to this Agreement and agree for this Agreement to be amended to
accommodate a collateral agent, in each case, pursuant to agreements in form and
substance reasonably satisfactory to the Agent.
(c) In no event shall any Subordinated Creditor enter into any
agreement with the Company or any Loan Party that places any restriction on the
modification of the Senior Debt Documents or creates any default or event of
default or right to accelerate, put or cause any Subordinated Creditor to
purchase, any Subordinated Debt, that is more extensive or more restrictive than
the provisions of Section 3.1.
4. WAIVER OF CERTAIN RIGHTS BY THE SUBORDINATED CREDITORS.
4.1. MARSHALING. Each Subordinated Creditor hereby waives any rights
it may have under applicable law to assert the doctrine of marshaling or to
otherwise require Agent or Senior Lenders to marshal any property of the Company
or any other obligor on the Senior Debt for the benefit of such Subordinated
Creditor.
4.2. RIGHTS RELATING TO AGENT'S ACTIONS WITH RESPECT TO THE
COLLATERAL. Each Subordinated Creditor hereby waives, to the extent permitted by
applicable law, any rights which it may have as the holder of a Secured Claim to
enjoin or otherwise obtain a judicial or administrative order
11
preventing Agent or Senior Lenders from taking, or refraining from taking, any
action with respect to all or any part of the Collateral, except to the extent
such action is expressly excluded from the definition of Enforcement Action.
Without limitation of the foregoing, each Subordinated Creditor hereby agrees
(a) that it has no right to direct or object to the manner in which Agent and
Lenders apply the proceeds of the Collateral resulting from the exercise by
Agent and Senior Lenders of rights and remedies under the Senior Debt Documents
to the Senior Debt and (b) that Agent has not assumed any obligation to act as
the agent for the Subordinated Creditors with respect to the Collateral. The
Agent shall have the exclusive right to enforce against and realize upon the
Collateral until the Senior Debt is paid in full in cash (or other consideration
acceptable to Agent in its sole discretion). In exercising rights and remedies
with respect to the Collateral, the Agent and Senior Lenders may enforce the
provisions of the Senior Debt Documents and exercise remedies thereunder, all in
such order and in such manner as it or they may determine in the exercise of its
or their sole business judgment. Such exercise and enforcement shall include,
without limitation, the rights to sell or otherwise dispose of Collateral, to
incur expenses in connection with such sale or disposition and to exercise all
the rights and remedies of a secured lender under the UCC. In conducting any
public or private sale under the UCC, Agent shall give the Subordinated
Creditors such notice of such sale as may be required by the UCC; PROVIDED,
HOWEVER, that 10 days' notice shall be deemed to be commercially reasonable
notice.
5. REPRESENTATIONS AND WARRANTIES.
5.1. REPRESENTATIONS AND WARRANTIES OF THE SUBORDINATED CREDITORS.
Each of the Subordinated Creditors hereby represents and warrants to Agent and
Senior Lenders that as of the date hereof: (a) it is duly formed and validly
existing under the laws of the jurisdiction of its formation; (b) it has the
power and authority to enter into, execute, deliver and carry out the terms of
this Agreement, all of which have been duly authorized by all proper and
necessary action; (c) the execution of this Agreement by it will not violate or
conflict with its organizational documents, any material agreement binding upon
it or any law, regulation or order or require any consent or approval which has
not been obtained; (d) this Agreement is its legal, valid and binding obligation
of enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by equitable principles; and (e) it is the sole
owner, beneficially and of record, of the Subordinated Debt Documents and the
Subordinated Debt to which it is party.
5.2. REPRESENTATIONS AND WARRANTIES OF AGENT. Agent hereby
represents and warrants to the Subordinated Creditors that as of the date
hereof: (a) Agent is a limited liability company duly formed and validly
existing under the laws of the State of Delaware; (b) Agent has the power and
authority to enter into, execute, deliver and carry out the terms of this
Agreement on behalf of itself and the Senior Lenders, all of which have been
duly authorized by all proper and necessary action; (c) the execution of this
Agreement by Agent will not violate or conflict with the organizational
documents of Agent, any material agreement binding upon Agent or any law,
regulation or order or require any consent or approval which has not been
obtained; and (d) this Agreement is the legal, valid and binding obligation of
Agent, enforceable against Agent and the Senior Lenders in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles.
