GENERAL SECURITY AGREEMENT New York
Exhibit
10.4
Debtor
(Name):
Corning
Natural Gas Corporation
(Organizational
Structure): Corporation
(State
Law organized under): New
York
(Organizational
Identification Number, if any; note that this is NOT a request for the Taxpayer
Identification Number):
(Address
of residence/chief executive office): 000
Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx 00000
Bank/Secured
Party: Manufacturers and Traders Trust Company,
a New
York banking corporation with its banking offices at One M&T Plaza, Buffalo,
New York 14203 Attention: Office of General Counsel.
For
good
and valuable consideration, the receipt and sufficiency of which is
acknowledged, and intending to be legally bound, Debtor agrees with Secured
Party as follows:
1. Security
Interests.
1.1 Grant.
As
security for the prompt and complete payment and performance when due of all
of
the Obligations, Debtor does hereby grant to Secured Party a continuing security
interest (“Security Interest”) in all personal property and fixtures of Debtor,
wherever located, whether now existing or owned or hereafter arising or
acquired, whether or not subject to the Uniform Commercial Code, as the same
may
be in effect in the State of New York, as amended from time to time (“UCC”), and
whether or not affixed to any realty, including, without limitation, (i) all
accounts, chattel paper, investment property, deposit accounts, documents,
goods, equipment, farm products, general intangibles (including trademarks,
service marks, trade names, patents, copyrights, licenses and franchises),
instruments, contract
rights,
money,
letter of credit rights, causes of action (including tort claims) and other
personal property (including agreements and instruments not constituting chattel
paper or a document, general intangible or instrument); (ii) all additions
to,
accessions to, substitutions for, replacements of and supporting obligations
of
the foregoing; (iii) all proceeds and products of the foregoing, including,
without limitation, insurance proceeds; and (iv) all business records and
information relating to any of the foregoing and any software or other programs
for accessing and manipulating such information (collectively, the
“Collateral”). Debtor acknowledges and agrees that the foregoing collateral
description is intended to cover all assets of Debtor.
1.2 Obligations.
The
term “Obligations” means any and all indebtedness or other obligations of Debtor
to Secured Party in any capacity, now existing or hereafter incurred, however
created or evidenced, regardless of kind, class or form, whether direct,
indirect, absolute or contingent (including obligations pursuant to any
guaranty, endorsement, other assurance of payment or otherwise), whether joint
or several, whether from time to time reduced and thereafter increased, or
entirely extinguished and thereafter reincurred, together with all extensions,
renewals and replacements thereof, and all interest, fees, charges, costs or
expenses which accrue on or in connection with the foregoing, including, without
limitation, any indebtedness or obligations (i) not yet outstanding but
contracted for, or with regard to which any other commitment by Secured Party
exists; (ii) arising prior to, during or after any pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding; (iii) owed by Debtor to others and
which Secured Party obtained, or may obtain, by assignment or otherwise; or
(iv)
payable under this Agreement.
2. Covenants.
Debtor
covenants and agrees as follows:
2.1 Perfection
of Security Interest.
Debtor
shall execute and deliver to Secured Party such financing statements, control
agreements or other documents, in form and content satisfactory to Secured
Party, as Secured Party may from time to time request to perfect and continue
the Security Interest. Upon the request of Secured Party, Debtor shall deliver
to Secured Party any and all instruments, chattel paper, negotiable documents
or
other documents evidencing or constituting any part of the Collateral properly
endorsed or assigned, in a manner satisfactory to Secured Party. Until such
delivery, Debtor shall hold such portion of the Collateral in trust for Secured
Party. Debtor shall pay all expenses for the preparation, filing, searches
and
related costs in connection with the grant and perfection of the Security
Interest. Debtor authorizes (both prospectively and retroactively) Secured
Party
to file financing statements, and any continuations and amendments thereof,
with
respect to the Collateral without Debtor’s signature. A photocopy or other
reproduction of any financing statement or this Agreement shall be sufficient
as
a financing statement for filing in any jurisdiction.
