Exhibit 10.1
LOAN AGREEMENT
* * * * * * * * *
THIS LOAN AGREEMENT,
made August 28, 2014, among LEATHERSTOCKING GAS COMPANY, LLC, having an office and principal place of business at 000 Xxxx Xxxxxxx
Xxxxxx, Xxxxxxx, Xxx Xxxx 00000 (the “Borrower”), LEATHERSTOCKING PIPELINE COMPANY, LLC, having an office and principal
place of business at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx 00000 (the “Guarantor”), and FIVE STAR BANK, a New
York State bank, having an office at 00 Xxxxx Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 (the “Lender”).
WITNESSETH:
WHEREAS, the Lender
has agreed to extend to the Borrower the loan described on the attached Exhibit “A” (the “Loan”); and
WHEREAS, the Loan
(a) evidenced by and payable in accordance with the terms of a Line of Credit Note, and (b) secured by two (2) General Security
Agreements, all as defined in Exhibit “B” attached hereto; and
WHEREAS, the Guarantor
has guaranteed repayment of the Loan pursuant to a guaranty of even date herewith (the “Guaranty”); and
WHEREAS, the Borrower,
Guarantor and the Lender have agreed to certain terms governing the Loan.
NOW, THEREFORE,
in consideration of the promises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged
by each of the parties hereto, the parties hereto agree for themselves, their successors and assigns as follows:
1.0 Representations
and Warranties. Borrower represents and warrants as of the date hereof and as of the date of any advance made by the Lender hereunder
that:
1.1 Indebtedness.
Except as disclosed in the financial statements referred to in Section 3.5 hereof, the Borrower has no outstanding indebtedness
or contingent liabilities (including without limitation “off balance sheet” liabilities and reimbursement liabilities
or contingent liabilities related to letters of credit) other than trade payables not yet due incurred in the ordinary course of
business.
1.2 Financial Statements
and Other Information. All balance sheets, earnings statements and other financial data which have been or shall hereafter be furnished
to the Lender as of the dates and the results of operations for the periods for which the same are furnished to the Lender, and
all other information, reports and other papers and data furnished to the Lender are or will be, at the time the same are so furnished,
accurate and correct in all material respects and each financial statement referred to herein was and will be prepared in accordance
with generally accepted accounting principles consistently applied.
1.3 Title of Property.
Except as set forth on Exhibit “C” hereto annexed, none of the assets of Borrower are, as of the date hereof, subject
to any mortgage, pledge, lien or encumbrance except to the Lender.
1.4 Litigation.
Except as set forth on Exhibit “D” hereto annexed, there is no action, suit or proceeding at law or in equity by or
before any governmental instrumentality or other agency now pending, or, to the knowledge of Borrower, threatened against or affecting
the Borrower or any properties or rights of the Borrower which, if adversely determined, would materially impair the right of the
Borrower to carry on business substantially as now conducted or would materially adversely affect the financial condition of Borrower.
1.5 Governmental
Approval. No approvals or consents of any public regulatory body or bodies are required for the valid authorization, making
or delivery of this Note, the borrowings hereunder, or any other action to be taken hereunder or in connection herewith by Borrower.
1.6 Retirement
Plans. Each qualified retirement plan of Borrower that is subject to any provisions of the Employee Retirement Income Security
Act of 1974 and the regulations adopted pursuant thereto (“ERISA”) is being administered in accordance with the documents
and instruments governing such Plan(s), and such documents and instruments are consistent with the applicable provisions of ERISA.
With respect to any such Plan(s), there has not been incurred any material accumulated unfunded deficiency under the terms of ERISA
nor has there been incurred any material liability to the Pension Benefit Guaranty Corporation.
1.7 Taxes. Borrower
has duly filed all federal, state and local income, sales, property and other tax returns required to be filed and has paid all
taxes shown on such returns.
1.8 Organization.
Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the State of New
York, has the power and authority to transact the business in which it is engaged, is duly licensed or qualified and in good standing
in each jurisdiction in which the conduct of such business required such licensing or qualification and has all necessary power
and authority to enter into this Agreement and to execute, deliver and perform this Agreement, the Note and any other documents
executed in connection herewith, all of which have been duly authorized by all proper and necessary action.
1.9 Approvals.
All necessary action on the part of the Borrower, including approval to the extent required, relating to the authorization of the
execution and delivery of this Agreement and all related documents and instruments and the performance of the obligations of the
Borrower hereunder the thereunder has been taken and is in full force and effect.
