EXHIBIT 10.8
Execution Copy
Pledge Agreement
     This Pledge Agreement, dated as of May 3, 2011 (as amended, restated,
supplemented or modified from time to time, this “Agreement”), is given, made
and entered into by Northeast Ohio Natural Gas Corp., an Ohio corporation
(“NEO”), Orwell Natural Gas Company, an Ohio corporation (“Orwell”), Brainard
Gas Corp., an Ohio corporation (“Brainard”; Brainard, NEO and Orwell are
referred to herein, collectively, as the “Fixed Rate Issuers” and, individually,
as a “Fixed Rate Issuer”), Great Plains Natural Gas Company, an Ohio
corporation, in its capacity as issuer of the hereinafter defined Floating Rate
Notes (the “Floating Rate Issuer) and in its capacity as guarantor under the
hereinafter defined Fixed Rate Note Purchase Agreement (“Great Plains),
Lightning Pipeline Company, Inc., an Ohio corporation (“Lightning”), Spelman
Pipeline Holdings, LLC, an Ohio limited liability company (“Spelman”), Kidron
Pipeline, LLC, an Ohio limited liability company (“Kidron”), Gas Natural Service
Company, LLC, an Ohio limited liability company (“Service Company”), and Gas
Natural Inc., an Ohio corporation (the “Parent”; the Parent, the Fixed Rate
Issuers, the Floating Rate Issuer, Great Plains, Lightning, Spelman, Kidron and
Service Company are referred to herein, collectively, as the “Initial Pledgors”)
and any new Subsidiary of any Initial Pledgor, whether now existing or hereafter
formed or acquired, which becomes party to this Agreement pursuant to Section 24
hereof (collectively, together with the Initial Pledgors, and in each case with
its respective successors and assigns, including debtors-in-possession on behalf
thereof, the “Pledgors” and, individually, a “Pledgor”), as the pledgors of the
pledged interests described below, and Sun Life Assurance Company of Canada (the
“Secured Party”), as the pledgee, in connection with those certain Note Purchase
Agreements (as defined below).
     Whereas, pursuant to that certain Note Purchase Agreement dated as of
November 1, 2010 by and among the Secured Party, the Fixed Rate Issuers, Great
Plains, Lightning and the Parent, as amended by the First Amendment and Joinder
to Note Purchase Agreement dated as of May 3, 2011 by and among the Secured
Party, the Fixed Rate Issuers, Great Plains, Lightning, Spelman, Kidron, Service
Company and the Parent (as so amended, and as from time to time further amended,
restated, supplemented or otherwise modified, the “Fixed Rate Note Purchase
Agreement”) (i) the Secured Party has agreed to purchase $15,334,000 aggregate
principal amount of the Fixed Rate Issuers’ Senior Secured Guaranteed Notes due
June 1, 2017 (the “Fixed Rate Notes”) and (ii) Great Plains, Lightning, Spelman,
Kidron, Service Company and the Parent have each agreed to jointly and severally
guarantee the Guaranteed Obligations (as defined therein).
     Whereas, pursuant to that certain Note Purchase Agreement dated as of
November 1, 2010 by and among the Secured Party, the Floating Rate Issuer,
Lightning and the Parent, as amended by the First Amendment and Joinder to Note
Purchase Agreement dated as of May 3, 2011 by and among the Secured Party, the
Floating Rate Issuer, Lightning, Spelman, Kidron, Service Company and the Parent
(as so amended, and as from time to time further amended, restated, supplemented
or otherwise modified, the “Floating Rate Note Purchase Agreement”; the Floating
Rate Note Purchase Agreement and the Fixed Rate Note Purchase Agreement are
referred to herein, collectively, as the “Note Purchase Agreements” and,
individually, as a “Note

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Purchase Agreement”) (i) the Secured Party has agreed to purchase $3,000,000
aggregate principal amount of the Floating Rate Issuer’s Floating Rate Senior
Secured Guaranteed Notes due 2013 (the “Floating Rate Notes”; the Floating Rate
Notes and the Fixed Rate Notes are referred to herein, collectively, as the
“Notes” and, individually, as a “Note”) and (ii) Lightning, Spelman, Kidron,
Service Company and the Parent have each agreed to jointly and severally
guarantee the Guaranteed Obligations (as defined therein).
     Whereas, in order to induce the Secured Party to enter into the Note
Purchase Agreements and other Financing Agreements (as hereinafter defined) and
to induce the Secured Party to purchase the Notes, each Pledgor has agreed to
secure its obligations to the Secured Party under each Note Purchase Agreement,
as applicable, and the other Financing Agreements by pledging the Pledged
Collateral (as hereinafter defined) owned by such Pledgor to the Secured Party
as more fully described herein.
     Whereas, the Initial Pledgors contemplate that from time to time after the
date hereof, additional Subsidiaries may, subject to the terms and conditions of
Section 9.8 of each of the Note Purchase Agreements, enter into joinder
agreements to the Financing Agreements and the Secured Party desires that such
Subsidiaries become subject to this Agreement pursuant to the requirements of
Section 24 hereof.
     Now, Therefore, intending to be legally bound hereby, the parties hereto
hereby agree as follows:
     1. Defined Terms. Except as otherwise expressly provided herein,
capitalized terms used in this Agreement shall have the respective meanings
assigned to them in the Note Purchase Agreements. Where applicable and except as
otherwise expressly provided herein, terms used herein (whether or not
capitalized) shall have the respective meanings assigned to them in the Uniform
Commercial Code as enacted in Ohio as amended from time to time (the “UCC”). In
addition, the following terms as used herein shall have the following meanings:
     “Equity Interests” means all securities, shares, units, options, warrants,
put rights, call rights, similar rights, participations, or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company, or similar entity, whether voting or nonvoting, certificated
or uncertificated, including general partner partnership interests, limited
partner partnership interests, common stock, preferred stock, or any other
“equity security” (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934).
     “Event of Default” shall mean, individually and collectively, (i) any
“Event of Default” as defined in the Fixed Rate Note Purchase Agreement and
(ii) any “Event of Default” as defined in the Floating Rate Note Purchase
Agreement.