2.2 Negative
Pledge; Disposition of Collateral.
Debtor
shall not grant or allow the imposition of any lien, security interest or
encumbrance on, or assignment of, the Collateral unless consented to in writing
by Secured Party. Debtor shall not make or permit to be made any sale, transfer
or other disposition of the Collateral; provided, however, prior to the
occurrence of an Event of Default, Debtor may in the ordinary course of business
consistent with its past practices and with prudent and standard practices
used
in the industry that is the same or similar to that in which Debtor is engaged:
(i) dispose of any Collateral consisting of equipment that is obsolete or
worn-out; (ii) sell or exchange any Collateral consisting of equipment in
connection with the acquisition of other equipment that is at least as valuable
as such equipment, that Debtor intends to use for substantially the same
purposes as such equipment and that is not subject to any security interest
or
other lien or encumbrance; or
(iii)
collect Collateral consisting of accounts or assign such Collateral for purposes
of collection.
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2.3 Condition
of Collateral; Impermissible Use.
Debtor
shall keep the Collateral consisting of goods in good condition and shall not
commit or permit damage or destruction (other than ordinary wear and tear)
to
such Collateral. Debtor shall not permit any Collateral consisting of goods
(i)
to be used in such a manner that would violate any insurance policy or warranty
covering the Collateral or that would violate any applicable law of any
governmental authority (including any environmental law) now or hereafter in
effect; (ii) to become fixtures on any real property on which Secured Party
does
not have a first priority mortgage lien (unless Secured Party has been provided
with an acceptable landlord/mortgagee waiver) or become an accession to any
goods not included in the Collateral; or (iii) to be placed in any warehouse
that may issue a negotiable document with regard to such
Collateral.
2.4 Modification
to Collateral.
Debtor
shall not, without Secured Party’s prior written consent, grant any extension
on, compound, settle for less than the full amount of, release (in whole or
in
part), modify, cancel, or allow for any substitution, credit or adjustment
on
Collateral consisting of accounts, chattel paper, general intangibles,
instruments, documents or investment property, except that in the absence of
an
Event of Default, Debtor may grant to account debtors, or other persons
obligated with respect to the Collateral, extensions, credits, discounts,
compromises or settlements in the ordinary course of business consistent with
its past practices and consistent with prudent and standard practices used
in
the industries that are the same or similar to those in which Debtor is
engaged.
2.5 Titled
Goods.
Debtor
shall cause all goods included in the Collateral to be properly titled and
registered to the extent required by applicable law. Upon the request of Secured
Party, Debtor shall cause the interest of Secured Party to be properly indicated
on any certificate of title relating to such goods and deliver to Secured Party
each such certificate, and any additional evidence of ownership, certificates
of
origin or other documents evidencing any interest in such goods.
2.6 Insurance.
Debtor
shall, at its own expense and at all times, maintain effective insurance
policies covering damage to persons and against fire, flood, theft and all
other
risks to which the Collateral may be subject, all in such amounts, with such
deductibles and issued by such insurance company as shall be satisfactory to
Secured Party. Such insurance policies shall have all endorsements that Secured
Party may require and shall further (i) name Secured Party, exclusively, as
the
additional insured on the casualty insurance and the lender’s loss payee and/or
mortgagee on the hazard insurance; (ii) provide that Secured Party shall receive
a minimum of thirty (30) days prior written notice of any amendment or
cancellation; and (iii) insure Secured Party notwithstanding any act or neglect
of Debtor or other owner of the property described in such insurance. If Debtor
fails to obtain the required insurance as provided herein, Secured Party may,
but is not obligated, to obtain such insurance as Secured Party may deem
appropriate, including, without limitation, if Secured Party so chooses, “single
interest insurance” which will cover only Secured Party’s interest in the
Collateral. Debtor shall pay or reimburse to Secured Party the cost of such
insurance. Secured Party shall have the option, in its sole discretion, to
hold
insurance proceeds as part of the Collateral, apply any insurance proceeds
toward the Obligations or allow the Debtor to apply the insurance proceeds
towards repair or replacement of the item of Collateral in respect of which
such
proceeds were received. Upon the request of Secured Party, Debtor shall from
time to time deliver to Secured Party such insurance policies, or other evidence
of such policies satisfactory to Secured Party, and such other related
information Secured Party may request.