1.10 Valid and
Binding Obligation. This Agreement, and any other document executed in connection herewith, and the Note when executed and delivered,
will constitute the legal, valid and binding obligations of the Borrower, enforceable in accordance with their respective terms.
The execution and delivery by the Borrower of this Agreement and all related documents and agreements, and the performance by the
Borrower of its obligations under this Agreement and all related documents and agreements will not violate any provision of law
or the Borrower’s Articles of Organization or other organizational documents or agreements. The execution, delivery and performance
of this Agreement and all related documents and agreements, and the consummation of the transactions contemplated hereby will not
violate, be in conflict with, result in a breach of, or constitute a default under any material agreement to which the Borrower
is a party or by which any of its assets or properties is bound, or any order, writ, injunction or decree of any court or governmental
instrumentality, and will not result in the creation of imposition or any lien, charge or encumbrance upon any of its assets or
properties.
1.11 Franchises
and Permits. The Borrower has all franchises, permits and licenses and other authority as are necessary to enable the Borrower
to conduct its business as being conducted, and the Borrower is not in default under any such franchises, permits, licenses or
authority.
1.12 Patents. Trademarks
and Authorizations. The Borrower owns or possesses all patents, trademarks, service marks, tradenames, copyrights, licenses, authorizations
and all rights with respect to the foregoing, necessary to the conduct of its business as now being conducted without any material
conflict with the rights of others.
1.13 Contracts and
Agreements. The Borrower is not a party to any contract or agreement that materially adversely affects its business, property,
assets or condition (financial or other) and the Borrower is in compliance in all material respects with all contracts and agreements
to which it is a party.
2.0 Advances/Equity
Injection.
2.1 Advances of
the $4,000,000.00 Loan are conditioned upon the Borrower’s injection of its own funds i.e. equity totaling $1,600,000.00
paid into the project defined below by completion. Each advance under the Loan will be comprised of 60% Lender financing and 40%
Borrower equity. Written evidence, in the sole discretion of the Lender, of the equity contribution by Borrower will be required
prior to each advance under the Loan. Project shall be defined as the work and services and products related to the continued and
additional infrastructure costs of the underground piping construction project in Montrose, Bridgewater and Dimock, Pennsylvania.
3.0 Affirmative
Covenants. Borrower covenants and agrees that Borrower shall:
3.1 Insurance.
Maintain adequate insurance at all times on Borrower’s insurable properties against fire, theft and other hazards with responsible
companies and in such amounts and against such risks as is usually carried by owners of similar businesses and properties. Borrower
shall promptly deliver to the Lender certificates of insurance with appropriate endorsements designating the Lender as a named
insured or loss payee.
3.2 Maintenance
of Properties. Maintain, preserve and keep Borrower’s plants, properties and other tangible assets in good repair, working
order and condition and from time to time make, or cause to be made, needful and proper repairs, renewals, replacements, betterments
and improvements thereto so that the business carried on in connection therewith may be properly and advantageously conducted at
all times.
3.3 Examination
of Books. Permit the Lender’s representative, at any reasonable time and from time to time, to (a) examine books and records
and to make extracts therefrom and (b) discuss financial affairs, condition and accounts of Borrower and Guarantors with the Borrower
and Guarantor accountants.
3.4 Claims and
Taxes. Pay, prior to the date on which they become delinquent, all of Borrower’s debts and obligations, and all taxes, assessments
and governmental charges imposed upon or against Borrower, and all lawful claims for labor, materials and supplies.
3.5 Financial Statements.
Keep all books of account in accordance with generally accepted accounting principles and will furnish or cause to be furnished
to the Lender:
3.5.1 annual
10-K report which all attached schedules for the Borrower and Guarantor within 120 days after fiscal year end;
3.5.2 quarterly
10-Q report which any attached schedules with 15 days after each quarter end;
3.5.3 annual
management-prepared financial statements, including balance sheet and income statement and accounts receivable and accounts payable
aging for Borrower and Guarantor and Coming Natural Gas Company within 120 days after fiscal year end; and
3.5.4 quarterly
management-prepared financial statements, including balance sheet and income statement and accounts receivable and accounts payable
aging for Borrower and Guarantor and Coming Natural Gas Company within 15 days after each quarter end.
3.6 Adverse Actions.
Notify the Lender promptly in writing in the event any litigation or proceeding including but not limited to any adverse claims
or notices or actions directly or indirectly relating to the environmental condition of any property securing the Loan is instituted
or threatened against Borrower.