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     “Financing Agreements” shall mean, individually and collectively, (i) the
“Financing Agreements” as defined in the Fixed Rate Note Purchase Agreement and
(ii) the “Financing Agreements” as defined in the Floating Rate Note Purchase
Agreement.
     “Fixed Rate Obligations” shall mean the “Obligations” as defined in the
Fixed Rate Note Purchase Agreement.
     “Floating Rate Obligations” shall mean the “Obligations” as defined in the
Floating Rate Note Purchase Agreement.
     “Governmental Rule” shall mean 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 date hereof or whether issued, enacted or adopted
after the date hereof, and any change therein or in the interpretation or
application thereof following the date hereof.
     “Marketable Securities” shall mean securities that are traded on any
national stock exchange or the OTC Bulletin Board, but shall not include any
Equity Interests held by a Pledgor in any Subsidiary or other Affiliate.
     “Obligations” shall mean, individually and collectively, the Fixed Rate
Obligations and the Floating Rate Obligations.
     “Other Indebtedness” shall mean and include all now existing and hereafter
arising Indebtedness, or other obligations or liabilities, of each Pledgor,
whether as a primary obligor, guarantor or otherwise, to the Secured Party,
other than that which relates to or arises under or in connection with the Note
Purchase Agreements and the other Financing Agreements to which such Pledgor is
a party.
     “Pledged Collateral” shall mean and include, with respect to each Pledgor,
all of such Pledgor’s present and future right, title and interest in and to the
following: (i) as of the date of this Agreement, the Equity Interests described
on Schedule A hereto and made a part hereof, the Equity Interests hereafter
described in any Pledge Supplement or Addendum, and all investment property,
capital stock, shares, securities, warrants, options, put rights, call rights,
similar rights, and all other ownership or participation interests related to
such pledged Equity Interests and the revenue, income, or profits thereof (the
“Investments”); (ii) all rights and privileges pertaining to the Investments,
including, without limitation, all present and future Investments receivable in
respect of or in exchange for any Investments, all rights under shareholder
agreements and other similar agreements relating to any Investments, and all
rights to subscribe for Investments, whether or not incidental to or arising
from ownership of any Investments; (iii) all cash, interest, stock and other
dividends or distributions paid or payable on any of the foregoing, and together
with whatever is received when any of the foregoing is sold, exchanged, replaced
or otherwise disposed of, including all proceeds, as such term is defined in the
UCC; and (iv) all cash and non-cash proceeds (including, without limitation,
insurance proceeds) of any of the foregoing property, all products thereof, and
all additions and accessions thereto, substitutions therefor and replacements
thereof; provided, however, that “Pledged Collateral” does not include any
Equity Interests of an Unrestricted Subsidiary.
     “Secured Obligations” shall mean and include all now existing and hereafter
arising (a) Fixed Rate Obligations of the Fixed Rate Issuers, Great Plains,
Lightning, Spelman, Kidron,

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Service Company and the Parent to the Secured Party under the Fixed Rate Note
Purchase Agreement and the Fixed Rate Notes, (b) Floating Rate Obligations of
the Floating Rate Issuer, Lightning, Spelman, Kidron, Service Company and the
Parent to the Secured Party under the Floating Rate Note Purchase Agreement and
the Floating Rate Notes, and (c) any other Obligations of the Pledgors to the
Secured Party under any of the other Financing Agreements to which any Pledgor
is a party, or under any Other Indebtedness, including the following: (i) all
obligations, liabilities, and indebtedness, whether for principal, interest,
fees, indemnities, expenses or otherwise, of the Pledgors to the Secured Party,
now existing or hereafter incurred under either Note Purchase Agreement, any
Notes, any of the other Financing Agreements, or any other agreement,
undertaking, instrument or document related to Other Indebtedness, as any of the
same or any one or more of them may from time to time be amended, restated,
modified, or supplemented, together with any and all extensions, renewals,
refinancings, and refundings thereof in whole or in part (and including
obligations, liabilities, and indebtedness arising or accruing after the
commencement of any bankruptcy, insolvency, reorganization, or similar
proceeding with respect to any Pledgor or any other Person, or which would have
arisen or accrued but for the commencement of such proceeding, even if the claim
for such obligation, liability or indebtedness is not enforceable or allowable
in such proceeding, and including all obligations, liabilities and indebtedness
arising from any extensions of credit under or in connection with the Financing
Agreements, or any such other agreement, undertaking, instrument or document,
from time to time, regardless whether any such extensions of credit are in
excess of the amount committed under or contemplated by the Financing
Agreements, or any such other agreement, undertaking, instrument or document, or
are made in circumstances in which any condition to extension of credit is not
satisfied); and (ii) any sums advanced by the Secured Party or which may
otherwise become due pursuant to the provisions of either Note Purchase
Agreement, this Agreement or any other Financing Agreements to which any Pledgor
is a party, or any such other agreement, undertaking, instrument or document, or
pursuant to any other document or instrument at any time delivered to the
Secured Party in connection therewith, including fees and charges, and
indemnification obligations under any such document or instrument, together with
all interest payable on any of the foregoing, whether such sums are advanced or
otherwise become due before or after the entry of any judgment for foreclosure
or any judgment on any Financing Agreement or any such other agreement,
undertaking, instrument or document, or with respect to any default under any of
the Secured Obligations. For the avoidance of doubt, the Fixed Rate Issuers’
Pledged Collateral shall at no time secure the Floating Rate Obligations.
     2. Grant of Security Interests. (a) To secure on a first priority perfected
basis the payment and performance of all Secured Obligations, in full, each
Pledgor hereby grants to the Secured Party a continuing first priority security
interest under the UCC in and hereby pledges to the Secured Party, in each case
for the benefit of the Secured Party, all of such Pledgor’s now existing and
hereafter acquired or arising right, title and interest in, to, and under the
Pledged Collateral, whether now or hereafter existing and wherever located.
     (b) Upon the execution and delivery of this Agreement, each Pledgor shall
deliver to and deposit with the Secured Party in pledge, all of such Pledgor’s
certificates, instruments or other documents comprising or evidencing the
Pledged Collateral, together with undated stock powers, instruments or other
documents signed in blank by such Pledgor. In the event that any