2.7 Collateral
Information.
Debtor
shall provide all information, in form and substance satisfactory to Secured
Party, that Secured Party shall from time to time request to (i) identify the
nature, extent, value, age and location of any of the Collateral, or (ii)
identify any account debtor or other party obligated with respect to any chattel
paper, general intangible, instrument, investment property, document or deposit
account included in the Collateral.
2.8 Financial
Information.
Debtor
shall furnish to Secured Party financial statements in such form (e.g.,
audited, reviewed, compiled) and at such intervals as Secured Party shall
request from time to time plus any additional financial information that Secured
Party may request. All such financial statements shall be in conformity with
generally accepted accounting principles consistently applied.
2.9 Taxes;
Licenses; Compliance with Laws.
Before
the end of any applicable grace period, Debtor shall pay each tax, assessment,
fee and charge imposed by any governmental authority upon the Collateral, the
ownership, disposition or use of any of the Collateral, this Agreement or any
instrument evidencing any of the Obligations. Debtor shall maintain in full
force and effect each license, franchise or other authorization needed for
any
ownership, disposition or use of the Collateral and the conduct of its business,
operations or affairs. Debtor shall comply with all applicable law of any
governmental authority (including any environmental law), now or hereafter
in
effect, applicable to the ownership, disposition or use of the Collateral or
the
conduct of its business, operations or affairs.
2.10 Records;
Legend.
Debtor
shall maintain accurate and complete books and records relating to the
Collateral in conformity with generally accepted accounting principles
consistently applied. At Secured Party’s request, Debtor will legend, in form
and manner satisfactory to Secured Party, its books and records to indicate
the
Security Interest.
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2.11 Additional
Collateral.
If at
any time the liquidation value of any of the Collateral is unsatisfactory to
Secured Party, then, on demand of Secured Party, Debtor shall immediately (i)
furnish such additional collateral satisfactory to Secured Party to be held
by
Secured Party as if originally pledged hereunder and execute such additional
security agreements, financing statements or other agreements as requested
by
Secured Party, or (ii) repay the Obligations to bring the outstanding amount
of
the Obligations to within a satisfactory relationship to the liquidation value
of the Collateral.
2.12 Notifications
of Change.
Immediately upon acquiring knowledge or reason to know of any of the following,
Debtor shall notify Secured Party of the occurrence or existence of (i) any
Event of Default; (ii) any event or condition that, after notice, lapse of
time
or after both notice and lapse of time, would constitute an Event of Default;
(iii) any account or general intangible that arises out of a contract with
any
governmental authority (including the United States); (iv) any event or
condition that has or (so far as can be foreseen) will or might have any
material adverse effect on the Collateral (including a material loss,
destruction or theft of, or of any damage to, the Collateral, material decline
in value of the Collateral or a material default by an account debtor or other
party’s performance of obligations with respect to the Collateral), on Debtor or
its business, operations, affairs or condition (financial or
otherwise).
2.13 Lien
Law.
If any
account or general intangible included in the Collateral represents money owing
pursuant to any contract for the improvement of real property or for a public
improvement for purposes of the Lien Law of the State of New York (the “Lien
Law”), Debtor shall (i) give Secured Party notice of such fact; (ii) receive and
hold any money advanced by Secured Party with respect to such account or general
intangible as a trust fund to be first applied to the payment of trust claims
as
such term and/or concept is defined in the Lien Law (in Section 71 thereof,
or
otherwise); and (iii) until such trust claim is paid, not use or permit the
use
of any such money for any purpose other than the payment of such trust
claims.