3.7 ERISA Actions.
Notify the Lender promptly in writing in the event Borrower knows or has reason to know that any termination event (a reportable
event as defined in Section 4043(b) of ERISA) or any other event or condition which might constitute grounds under Section 4042
of ERISA for the termination of, or for the appointment of a trustee to administer any plan has occurred.
3.8 Expenses of
Lender. Pay or reimburse the Lender on demand for any and all reasonable out-of-pocket expenses (including attorneys’ fees
and expenses) which the Lender paid or incurred in connection herewith, or any other agreement(s) called for hereunder and any
filing related hereto, and the expenses (including reasonable attorneys’ fees) relating to the repossession, storage or sale
of assets in which the Lender has a security interest and to the collection of the obligations of Borrower hereunder, or in connection
herewith.
3.9 Maintain Existence.
Maintain its existence in good standing and remain or become duly licensed or qualified and in good standing in each jurisdiction
in which the conduct of its business requires such qualification or licensing.
3.10 Lender Desiository.
The Lender shall be designated and shall continue to be the depository of the funds of the Borrower with respect to operating,
checking, savings and direct deposit payroll accounts.
3.11 Franchises
and Permits. Preserve and keep in full force and effect all franchises, permits, licenses and other authority as are necessary
to enable it to conduct its business as being conducted on the date hereof, and to comply in all material respects with all laws,
regulations and requirements now in effect or hereafter promulgated by any property constituted governmental authority having jurisdiction
over Borrower or its business.
3.1 Payments on
Note. Make all payments as and when required by this Agreement and the Note and any other agreements related thereto or hereto.
3.13 Debt Service
Coverage Ratio. Commencing with the calendar year end December 31, 2014 and continuing through and including the Maturity Date
(as defined in the Note), Borrower must maintain a minimum debt service coverage ratio (“DSCR”) of 1.15x, measured
annually. DSCR shall be defined as: Annual Net Income plus Interest Expense and Credit Fees plus All Non-Cash Negative Adjustments
to Net Income minus All Positive Non-Cash Adjustments to Net Income divided by The Sum of the Prior Year’s Current Maturities
of Long Term Debt, including Capital Lease Payments plus Interest Expense and Credit Fees.
4.0 Negative
Covenants. Except after providing written notice to the Lender, the Borrower will not:
4.1 Type of Business.
Engage in any business other than the type conducted and operated during the present and preceding calendar year.
4.2 Other Indebtedness.
Incur, create, assume or permit to exist any indebtedness or liability on account of deposits or advances or any indebtedness or
liability for borrowed money, or any other indebtedness or liability except indebtedness to the Lender, Current Accounts Payable
and other Current Liabilities arising out of transactions, other than borrowings, in the ordinary course of business.
4.3 Limitation
on Liens. Create or suffer to exist any mortgage, pledge, lien, security interest or encumbrance on any of its property or assets
now owned or hereafter acquired, or enter into any arrangement for the acquisition of property subject to a conditional sales agreement
or other title retention arrangement except (a) liens in connection with Workmen’s Compensation, Unemployment Insurance and
other Social Security obligations, (b) liens, securing performance of surety and appeal bonds and other liens of like nature arising
in the ordinary course of business, (c) mechanic’s, workmen’s, materialmen’s or other like liens arising in the
ordinary course of business in respect of obligations not yet due or being contested in good faith, (d) liens for taxes, assessments
or governmental charges or levies on it or its properties not delinquent or being contested in good faith, and (e) mortgages, pledges
and other liens to the Lender.
4.4 Disposal of
Accounts. Notes. Sell, assign, discount or otherwise dispose of any Accounts Receivable or bills, notes or other commercial paper,
with or without recourse to Borrower.
4.5 Contingent
Liabilities. Guaranty, endorse or otherwise in any way be or become responsible for obligations of any other person except to the
Lender, whether by agreement to purchase indebtedness, or agreement for furnishing funds through the purchase of goods, supplies
or services (or by way of stock purchase) capital contribution, advance or loan for the purpose of paying or discharging any indebtedness
or obligation of any other person, or agreement to maintain minimum capital or net worth of any other person, or otherwise, excepting
from the purview of this clause, endorsements of negotiable instruments for collection and guarantees to the Lender.