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Pledgor should ever acquire or receive certificates, securities, instruments or
other documents evidencing the Pledged Collateral, such Pledgor shall deliver to
and deposit with the Secured Party in pledge all such certificates, securities,
instruments or other documents which evidence the Pledged Collateral.
     (c) If any Pledgor shall acquire (by purchase, stock dividend or otherwise)
any additional Pledged Collateral at any time or from time to time after the
date hereof, such Pledged Collateral shall automatically (and without any
further action being required to be taken) be subject to the pledge and security
interests created pursuant to Section 2(a) hereof and, furthermore, the Pledgor
will promptly thereafter take (or cause to be taken) all action with respect to
such Pledged Collateral in accordance with the procedures set forth in Section
2(b) hereof, and will promptly thereafter deliver to the Secured Party a
supplement to this Pledge Agreement substantially in the form of Exhibit B
hereto (each such supplement, a “Pledge Supplement”) describing such Pledged
Collateral and certifying that the same has been duly pledged in favor of the
Secured Party hereunder. Notwithstanding the forgoing, solely with respect to
any Marketable Securities that are from time to time acquired by a Pledgor in
the ordinary course (other than Marketable Securities held by a securities
intermediary and subject of a control agreement as provided in Section 3(b)
below), so long as no Default or Event of Default is in existence, such Pledgor
shall be permitted to deliver any such Marketable Securities, together with all
other related deliveries pursuant to this Section 2(b) and (c), on or prior to
the last day of the calendar quarter immediately following the date of such
Pledgor’s acquisition of any such Marketable Securities.
     3. Further Assurances. (a) Prior to or concurrently with the execution of
this Agreement, and thereafter at any time and from time to time upon reasonable
request of the Secured Party, each Pledgor shall execute and deliver to the
Secured Party all financing statements, continuation financing statements,
assignments, certificates and documents of title, affidavits, reports, notices,
schedules of account, letters of authority, further pledges, powers of attorney
and all other documents (collectively, the “Collateral Documents”) which the
Secured Party may reasonably request, in form reasonably satisfactory to the
Secured Party, and take such other action that the Secured Party may reasonably
request, to perfect and continue perfected and to create and maintain the first
priority status of the Secured Party’s security interest in the Pledged
Collateral and to fully consummate the transactions contemplated under this
Agreement. Each Pledgor agrees that the Secured Party may record any one or more
financing statements under the applicable Uniform Commercial Code with respect
to the pledge and security interest herein granted. Each Pledgor hereby
irrevocably makes, constitutes and appoints the Secured Party (and any of the
Secured Party’s officers or employees or agents designated by the Secured Party)
as such Pledgor’s true and lawful attorney with power to sign the name of such
Pledgor on all or any of the Collateral Documents which the Secured Party
determines must be executed, filed, recorded or sent in order to perfect or
continue perfected the Secured Party’s security interest in the Pledged
Collateral in any jurisdiction. Such power, being coupled with an interest, is
irrevocable until all of the Secured Obligations have been indefeasibly paid, in
cash, in full. Notwithstanding the foregoing, the Secured Party agrees not to
exercise its rights under such power of attorney until an Event of Default has
occurred or exists.