2.14 Protection
of Collateral; Further Assurances.
Debtor
shall, at its own cost, faithfully preserve, defend and protect the Security
Interest as a prior perfected security interest in the Collateral under the
UCC
and other applicable law, superior and prior to the rights of all third parties
(other than those permitted pursuant to Section 3.1) and shall defend the
Collateral against all setoffs, claims, counterclaims, demands and defenses.
At
the request of Secured Party, Debtor shall do, obtain, make, execute and deliver
all such additional and further acts, things, deeds, assurances and instruments
as Secured Party may deem necessary or advisable from time to time in order
to
attach, continue, preserve, perfect or protect the Security Interest and Secured
Party’s rights hereunder including obtaining waivers (in form and content
acceptable to Secured Party) from landlords, warehousemen and mortgagees. Debtor
hereby irrevocably appoints Secured Party, its officers, employees and agents,
or any of them, as attorneys-in-fact for Debtor with full power and authority
in
the place and stead of Debtor and in the name of Debtor or its own name from
time to time in Secured Party’s discretion, to perform all acts which Secured
Party deems appropriate to attach, continue, preserve or perfect and continue
the Security Interest, including signing for Debtor (to the extent such
signature may be required by applicable law) UCC-1 financing statements, UCC-3
amendment or other instruments and documents to accomplish the purposes of this
Agreement. This power of attorney, being coupled with an interest, is
irrevocable and shall not be affected by the subsequent disability or
incompetence of Debtor.
3. Representations
and Warranties.
Debtor
represents, warrants and agrees as follows:
3.1 Title.
Debtor
holds good and marketable title to the Collateral free and clear from any
security interest or other lien or encumbrance of any party, other than the
Security Interest or such liens, security interests or other liens or
encumbrances specifically permitted by Secured Party and set forth on Exhibit
A
hereto (“Permitted Liens”). Debtor has not made any prior sale, pledge,
encumbrance, assignment or other disposition of any of the Collateral except
for
the Permitted Liens.
3.2 Authority.
If
Debtor is a business entity, it is duly organized, validly existing and in
good
standing under the laws of the above-named state of organization. Debtor has
the
full power and authority to grant the Security Interest and to execute, deliver
and perform its obligations in accordance with this Agreement. The execution
and
delivery of this Agreement will not (i) violate any applicable law of any
governmental authority or any judgment or order of any court, other governmental
authority or arbitrator; (ii) violate any agreement governing Debtor or to
which
Debtor is a party; or (iii) result in a security interest or other lien or
encumbrance on any of Debtor’s assets, except in favor of Secured Party.
Debtor’s certificate of incorporation, by-laws or other organizational documents
do not prohibit any term or condition of this Agreement. Each authorization,
approval or consent from, each registration and filing with, each declaration
and notice to, and each other act by or relating to, any party required as
a
condition of Debtor’s execution, delivery or performance of this Agreement
(including any shareholder or board of directors or similar approvals) has
been
duly obtained and is in full force and effect. Debtor has the power and
authority to transact the business in which it is engaged and is duly licensed
or qualified and in good standing in each jurisdiction in which the conduct
of
its business or ownership of property requires such licensing or such
qualifications.
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3.3 Judgments
and Litigation.
There
is no pending or threatened claim, audit, investigation, action or other legal
proceeding or judgment or order of any court, agency or other governmental
authority or arbitrator which involves Debtor or the Collateral and which might
have a material adverse effect upon the Collateral, the Debtor, its business,
operations, affairs or condition (financial or otherwise), or threaten the
validity of this Agreement or any related document or action. Debtor will
immediately notify Secured Party upon acquiring knowledge of the
foregoing.
3.4 Enforceability
of Collateral.