4.6 Loans and Investments.
Except for loans to key employees which loans in the aggregate do not exceed $50,000.00, make any loan or advance of money or property
to, or any investment (whether by stock or other security acquisition, or by purchase, or otherwise) in any person, firm, corporation
or entity of any kind, excepting investments in U.S. Government Bonds and obligations, certificates of deposit issued by a member
bank of the Federal Reserve System, and investments in commercial paper which at the time of such investment is assigned the highest
quality rating in accordance with the rating systems employed by either Xxxxx’x Investor Service, Inc. or Standard &
Poor’s Corporation.
4.7 Sale of All
or Substantially All of Assets. Assign, transfer, sell, lease or otherwise dispose of all or a substantial part of Borrower’s
assets.
4.8 Leases. Enter
into any arrangement with any lender or investor providing for the leasing by the Borrower of any property, real or personal, (a)
which has been or is to be sold or transferred to such lender or investor, or (b) in the case of real property, on which one or
more buildings have been or are to be constructed by such lender or investor, and which in either case was for the purpose of leasing
such property to the Borrower nor will the Borrower, become liable as lessee on any lease.
4.9 Mergers and
Acquisitions. Liquidate or dissolve or enter into any consolidation, merger, partnership, joint venture, syndicate or other combination
or purchases or acquire or incur
liability for the purchase or acquisition
of any or all of the assets or business of any person, firm, or corporation.
4.10 Material Changes.
Permit any material change to be made in the character of the business of the Borrower, or in its executive management, or in the
nature of its operations as carried on as of the date hereof.
5.0 Default.
5.1 Events of Default.
The occurrence of any one or more of the following events shall constitute an Event of Default (individually “Event of Default”
and collectively “Events of Default”):
5.1.1 Default
in the Payment of Principal or Interest. Default by Borrower in the payment of any principal or interest due to the Lender under
the Note.
5.1.2 Misrepresentations.
One or more representations or warranties made by the Borrower herein or in writing in connection with or pursuant to this Agreement
shall be false, inaccurate or misleading in any material respect.
5.1.3 Breach
of Covenants. If any agreement or covenant made by the Borrower herein shall not be complied with, whether or not there shall be
compliance with any or all other agreements and covenants made by the Borrower herein.
5.1.4 Default
in Other Obligations. Default shall be made with respect to any indebtedness of the Borrower or any Guarantor, or the performance
of any other obligation incurred in connection with any indebtedness for borrowed money of the Borrower, or any Guarantor, if the
effect of such default is to accelerate the maturity of such indebtedness or to permit the holder thereof to cause such indebtedness
to become due prior to its stated date of maturity, or any such indebtedness shall not be paid when due.
5.1.5 Financial
Statements. Borrower or any Guarantor fails to provide the Lender with financial statements, tax returns or other information within
thirty (30) days of Lender’s request..
5.1.6 Taxes.
In the event Borrower shall fail to pay or discharge its taxes, assessments, levies and governmental charges prior to the date
of which the penalties are attached thereto.
5.1.7 ERISA.
Any reportable event (as defined in Title IV of ERISA) which might constitute grounds for the termination of any retirement
plan of Borrower or for the appointment by the appropriate regulatory body of a trustee to administer any such retirement plan
shall have occurred and be continuing for thirty (30) days after written notice to such effect shall have been given to Borrower
or any such retirement plan shall be terminated or a trustee shall be appointed to administer any such retirement plan, or the
Pension Benefit Guaranty Corporation shall institute proceedings to terminate any such retirement plan or to appoint a trustee
to administer any such retirement plan.
5.1.8 Money Judgments.
An uninsured judgment for the payment of money in excess of $10,000.00 shall be entered against Borrower, or any Guarantor, or
any attachment, execution or garnishment shall be issued or filed against any of the property of the Borrower, or any Guarantor
and shall not be released or discharged within ten (10) days.
5.2 Effects of
an Event of Default. Upon the happening of one or more Events of Default:
5.2.1 If an Event
of Default occurs under paragraphs 5.1.1 through 5.1.8 hereof, the Lender’s obligations hereunder shall be cancelled immediately,
automatically and without notice, and the unpaid principal of the Loan with interest accrued thereon shall become immediately due
and payable without any presentment, demand, protest, notice of protest or notice of any kind, all of which are hereby expressly
waived.
6.0 Except as specifically
amended herein, all of the terms, covenants, conditions and stipulations contained in the Note and all of the other documents relating
thereto (the “Loan Documents”) are hereby ratified and confirmed in all respects, shall continue to apply with full
force and effect.