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     (b) Notwithstanding anything to the contrary set forth in this Section 3 or
elsewhere in this Agreement, either Note Purchase Agreement or any other
Financing Agreement, if, at any time and from time to time, any Pledged
Collateral (including any certificate or instrument representing or evidencing
any Pledged Collateral) is maintained by a “securities intermediary’’ (as
defined in the UCC) or is otherwise in the possession of a Person other than the
Secured Party or a Pledgor (a “Holder”), then the Pledgors shall immediately, at
the Secured Party’s option, either cause such Pledged Collateral to be delivered
into the Secured Party’s possession, or cause such Holder to enter into a
control agreement, in form and substance satisfactory to the Secured Party, and
take all other steps deemed necessary by the Secured Party to perfect the
security interest of the Secured Party in such Pledged Collateral, all pursuant
to Sections 9-106 and 9-313 of the UCC or other applicable law governing the
perfection of the Secured Party’s security interest in the Collateral in the
possession of such Holder. In the event any such securities intermediary
provides any notice of its intention to terminate such control agreement, the
Secured Party shall have the right to exercise exclusive control over any
Pledged Collateral subject to such control agreement.
     (c) Any and all Pledged Collateral (including dividends, interest, and
other cash distributions) at any time received or held by a Pledgor shall be so
received or held in trust for the Secured Party, shall be segregated from other
funds and property of such Pledgor and shall be forthwith delivered to the
Secured Party in the same form as so received or held, with any necessary
indorsements; provided that cash dividends or distributions received by such
Pledgor, may be retained by such Pledgor (without having to be segregated from
other funds and property of such Pledgor) in accordance with Section 19.
     (d) If at any time, and from time to time, any Pledged Collateral consists
of an uncertificated security or a security in book entry form, then the
applicable Pledgor shall promptly cause such Pledged Collateral to be registered
or entered, as the case may be, in the name of the Secured Party, or otherwise
cause the Secured Party’s security interest thereon to be perfected in
accordance with applicable law. Notwithstanding the forgoing, solely with
respect to any Marketable Securities consisting of an uncertificated security or
a security in book entry form that are from time to time acquired by a Pledgor
in the ordinary course (other than Marketable Securities held by a securities
intermediary and subject of a control agreement as provided in Section 3(b)
above), so long as no Default or Event of Default is in existence, such Pledgor
shall be permitted to cause such Marketable Securities to be so registered or
entered (or otherwise perfected in accordance with applicable law) on or prior
to the last day of the calendar quarter immediately following the date of such
Pledgor’s acquisition of any such Marketable Securities.
     4. Representations and Warranties. Each Pledgor hereby represents and
warrants to the Secured Party as follows:
     (a) Such Pledgor has and will continue to have (or, in the case of any
after-acquired Pledged Collateral at the time such Pledgor acquires rights in
such Pledged Collateral, will have and will continue to have) title to such
Pledgor’s Pledged Collateral, free and clear of all liens, charges or
encumbrances other than those in favor of the Secured Party and Permitted
Encumbrances;

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     (b) The Equity Interests constituting such Pledgor’s Pledged Collateral
have been duly authorized and validly issued to such Pledgor, are fully paid and
nonassessable, and constitute the percentage of all of the issued and
outstanding capital stock of each of such Pledgor’s Subsidiaries as set forth on
Schedule A attached hereto;
     (c) The security interests in the Pledged Collateral granted hereunder are
valid, perfected and of first priority, subject to the lien, charge or
encumbrance of no other Person, and all actions necessary to achieve such
perfection have been duly taken;
     (d) There are no restrictions upon the voting rights associated with, or
upon the transfer of, the Pledged Collateral and such Pledgor has the power and
authority and unencumbered right to vote, pledge and grant a security interest
in or otherwise transfer its Pledged Collateral free of any liens, charges or
encumbrances (except for Permitted Encumbrances) and without obtaining the
consent of any other Person;
     (e) Such Pledgor has all necessary power to execute, deliver and perform
this Agreement;
     (f) There are no actions, suits, proceedings or investigations pending or
to such Pledgor’s best knowledge after due inquiry, threatened against or
affecting any Pledgor with respect to the Pledged Collateral, at law or in
equity or before or by any Governmental Authority, and no Pledgor is in default
with respect to any judgment, writ, injunction, decree, rule or regulation which
could adversely affect any Pledgor’s performance hereunder or any of the Pledged
Collateral;
     (g) This Agreement has been duly executed and delivered and constitutes the
valid and legally binding obligation of such Pledgor, enforceable in accordance
with its terms, except to the extent that enforceability of this Agreement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforceability of creditors’ rights generally
or limiting the right of specific performance;
     (h) Neither the execution or delivery by such Pledgor of this Agreement,
nor the compliance with the terms and provisions hereof, will violate any
material provision of any Governmental Rules or conflict with or result in a
breach of any of the terms, conditions or provisions of any judgment, order,
injunction, decree or ruling of any Governmental Authority to which such Pledgor
or any of such Pledgor’s property is subject or any provision of any agreement,
understanding or arrangement to which such Pledgor is a party or by which such
Pledgor or any of such Pledgor’s property is bound;
     (i) Such Pledgor’s exact legal name is as set forth on the signature page
hereto;
     (j) The jurisdiction of organization of such Pledgor is as set forth on
Schedule A hereto;