Instruments, chattel paper, accounts or documents which constitute any part
of
the Collateral are genuine and enforceable in accordance with their terms,
comply with the applicable law of any governmental authority concerning form,
content, manner of preparation and execution, and all persons appearing to
be
obligated on such Collateral have authority and capacity to contract and are
in
fact obligated as they appear to be on such Collateral. There are no
restrictions on any assignment or other transfer or grant of the Security
Interest by Debtor. Each sum represented by Debtor from time to time as owing
on
accounts, instruments, deposit accounts, chattel paper and general intangibles
constituting any part of the Collateral by account debtors and other parties
with respect to such Collateral is the sum actually and unconditionally owing
by
account debtors and other parties with respect thereto at such time, except
for
applicable normal cash discounts. None of the Collateral is subject to any
defense, set-off, claim or counterclaim of a material nature against Debtor
except as to which Debtor has notified Secured Party in writing.
3.5 Location
of Chief Executive Office, Records, Collateral.
The
locations of the following are listed on page one of this Agreement or, if
different or additional, on Exhibit A hereto: (i) Debtor’s residence, principal
place of business and chief executive office; (ii) the office in which Debtor
maintains its books or records relating to the Collateral; (iii) the facility
(including any storage facility) at which now owned or subsequently acquired
equipment and fixtures constituting any part of the Collateral shall be kept;
and (iv) the real property on which any crop included in the Collateral is
growing or is to be grown, or on which any timber constituting any part of
the
Collateral is or is to be standing. Debtor will not effect or permit any change
in any of the foregoing locations (or remove or permit the removal of the
records or Collateral therefrom, except for mobile equipment included in the
Collateral which may be moved to another location for not more than thirty
(30)
days) without thirty (30) days prior written notice to Secured Party and all
actions deemed necessary by Secured Party to maintain the Security Interest
intended to be granted hereby at all times fully perfected and in full force
and
effect have been taken. All of the locations listed on page one or Exhibit
A are
owned by Debtor, of if not, by the party(ies) identified on Exhibit
A.3.6 Structure;
Name.
Debtor’s organizational structure, state of registration and organizational
identification number (if any) are stated accurately on page one of this
Agreement, and its full legal name and any trade name used to identify it are
stated accurately on page one of this Agreement, or if different or additional
are listed on Exhibit A hereto. Debtor will not change its name, any trade
names
or its identity, its organizational structure, state of registration or
organizational identification number without thirty (30) days prior written
notice to Secured Party. All actions deemed necessary by Secured Party to
maintain the Security Interest intended to be granted hereby at all times fully
perfected and in full force and effect have been taken.
4. Performance
and Expenditures by Secured Party.
If
Debtor fails to perform or comply with any of the terms hereof, Secured Party,
at its option, but without any obligation so to do, may perform or comply,
or
otherwise cause performance or compliance, with such terms including the payment
or discharge of all taxes, fees, security interest or other liens, encumbrances
or claims, at any time levied or placed on the Collateral. An election to make
expenditures or to take action or perform an obligation of Debtor under this
Agreement, after Debtor’s failure to perform, shall not affect Secured Party’s
right to declare an Event of Default and to exercise its remedies. Nor shall
the
provisions of this Section relieve Debtor of any of its obligations hereunder
with respect to the Collateral or impose any obligation on Secured Party to
proceed in any particular manner with respect to the Collateral.
5. Duty
of Secured Party.
Secured
Party’s sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession shall be to deal with it in
the
same manner as Secured Party deals with similar property for its own account.
Neither Secured Party nor its directors, officers, employees or agents shall
be
liable for failure to demand, collect or realize upon the Collateral or for
any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of the Collateral upon the request of Debtor or any other person or to take
any
other action whatsoever with regard to the Collateral. The powers conferred
on
Secured Party hereunder are solely to protect Secured Party’s interests in the
Collateral and shall not impose any duty upon any Secured Party to exercise
any
such powers. Secured Party shall be accountable only for amounts that it
actually receives as a result of the exercise of its powers under this
Agreement, and neither it nor its officers, directors, employees or agents
shall
be responsible to Debtor for any act or failure to act hereunder, except for
its
own gross negligence or willful misconduct.