6. SUBROGATION. Subject to the payment in full in cash (or other consideration
acceptable to Agent in its sole discretion) of all Senior Debt, the Subordinated
Creditors shall be subrogated to the rights of Agent and Senior Lenders to
receive Distributions with respect to the Senior Debt until the Subordinated
Debt is paid in full. Each Subordinated Creditor agrees that in the event that
all or any part of a payment made with respect to the Senior Debt is recovered
from the holders of the Senior Debt in a Proceeding or otherwise, any
Distribution (other than Reorganization Subordinated Securities) received by
such
12
Subordinated Creditor with respect to the Subordinated Debt at any time after
the date that it receives notice that such payment has been so recovered,
whether pursuant to the right of subrogation provided for in this Agreement or
otherwise, shall be deemed to have been received by such Subordinated Creditor
in trust as property of the holders of the Senior Debt and such Subordinated
Creditor shall forthwith deliver the same to the Agent for the benefit of the
Senior Lenders for application to the Senior Debt until the Senior Debt is paid
in full. A Distribution made pursuant to this Agreement to Agent or Senior
Lenders which otherwise would have been made to any Subordinated Creditor is
not, as between the Company and such Subordinated Creditor, a payment by the
Company to or on account of the Senior Debt.
7. MODIFICATION. Any modification or waiver of any provision of this
Agreement, or any consent to any departure by any party from the terms hereof,
shall not be effective in any event unless the same is in writing and signed by
Agent and the Subordinated Creditors holding a majority of the principal amount
of the Subordinated Notes as in effect on the date hereof (the "REQUIRED
SUBORDINATED CREDITORS"), and then such modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose given. Any
notice to or demand on any party hereto in any event not specifically required
hereunder shall not entitle the party receiving such notice or demand to any
other or further notice or demand in the same, similar or other circumstances
unless specifically required hereunder.
8. FURTHER ASSURANCES. Each party to this Agreement promptly will execute and
deliver such further instruments and agreements and do such further acts and
things as may be reasonably requested in writing by any other party hereto that
may be necessary or desirable in order to effect fully the purposes of this
Agreement.
9. NOTICES. Unless otherwise specifically provided herein, any notice
delivered under this Agreement shall be in writing addressed to the respective
party as set forth below and may be personally served, telecopied or sent by
overnight courier service or certified or registered United States mail and
shall be deemed to have been given (a) if delivered in person, when delivered;
(b) if delivered by telecopy, when transmitted and a confirmation is received if
transmission and confirmation occur on a Business Day before 4:00 p.m. (New York
time) or, if after 4:00 p.m. (New York time), on the next succeeding Business
Day after such transmission and confirmation have occurred; (c) if delivered by
nationally recognized overnight courier, one Business Day after delivery to such
courier properly addressed; or (d) if by United States mail, four Business Days
after deposit in the United States mail, postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to the Subordinated Creditors:
Castlerigg PNG Investments LLC, as Agent
c/o Sandell Asset Management Corp.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Cem Hacioglu (▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇)
13
With a copy to (which shall not constitute notice):
Fox Rothschild LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Company:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, CEO
With a copy to (which shall not constitute notice):
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇, Esq.
If to Agent or Senior Lenders:
Fourth Third Capital LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to (which shall not constitute notice):
King & Spalding LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or in any case, to such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this Section 9.
10. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of, and
shall be binding upon, the respective successors and assigns of Agent, Senior
Lenders, the Subordinated Creditors and the Company. To the extent permitted
under the Senior Debt Documents, Senior Lenders may, from time to time, without
notice to any Subordinated Creditor, assign or transfer any or all of the Senior
Debt or any interest therein to any Person and, notwithstanding any such
assignment or transfer, or any subsequent assignment or transfer, the Senior
Debt shall, subject to the terms hereof, be and remain Senior Debt for
14
purposes of this Agreement, and every permitted assignee or transferee of any of
the Senior Debt or of any interest therein shall, to the extent of the interest
of such permitted assignee or transferee in the Senior Debt, be entitled to rely
upon and be the third party beneficiary of the subordination provided under this
Agreement and shall be entitled to enforce the terms and provisions hereof to
the same extent as if such assignee or transferee were initially a party hereto.
11. RELATIVE RIGHTS. This Agreement shall define the relative rights of Agent,
Senior Lenders and the Subordinated Creditors. Nothing in this Agreement shall
(a) impair, as among the Company, Agent and Senior Lenders and as between the
Company and the Subordinated Creditors, the obligation of the Company with
respect to the payment of the Senior Debt and the Subordinated Debt in
accordance with their respective terms or (b) affect the relative rights of
Agent, Senior Lenders or the Subordinated Creditors with respect to any other
creditors of the Company. For purposes of clarification, the Company shall have
no rights to assert any rights or benefits hereunder.