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     (k) All rights of such Pledgor in connection with such Pledgor’s ownership
of its Subsidiaries are evidenced and governed solely by the stock certificates,
instruments or other documents evidencing ownership and organizational documents
of such Subsidiaries, and no shareholder, voting or other similar agreements are
applicable to any of the Pledged Collateral or any of such Pledgor’s rights with
respect thereto; and the organizational documents of such Subsidiaries contain
no restrictions on the rights of shareholders other than those that normally
would apply to a company organized under the laws of the jurisdiction of
organization of each such Subsidiary; and
     (l) The Pledged Collateral does not include Margin Stock and no part of the
proceeds from the sale of the Notes under either Note Purchase Agreement, as
applicable, will be used, directly or indirectly, for the purpose of purchasing
or carrying Margin Stock. “Margin Stock” as used in this clause (l) shall have
the meaning ascribed to such term by Regulation U of the Board of Governors of
the Federal Reserve System of the United States.
     5. General Covenants. Each Pledgor hereby covenants and agrees as follows:
     (a) Such Pledgor shall do all reasonable acts that may be necessary and
appropriate to maintain, preserve and protect the Pledged Collateral, such
Pledgor shall be responsible for the risk of loss of, damage to, or destruction
of the Pledged Collateral owned by such Pledgor, unless such loss is the result
of the gross negligence or willful misconduct of the Secured Party;
     (b) Such Pledgor shall appear in and defend any action or proceeding of
which such Pledgor is aware which could reasonably be expected to affect such
Pledgor’s title to, or the Secured Party’s interest in, the Pledged Collateral
or the proceeds thereof; provided, however, that with the prior written consent
of the Secured Party, which shall not be unreasonably withheld or delayed, such
Pledgor may settle such actions or proceedings with respect to the Pledged
Collateral;
     (c) Such Pledgor shall, and shall cause each other Pledgor to, keep
separate, accurate and complete records of the Pledged Collateral, disclosing
the Secured Party’s security interest hereunder;
     (d) Such Pledgor shall comply with all material Governmental Rules
applicable to the Pledged Collateral unless any noncompliance would not
individually or in the aggregate materially impair the use or value of the
Pledged Collateral or the Secured Party’s rights hereunder;
     (e) Such Pledgor shall pay any and all taxes, duties, fees or imposts of
any nature imposed by any Governmental Authority on any of the Pledged
Collateral, except to the extent contested in good faith by appropriate
proceedings;
     (f) Such Pledgor shall permit the Secured Party, its officers, employees
and agents, on reasonable prior notice prior to the existence of an Event of
Default (or in the

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absence of prior notice following and during the continuation of an Event of
Default), to inspect all books and records related to the Pledged Collateral;
     (g) Except as permitted by the Note Purchase Agreements, during the term of
this Agreement, such Pledgor shall not sell, assign, replace, retire, transfer
or otherwise dispose of such Pledgor’s Pledged Collateral;
     (h) Such Pledgor will not change its state of principal residence without
providing thirty (30) days prior written notice to the Secured Party; and
     (i) Such Pledgor will not change its name without providing thirty
(30) days prior written notice to the Secured Party.
     6. Other Rights with Respect to Pledged Collateral. In addition to the
other rights with respect to the Pledged Collateral granted to the Secured Party
hereunder, at any time and from time to time, after and during the continuation
of an Event of Default, the Secured Party, at its option and at the expense of
the Pledgors, may (a) transfer into its own name, or into the name of its
nominee, all or any part of the Pledged Collateral, thereafter receiving all
dividends, income or other distributions upon the Pledged Collateral, (b) take
control of and manage all or any of the Pledged Collateral, (c) apply to the
payment of any of the Secured Obligations, whether any be due and payable or
not, any moneys, including cash dividends and income from any Pledged
Collateral, now or hereafter in the hands of the Secured Party, on deposit or
otherwise, belonging to any Pledgor, as the Secured Party in its sole discretion
shall determine, and (d) do anything which the Pledgors are required but fail to
do hereunder.
     7. Additional Remedies upon Event of Default. Except as otherwise provided
in Section 11 hereof upon the Pledged Collateral Release Event (as defined
below), upon the occurrence of any Event of Default and while such Event of
Default shall be continuing, the Secured Party shall have, in addition to all
rights and remedies of a secured party under the UCC or other applicable
Governmental Rules, and in addition to its rights under Section 6 above and
under the other Financing Agreements, the following rights and remedies:
(a) The Secured Party may, after ten (10) days’ advance written notice to the
Pledgors sell, assign, give an option or options to purchase or otherwise
dispose of the Pledged Collateral or any part thereof at a public or private
sale, at any of the Secured Party’s offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as the Secured Party may deem
commercially reasonable. Each Pledgor agrees that ten (10) days’ advance written
notice of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The Secured
Party shall not be obligated to make any sale of Pledged Collateral regardless
of notice of sale having been given. The Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. Each Pledgor recognizes that the Secured
Party may be compelled to resort to one or more private sales of the Pledged
Collateral to a restricted group of purchasers who will be obligated to agree,
among other things, to acquire such