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6. Certain
Rights and Remedies.
6.1 Inspection;
Verification.
Secured
Party, and such persons as it may designate, shall have the right from time
to
time to (i) audit and inspect (a) the Collateral, (b) all books and records
related thereto (and make extracts and copies from such records), and (c) the
premises upon which any of the Collateral or books and records may be located;
(ii) discuss Debtor’s business, operations, affairs or condition (financial or
otherwise) with its officers, accountants; and (iii) verify the validity,
amount, quality, quantity, value, condition and status of, or any other matter
relating to the Collateral in any manner and through any medium Secured Party
may consider appropriate (including contacting account debtors or third party
possessing the Collateral for purpose of making such verification). Debtor
shall
furnish all assistance and information and perform any acts Secured Party may
require regarding thereto. Debtor shall bear the cost and expense of any such
inspection and verification.
6.2 Notification
of Security Interest.
Secured
Party may notify any or all account debtors and other person obligated with
respect to the Collateral of the Security Interest therein. Upon the request
of
Secured Party, Debtor agrees to enter into such warehousing, lockbox or other
custodial arrangement with respect to any of the Collateral that Secured Party
shall deem necessary or desirable.
6.3 Application
of Proceeds.
Secured
Party may apply the proceeds from the sale, lease or other disposition or
realization upon the Collateral to the Obligations in such order and manner
and
at such time as Secured Party shall, in its sole discretion, determine. Debtor
shall remain liable for any deficiency if the proceeds of any sale, lease or
other disposition or realization upon the Collateral are insufficient to pay
the
Obligations. Any proceeds received by Debtor from the Collateral after an Event
of Default shall (i) be held by Debtor in trust for Secured Party in the same
medium in which received; (ii) not be commingled with any assets of Debtor;
and
(iii) be delivered to Secured Party in the form received, properly indorsed
to
permit collection. After an Event of Default, Debtor shall promptly notify
Secured Party of the return to or repossession by Debtor of goods constituting
part of the Collateral, and Debtor shall hold the same in trust for Secured
Party and shall dispose of the same as Secured Party directs.
6.4 Income
and Proceeds of Instruments and Investment Property.
Until
the occurrence of an Event of Default, Debtor reserves the right to request
to
receive all cash income or cash distribution (whether in cash or evidenced
by
check) payable on account of any instrument or investment property constituting
part of the Collateral (collectively, “Cash Distribution”). Until actually paid,
all rights in the foregoing shall remain subject to the Security Interest.
Any
other income, dividend, distribution, increase in or profits (including any
stock issued as a result of any stock split or dividend, any capital
distributions and the like) on account of any instrument or investment property
constituting part of the Collateral and, upon the occurrence of an Event of
Default, all Cash Distributions, shall be delivered to Secured Party immediately
upon receipt, in the exact form received and without commingling with other
property which may be received by, paid or delivered to Debtor or for Debtor’s
account, whether as an addition to, in discharge of, in substitution of, or
in
exchange of the Collateral. Until delivery, such Collateral shall be held in
trust for Secured Party.
6.5 Registered
Holder of the Collateral.
Secured
Party shall have the right to transfer to or register (with or without reference
to this Agreement) in the name of Secured Party or its nominee any investment
property, general intangible, instrument or deposit account constituting part
of
the Collateral so that Secured Party or such nominee shall appear as the sole
owner of record thereof; provided, however, that so long as no Event of Default
has occurred, Secured Party shall deliver to Debtor all notices, statements
or
other communications received by it or its nominee as such registered owner,
and
upon demand and receipt of payment of necessary expenses thereof, shall give
to
Debtor or its designee a proxy or proxies to vote and take all action with
respect to such Collateral. After the occurrence of any Event of Default, Debtor
waives all rights to be advised of or to receive any notices, statements or
communications received by Secured Party or its nominee as such record owner,
and agrees that no proxy or proxies given by Secured Party to Debtor or its
designee as aforesaid shall thereafter be effective.