12. CONFLICT. In the event of any conflict between any term, covenant or
condition of this Agreement and any term, covenant or condition of any of the
Senior Debt Documents or the Subordinated Debt Documents, the provisions of this
Agreement shall control and govern.
13. HEADINGS. The paragraph headings used in this Agreement are for convenience
only and shall not affect the interpretation of any of the provisions hereof.
14. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
15. SEVERABILITY. In the event that any provision of this Agreement is deemed
to be invalid, illegal or unenforceable by reason of the operation of any law or
by reason of the interpretation placed thereon by any court or governmental
authority, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not in any way be affected or impaired thereby, and the
affected provision shall be modified to the minimum extent permitted by law so
as most fully to achieve the intention of this Agreement.
16. CONTINUATION OF SUBORDINATION; TERMINATION OF AGREEMENT. This Agreement
shall remain in full force and effect until the payment in full in cash (or
other consideration acceptable to Agent in its sole discretion) of the Senior
Debt after which this Agreement shall terminate without further action on the
part of the parties hereto.
17. APPLICABLE LAW. This Agreement shall be governed by and shall be construed
and enforced in accordance with the internal laws of the State of New York,
without regard to conflicts of law principles, other than section 5-1401 of the
New York General Obligations Law.
18. CONSENT TO JURISDICTION. EACH SUBORDINATED CREDITOR AND THE COMPANY HEREBY
CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO
AGENT'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH SUBORDINATED CREDITOR AND EACH
COMPANY EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH SUBORDINATED
CREDITOR AND THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR
REGISTERED MAIL, RETURN
15
RECEIPT REQUESTED, ADDRESSED TO SUCH SUBORDINATED CREDITOR AND THE COMPANY AT
THEIR RESPECTIVE ADDRESSES SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL
BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
19. WAIVER OF JURY TRIAL. EACH SUBORDINATED CREDITOR, THE COMPANY AND AGENT
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE SUBORDINATED DEBT
DOCUMENTS OR ANY OF THE SENIOR DEBT DOCUMENTS. EACH SUBORDINATED CREDITOR, THE
COMPANY AND AGENT ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT AND THE SENIOR DEBT DOCUMENTS AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH
SUBORDINATED CREDITOR, THE COMPANY AND AGENT WARRANTS AND REPRESENTS THAT EACH
HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND
THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
20. PERFECTION AGENT. Agent and each Subordinated Creditor agree that solely
with respect to any Collateral in which a security interest may only be
perfected by title, possession or "control", such party shall serve as the
contractual representative agent of the other party solely for purposes of
perfecting (to the extent not otherwise perfected) the liens in favor of the
Subordinated Creditors or liens in favor of Agent and Senior Lenders, as
applicable, subject in all events to the relative priorities established
pursuant to this Agreement and to the limitations set forth in this Agreement
with respect to such party's liabilities, duties and obligations in respect of
the Collateral or otherwise. Without limiting the generality of the foregoing,
each party shall be deemed to be an agent of the other party solely for purposes
of perfection under the UCC and shall not incur any liabilities, fiduciary
duties or obligations whatsoever to the other party due to the provisions of
this Section 20. Promptly following the payment in full of the Senior Debt in
cash, cash equivalents or other consideration acceptable to the Agent, the Agent
shall, upon the request of the Subordinated Creditors, (x) deliver the remainder
of such Collateral, if any, in its possession to the designee of the
Subordinated Creditors, and (y) deliver any certificates of title held by it in
respect of the Collateral (such as motor vehicle titles) and assign the Lien of
the Agent on any such certificates of title, without representation, warranty or
recourse and otherwise on terms reasonably acceptable to the Required
Subordinated Creditors, in each case except as may otherwise be required by
applicable law or court order
21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes and
replaces, in its entirety, any agreement or understanding, whether written or
oral, heretofore made between or among the parties relative to the subject
matter thereof.
(SIGNATURE PAGE FOLLOWS)
16
IN WITNESS WHEREOF, the Subordinated Creditors, the Company and
Agent have caused this Agreement to be executed as of the date first above
written.
SUBORDINATED CREDITORS
CASTLERIGG PNG INVESTMENTS LLC,
By: Castlerigg Master Investments Ltd., its sole member
By: ▇▇▇▇▇▇▇ Asset Management Corp., its
investment manager
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Managing Director
Signature Page to Subordination and Intercreditor Agreement
"COMPANY":
PNG VENTURES, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇
Its: Chief Executive Officer
Signature Page to Subordination and Intercreditor Agreement
AGENT:
FOURTH THIRD LLC, a Delaware limited liability company,
as Agent and as a Senior Lender
By: ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
Its: Authorized Signatory
Signature Page to Subordination and Intercreditor Agreement