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securities, shares, capital stock, investment property or ownership interests
for their own account for investment and not with a view to the distribution or
resale thereof.
     (b) The proceeds of any collection, sale or other disposition of the
Pledged Collateral, or any part thereof, shall, after the Secured Party has made
all deductions of expenses, including but not limited to attorneys’ fees and
other expenses incurred in connection with repossession, collection, sale or
disposition of such Pledged Collateral or in connection with the enforcement of
the Secured Party’s rights with respect to the Pledged Collateral, including in
any insolvency, bankruptcy or reorganization proceedings, be applied against the
Secured Obligations, whether or not all the same be then due and payable, as
follows:
     (i) first, to the Secured Obligations and to reimburse the Secured Party
for out-of-pocket costs, expenses and disbursements, including without
limitation reasonable attorneys’ fees and legal expenses, incurred by the
Secured Party in connection with realizing on the Pledged Collateral or
collection of any obligation of the Pledgor under any of the Financing
Agreements, including advances made subsequent to an Event of Default by the
Secured Party for the reasonable maintenance, preservation, protection or
enforcement of, or realization upon, the Pledged Collateral, including without
limitation advances for taxes, insurance, and the like, and reasonable expenses
incurred to sell or otherwise realize on, or prepare for sale of or other
realization on, any of the Pledged Collateral, in such order as the Secured
Party may determine in its discretion; and
     (ii) the balance, if any, as required by Governmental Rules.
     8. Lender’s Duties. The powers conferred on the Secured Party hereunder are
solely to protect its interest in the Pledged Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe custody of any
Pledged Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Secured Party shall have no duty as to any Pledged
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Pledged Collateral.
     9. [Intentionally Omitted.]
     10. No Waiver; Cumulative Remedies. No failure to exercise, and no delay in
exercising, on the part of the Secured Party, any right, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any further
exercise thereof or the exercise of any other right, power or privilege. No
waiver of a single Event of Default shall be deemed a waiver of a subsequent
Event of Default. The remedies herein provided are cumulative and not exclusive
of any remedies provided under the other Financing Agreements or by Governmental
Rules and the Secured Party may enforce any one or more remedies hereunder
successively or concurrently at its option. Each Pledgor waives any right to
require the Secured Party to proceed against any other Person or to exhaust any
of the Pledged Collateral or other security for the Secured Obligations or to
pursue any remedy in the Secured Party’s power.

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     11. No Discharge Until Indefeasible Payment of the Secured Obligations;
Certain Pledged Collateral Release Event. The pledge, security interests, and
other Liens and the obligations of each Pledgor hereunder shall not be
discharged or impaired or otherwise diminished by any failure, default,
omission, or delay, willful or otherwise, by the Secured Party or any other
obligor on any of the Secured Obligations, or by any other act or thing or
omission or delay to do any other act or thing which may or might in any manner
or to any extent vary the risk of the Pledgors or which would otherwise operate
as a discharge of the Pledgors as a matter of law or equity, except that, and
notwithstanding anything contained in this Agreement to the contrary, in the
event that all principal of, interest on, and make-whole amount, other premium
and break charges, if any, with respect to, the Notes and the other Obligations
of the Pledgors then due under each of the other Financing Agreements have been
performed and satisfied in full (the “Pledged Collateral Release Event"), then
the Secured Party shall release its pledge, security interest and other Liens in
the Pledged Collateral, and promptly return to the Pledgors any certificates in
its possession evidencing such Pledged Collateral. Without limiting the
generality of the foregoing, including without limitation, the terms and
conditions of the Pledged Collateral Release Event, each Pledgor hereby consents
to, and the pledge, security interests, and other Liens given by each Pledgor
hereunder shall not be diminished, terminated, or otherwise similarly affected
by any of the following at any time and from time to time:
     (a) Any lack of genuineness, legality, validity, enforceability, or
allowability, (in a bankruptcy, insolvency, reorganization or similar
proceeding, or otherwise), or any avoidance or subordination, in whole or in
part, of any Financing Agreement or any of the Secured Obligations and
regardless of any Governmental Rules, regulation, or order now or hereafter in
effect in any jurisdiction affecting any of the Secured Obligations, any of the
terms of the Financing Agreements, or any rights of the Secured Party or any
other Person with respect thereto;
     (b) Any increase, decrease, or change in the amount, nature, type or
purpose of any of the Secured Obligations (whether or not contemplated by the
Financing Agreements as presently constituted); any change in the time, manner,
method, or place of payment or performance of or in any other term of, any of
the Secured Obligations; any execution or delivery of any additional Financing
Agreements or any amendment, modification or supplement to, or refinancing or
refunding’ of, any Financing Agreement or any of the Secured Obligations;
     (c) Any failure to assert any breach of or default under any Financing
Agreement or any of the Secured Obligations; any extensions of credit in excess
of the amount committed under or contemplated by the Financing Agreements, or in
circumstances in which any condition to such extensions of credit has not been
satisfied; any other exercise or non-exercise, or any other failure, omission,
breach, default, delay, or wrongful action in connection with any exercise or
non-exercise, or any right or remedy against the Pledgors or any other Person
under or in connection with any Financing Agreement or any of the Secured
Obligations; any refusal of payment or performance of any of the Secured
Obligations, whether or not with any reservation of rights against any Pledgor;
or any application of collections (including collections resulting from
realization upon any direct or indirect security for the Secured