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7. Default.
7.1 Events
of Default.
Any of
the following events or conditions shall constitute an “Event of Default”: (i)
failure by Debtor to pay when due (whether at the stated maturity, by
acceleration, upon demand or otherwise) the Obligations, or any part thereof,
or
there occurs any event or condition which after notice, lapse of time or after
both notice and lapse of time will permit acceleration of any Obligation; (ii)
default by Debtor in the performance of any obligation, term or condition of
this Agreement or any other agreement with Secured Party or any of its
affiliates or subsidiaries (collectively, “Affiliates”); (iii) failure by Debtor
to pay when due (whether at the stated maturity, by acceleration, upon demand
or
otherwise) any indebtedness or obligation owing to any third party or any
Affiliate, the occurrence of any event which could result in acceleration of
payment of any such indebtedness or obligation or the failure to perform any
agreement with any third party or any affiliate; (iv) Debtor is dissolved,
becomes insolvent, generally fails to pay or admits in writing its inability
generally to pay its debts as they become due; (v) Debtor makes a general
assignment, arrangement or composition agreement with or for the benefit of
its
creditors or makes, or sends notice of any intended, bulk sale; the sale,
assignment, transfer or delivery of all or substantially all of the assets
of
Debtor to a third party; or the cessation by Debtor as a going business concern;
(vi) Debtor files a petition in bankruptcy or institutes any action under
federal or state law for the relief of debtors or seeks or consents to the
appointment of an administrator, receiver, custodian or similar official for
the
wind up of its business (or has such a petition or action filed against it
and
such petition action or appointment is not dismissed or stayed within forty-five
(45) days); (vii) the reorganization, merger, consolidation or dissolution
of
Debtor (or the making of any agreement therefor); (viii) the death or judicial
declaration of incompetency of Debtor, if an individual; (ix) the entry of
any
judgment or order of any court, other governmental authority or arbitrator
against Debtor; (x) falsity, omission or inaccuracy of facts submitted to
Secured Party or any Affiliate (whether in a financial statement or otherwise);
(xi) an adverse change in the Collateral, Debtor, its business, operations,
affairs or condition (financial or otherwise) from the status shown on any
financial statement or other document submitted to Secured Party, and which
change Secured Party determines will have a material adverse affect on (a)
Debtor, its business, operations or condition (financial or otherwise), or
(b)
the ability of Debtor to pay or perform the Obligations; (xii) any pension
plan
of Debtor fails to comply with applicable law or has vested unfunded liabilities
that, in the opinion of Secured Party, might have a material adverse effect
on
Debtor’s ability to repay its debts; (xiii) any indication or evidence received
by Secured Party that Debtor may have directly or indirectly been engaged in
any
type of activity which, in Secured Party’s discretion, might result in the
forfeiture of any property of Debtor to any governmental authority; (xiv) the
occurrence of any event described in Section 7.1(i) through and including
7.1(xiii) with respect to any endorser, guarantor or any other party liable
for,
or whose assets or any interest therein secures, payment of any of the
Obligations; or (xv) Secured Party in good xxxxx xxxxx itself insecure with
respect to payment or performance of the Obligations.
7.2 Rights
and Remedies Upon Default.
Upon
the occurrence of any Event of Default, Secured Party without demand of
performance or other demand, presentment, protest, advertisement or notice
of
any kind (except any notice required by law) to or upon Debtor or any other
person (all and each of which demands, presentments, protests, advertisements
and notices are hereby waived), may exercise all rights and remedies of a
secured party under the UCC, under other applicable law, in equity or otherwise
or available under in this Agreement including:
7.2.1 Obligations
Immediately Due; Termination of Lending.