7.0 Neither this
Loan Agreement nor any other Loan Document nor any provision hereof or thereof may be modified, amended, changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
8.0 This Loan Agreement
may be executed in one or more counterparts each of which shall be an original but all of which when taken together shall constitute
one and the same instrument. The failure of any party listed below to execute, acknowledge or join in this Agreement, or any counterpart
hereof, shall not relieve the other signatories from the obligations hereunder.
9.0 This Loan Agreement
is and shall be deemed to be a contract entered into pursuant to the laws of the State of New York and shall in all respects be
governed, construed, applied and enforced in accordance with the laws of the State of New York.
10.0 This Loan
Agreement is binding upon, and shall inure to the benefit of, the parties hereto and their respective heirs, executors, administrators,
legal representatives, successors and assigns.
11.0 Nothing
in this Loan Agreement or any other Loan Document is intended to or shall be deemed to create any rights or obligations of partnership,
joint venture, or similar association among the parties hereto.
12.0 If any term,
covenant, provision or condition of this Loan Agreement or any of the other Loan Documents shall be held to be invalid, illegal
or unenforceable in any respect, this Agreement shall be construed without such term, covenant, provision or condition.
13.0 This is
the Loan Agreement referred to in, is entitled to the benefits of, and is subject to the Note, if applicable, the Security Agreement,
and Guaranty, the respective terms of which are incorporated herein by reference.
14.0 The parties
hereto hereby irrevocably and unconditionally waive any and all rights to trial by jury in any action, suit or counterclaim arising
in connection with, out of or otherwise related to this Agreement, and every other Loan Document heretofore, now or hereafter executed
and/or delivered in connection therewith, the Loan and all other obligations of the Borrower or Guarantor related thereto or in
any way related to this transaction or otherwise with respect to the Premises.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have
executed this Agreement as of the day and year first above written.
Borrower Name: |
LEATHERSTOCKING GAS COMPANY, LLC |
Signature: |
/s/ Xxxxxxx X. German, CEO and Manager |
Print Name and Title: |
Xxxxxxx X. German, CEO and Manager |
STATE OF NEW YORK )
COUNTY OF STEUBEN ) ss.:
On the 27th day of August, in the year
2014, before me, the undersigned, a Notary Public in and for said State, personally appeared Xxxxxxx X. German, personally known
to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual,
or the person upon behalf of which the individual acted, executed the instrument.
/s/ Xxxxx X. Xxxxx
Notary Public
Guarantor Name: |
LEATHERSTOCKING PIPELINE COMPANY, LLC |
Signature: |
/s/ Xxxxxx X. Xxxxxxxx |
Print Name and Title: |
Xxxxxx X. Xxxxxxxx, Manager |
|
|
Signature: |
/s/ Xxxxxxx X. German, CEO and Manager |
Print Name and Title: |
Xxxxxxx X. German, CEO and Manager |
STATE OF NEW YORK )
COUNTY OF STEUBEN ) ss.:
On the 27th day of August, in the year
2014, before me, the undersigned, a Notary Public in and for said State, personally appeared Xxxxxx X. Xxxxxxxx, personally known
to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual,
or the person upon behalf of which the individual acted, executed the instrument.
/s/ Xxxxx X. Xxxxx
Notary Public
STATE OF NEW YORK )
COUNTY OF STEUBEN ) ss.:
On the 27th day of August, in the year
2014, before me, the undersigned, a Notary Public in and for said State, personally appeared Xxxxxxx X. German, personally known
to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of
which the individual acted, executed the instrument.
/s/ Xxxxx X. Xxxxx
Notary Public
Lender Name: |
FIVE STAR BANK |
Signature: |
/s/ Xxxxxxx X. Xxxxx |
Print Name and Title: |
Xxxxxxx X. Xxxxx, Vice President |
EXHIBIT “A”
Loan from Lender to Borrower:
1. A Commercial
Line of Credit Loan and Permanent Term Loan in the amount of $4,000,000.00 from Lender to Borrower dated August ___, 2014.
EXHIBIT “B”
Note: The term “Note”
as used in this Loan Agreement shall mean a certain Line of Credit Note dated August ___, 2014, in the principal sum of $4,000,000.00
to be given by the Borrower to the Lender.
Security Agreement:
The term “General Security Agreement” as used in this Loan Agreement shall mean, collectively and individually: (1)
a certain General Security Agreement dated August ___, 2014, by Guarantor to the Lender; and (2) a certain General Security Agreement
dated August ___, 2014, by Borrower to the Lender.
EXHIBIT “C”
Assets subject to security interests
(excluding liens of the Lender): None
EXHIBIT “D”
Pending Litigation: None