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Obligations) or other obligations, if any, not entitled to the benefits of this
Agreement, in preference to Secured Obligations or, if any collections are
applied to Secured Obligations, any application to particular Secured
Obligations;
     (d) Any taking, exchange, amendment modification, supplement, termination,
subordination, release, loss, or impairment of, or any failure to protect,
perfect, or preserve the value of, or any enforcement of, realization upon, or
exercise of rights or remedies under or in connection with, or any failure,
omission, breach, default, delay, or wrongful action by the Secured Party or any
other Person in connection with the enforcement of, realization upon, or
exercise of rights or remedies under or in connection with, or, any other action
or inaction by the Secured Party or any other Person in respect of, any direct
or indirect security for any of the Secured Obligations (including the Pledged
Collateral). As used in this Agreement, “direct or indirect security” for the
Secured Obligations, and similar phrases, includes any collateral security,
guaranty, suretyship, letter of credit, capital maintenance agreement, put
option, subordination agreement, or other right or arrangement of any nature
providing direct or indirect assurance of payment or performance of any of the
Secured Obligations, made by or on behalf of any Person;
     (e) Any merger, consolidation, liquidation, dissolution, winding-up,
charter revocation, or forfeiture, or other change in, restructuring or
termination of the corporate, partnership or limited liability company structure
or existence, as applicable, of any Pledgor, or any other Person; any
bankruptcy, insolvency, reorganization or similar proceeding with respect to any
Pledgor or any other Person; or any action taken or election (including any
election under Section 1111(b)(2) of the United States Bankruptcy Code or any
comparable law of any jurisdiction) made by the Secured Party, any Pledgor or
any other Person in connection with any such proceeding;
     (f) Any defense, setoff, or counterclaim which may at any time be available
to or be asserted by any Pledgor or any other Person with respect to any
Financing Agreement or any of the Secured Obligations; or any discharge by
operation of law or release of any Pledgor or any other Person from the
performance or observance of any Financing Agreement or any of the Secured
Obligations; or
     (g) Any other event or circumstance, whether similar or dissimilar to the
foregoing, and whether known or unknown, which might otherwise constitute a
defense available to, or limit the liability of a guarantor or a surety,
including the Pledgors, excepting only full, strict, and indefeasible payment
and performance of the Secured Obligations in full.
     12. [Intentionally Omitted.]
     13. Waivers. Each Pledgor hereby waives any and all defenses which such
Pledgor may now or hereinafter have based on principals of suretyship,
impairment of collateral, or the like. Without limiting the generality of the
foregoing and to the fullest extent permitted by applicable Governmental Rules,
each Pledgor hereby further waives each of the following:

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     (a) All notices, disclosures and demands of any nature which otherwise
might be required from time to time to preserve intact any rights against such
Pledgor, including the following: any notice of any event or circumstance
described in the immediately preceding section hereof; any notice required by
any Governmental Rules, regulation, or order now or hereafter in effect in any
jurisdiction; any notice of nonpayment, nonperformance, dishonor, or protest
under any Financing Agreement or any of the Secured Obligations; any notice of
the incurrence of any Secured Obligations; any notice of any default or any
failure on the part of any Pledgor or any other Person to comply with any
Financing Agreement or any of the Secured Obligations or any requirement
pertaining to any direct or indirect security for any of the Secured
Obligations; and any notice or other information pertaining to the business,
operations, condition (financial or otherwise), or prospects of any Pledgor to
any other Person;
     (b) Any right to any marshalling of assets, to the filing of any claim
against any Pledgor or any other Person in the event of any bankruptcy,
insolvency, reorganization, or similar proceeding, or to the exercise against
any Pledgor or any other Person of any other right or remedy under or in
connection with any Financing Agreement or any of the Secured Obligations or any
direct or indirect security for any of the Secured Obligations; any requirement
of promptness or diligence on the part of the Secured Party or any other Person;
any requirement to exhaust any remedies under or in connection with, or to
mitigate the damages resulting from default under any Financing Agreement or any
of the Secured Obligations or any direct or indirect security for any of the
Secured Obligations; any benefit of any statute of limitations; and any
requirement of acceptance of this Agreement or any other Financing Agreement,
and any requirement that the Pledgor receive notice of any such acceptance; and
     (c) Any defense or other right arising by reason of any Governmental Rules
now or hereafter in effect in any jurisdiction pertaining to election of
remedies (including anti-deficiency laws, “one action” laws, or the like), or by
reason of any election of remedies or other action or inaction by the Secured
Party (including commencement or completion of any judicial proceeding or
nonjudicial sale or other action in respect of collateral security for any of
the Secured Obligations), which results in denial or impairment of the right of
the Secured Party to seek a deficiency against any Pledgor or any other Person
or which otherwise discharges or impairs any of the Secured Obligations.
     14. Assignment. All rights of the Secured Party under this Agreement shall
inure to the benefit of its successors and assigns and to all other holders of
the Notes from time to time. All obligations of the Pledgors shall bind each
Pledgor’s successors, assigns, heirs, executors and personal representatives, as
the case may be; provided, however, no Pledgor may assign or transfer any of
such Pledgor’s rights and obligations hereunder or any interest herein, and any
such purported assignment or transfer shall be null and void.
     15. Severability. Any provision of this Agreement (or portion hereof) which
shall be held invalid or unenforceable shall be ineffective without invalidating
the remaining provisions hereof (or portions thereof).

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     16. Governing Law. This Agreement shall be construed in accordance with and
governed by the internal laws of the State of Ohio without regard to its
conflicts of law principles, except to the extent the validity or perfection of
the security interests or the remedies hereunder in respect of any Pledged
Collateral are governed by the law of a jurisdiction other than the State of
Ohio.
     17. Notices. All notices, requests, demands, directions and other
communications (collectively, “notices”) given to or made upon any party hereto
under the provisions of this Agreement shall be given or made as set forth in
Section 18 [Notices] of the applicable Note Purchase Agreement.
     18. Specific Performance. Each Pledgor acknowledges and agrees that, in
addition to the other rights of the Secured Party hereunder and under the other
Financing Agreements, because the Secured Party’s remedies at law for failure of
the Pledgors to comply with the provisions hereof relating to the Secured
Party’s rights (i) to inspect the books and records related to the Pledged
Collateral, (ii) to receive the various notifications the Pledgors are required
to deliver hereunder, (iii) to obtain copies of agreements and documents as
provided herein with respect to the Pledged Collateral, (iv) to enforce the
provisions hereof pursuant to which the Pledgors have appointed the Secured
Party each Pledgor’s attorney-in-fact, and (v) to enforce the Secured Party’s
remedies hereunder, would be inadequate and that any such failure would not be
adequately compensable in damages, each Pledgor agrees that each such provision
hereof may be specifically enforced.
     19. Voting Rights in Respect of the Pledged Collateral; Dividends and
Distributions. So long as no Event of Default shall occur and be continuing
under either Note Purchase Agreement, each Pledgor (i) shall have the right to
receive revenue, distributions and dividends paid or payable on the Pledged
Collateral and (ii) may exercise any and all voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the other Financing Agreements;
provided, however, that no Pledgor will enter into any agreement or undertaking
restricting the right or ability of any Pledgor or the Secured Party to sell,
assign or transfer any of the Pledged Collateral. Upon the occurrence and during
the continuance of an Event of Default, all rights of the Pledgors to exercise
the voting and other consensual rights or receive and retain revenue,
distributions and dividends that it would otherwise be entitled to exercise or
receive and retain, as applicable pursuant to this Section 19, shall cease, and
all such rights shall thereupon become vested in the Secured Party who shall
thereupon have the sole right to exercise such voting or other consensual rights
and to receive and retain such cash dividends and distributions in accordance
with Sections 6 and 7 hereof, as applicable.
     20. Consent to Jurisdiction. Each Pledgor hereby irrevocably submits to the
nonexclusive jurisdiction of the Court of Common Pleas of Lake County, Ohio and
of the District Court of the United States for the Northern District of Ohio in
any action or proceeding arising out of or relating to this Agreement, and each
Pledgor hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in the Court of Common Pleas of Lake
County, Ohio and in the District Court of the United States for the Northern
District of Ohio.

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Each Pledgor hereby waives to the fullest extent such Pledgor may effectively do
so, the defense of an inconvenient forum to the maintenance of any such action
or proceeding. Each Pledgor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions (or
any political subdivision thereof) by suit on the judgment or in any other
manner provided by law.
     21. Waiver of Jury Trial. Except as prohibited by law, each Pledgor hereby
waives any right such Pledgor may have to a trial by a jury in respect of any
litigation directly or indirectly arising out of, under, or in connection with
this Agreement or any other documents or transactions relating thereto.
     22. Entire Agreement; Amendments. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements relating to a grant of a security interest in
the Pledged Collateral by the Pledgors. This Agreement may not be amended or
supplemented, and no provision of this Agreement shall be waived, except, in
each case, by a writing signed by the Secured Party and the Pledgors.
     23. Counterparts; Electronic Signatures. This Agreement may be executed in
any number of counterparts, and by different parties hereto in separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same instrument. Delivery of
an executed counterpart of this Agreement by facsimile or email shall be as
effective as delivery of a manually executed counterpart of this Agreement.
     24. Additional Pledgors. Additional Subsidiaries that are required by the
terms of Section 9.8 of each of the Note Purchase Agreements, shall execute and
deliver to the Secured Party an Addendum in the form of Exhibit A attached
hereto and shall, thereafter, become a Pledgor hereunder.
[Remainder of Page Intentionally Blank]

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     In Witness Whereof, and intending to be legally bound, the parties hereto
have caused this Agreement to be duly executed as of the date first above
written.

            INITIAL PLEDGORS:

Northeast Ohio Natural Gas Corp.
      By:   /s/ Thomas J. Smith         Name:   Thomas J. Smith        Title:  
Chief Financial Officer        Orwell Natural Gas Company
      By:   /s/ Thomas J. Smith         Name:   Thomas J. Smith        Title:  
Chief Financial Officer        Brainard Gas Corp.
      By:   /s/ Thomas J. Smith         Name:   Thomas J. Smith        Title:  
Chief Financial Officer        Great Plains Natural Gas Company
      By:   /s/ Thomas J. Smith         Name:   Thomas J. Smith        Title:  
Chief Financial Officer   

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            Lightning Pipeline Company, Inc.
      By:   /s/ Thomas J. Smith         Name:   Thomas J. Smith        Title:  
Chief Financial Officer        Kidron Pipeline, LLC
      By:   /s/ Thomas J. Smith         Name:   Thomas J. Smith        Title:  
Chief Financial Officer        Spelman Pipeline Holdings, LLC
      By:   /s/ Thomas J. Smith         Name:   Thomas J. Smith        Title:  
Chief Financial Officer        Gas Natural Service Company, LLC
      By:   /s/ Thomas J. Smith         Name:   Thomas J. Smith        Title:  
Chief Financial Officer        Gas Natural Inc.
      By:   /s/ Thomas J. Smith         Name:   Thomas J. Smith        Title:  
Chief Financial Officer   

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This Agreement is hereby accepted and agreed to as of the date thereof.

            SECURED PARTY:

Sun Life Assurance Company of Canada
      By:   /s/ John Chamberlain         Name:   John Chamberlain       
Title:   Senior Director, Private Fixed Income            By:   /s/ Paul
Sinclair         Name:   Paul Sinclair        Title:   Managing Director, Head
of Private Debt, Private Fixed Income     

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