Secured
Party may declare all or any part of any Obligations not payable on demand
to be
immediately due and payable without demand or notice of any kind. All or any
part of any Obligations whether or not payable on demand, shall be immediately
due and payable automatically upon the occurrence of an Event of Default in
Section 7.1 (vi) above. The provisions hereof are not intended in any way to
affect any rights of Secured Party with respect to any Obligations which may
now
or hereafter be payable on demand. Secured Party may terminate any obligation
it
may have to grant any additional loan, credit or other financial accommodation
to Debtor.
7.2.2 Access
to Collateral.
Secured
Party, or its agents, may peaceably retake possession of the Collateral with
or
without notice or process of law, and for that purpose may enter upon any
premises where the Collateral is located and remove the same. At Secured Party’s
request, Debtor shall assemble the Collateral and deliver it to Secured Party
or
any place designated by Secured Party, at Debtor’s expense.
7.2.3 Sell
Collateral.
Secured
Party shall have the right to sell, lease or otherwise dispose of the Collateral
in one or more parcels at public or private sale or sales upon such terms and
conditions as it may deem advisable and at such prices as it may deem best,
for
cash or on credit or for future delivery without assumption of any credit risk.
Each purchaser at any such sale shall hold the property sold absolutely, free
from any claim or right on the part of Debtor. Debtor hereby waives (to the
extent permitted by law) all rights of redemption, stay and appraisal which
Debtor now has or may at any time in the future have under any applicable law
now existing or hereafter enacted. Secured Party shall have the right to use
Debtor’s premises and any materials or rights of Debtor (including any
intellectual property rights) without charge for such sales or disposition
of
the Collateral or the completion of any work in progress for such times as
Secured Party may see fit. Without in any way requiring notice to be given
in
the following time and manner, Debtor agrees that with respect to any notice
by
Secured Party of any sale, lease or other disposition or realization or other
intended action hereunder or in connection herewith, whether required by the
UCC
or otherwise, such notice shall be deemed reasonable and proper if given at
least five (5) days before such action in the manner described below in the
Section entitled “Notices”.
6
7.2.4 Collect
Revenues.
Secured
Party may either directly or through a receiver (i) demand, collect and xxx
on
any Collateral consisting of accounts or any other Collateral including
notifying account debtors or any other persons obligated on the Collateral
to
make payment on the Collateral directly to Secured Party; (ii) file any claim
or
to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by Secured Party with respect to the Collateral
or
to enforce any other right in respect of the Collateral; (iii) take control,
in
any manner, of any payment or proceeds from the Collateral; (iv) prosecute
or
defend any suit, action or proceeding brought against Debtor with respect to
the
Collateral; (v) settle, compromise or adjust any and all claims arising under
the Collateral or, to give such discharges or releases as Secured Party may
deem
appropriate; (vi) receive and collect all mail addressed to Debtor, direct
the
place of delivery thereof to any location designated by Secured Party; to open
such mail; to remove all contents therefrom; to retain all contents thereof
constituting or relating to the Collateral; (vii) execute, sign or endorse
any
and all claims, endorsements, assignments, checks or other instruments with
respect to the Collateral; or (viii) generally, use, sell, transfer, pledge
and
make any agreement with respect to or otherwise deal with any of the Collateral;
and Debtor hereby irrevocably appoints Secured Party, its officers, employees
and agents, or any of them, as attorneys-in-fact for Debtor with full power
and
authority in the place and stead of Debtor and in the name of Debtor or in
its
own name from time to time in Secured Party’s discretion, to take any and all
appropriate action Secured Party deems necessary or desirable to accomplish
any
of the foregoing or otherwise to protect, preserve, collect or realize upon
the
Collateral or to accomplish the purposes of this Agreement. Debtor revokes
each
power of attorney (including any proxy) heretofore granted by Debtor with regard
to the Collateral. This power of attorney, being coupled with an interest,
is
irrevocable and shall not be affected by the subsequent disability or
incompetence of Debtor.
7.2.5 Setoff.
Secured
Party may place an administrative hold on and set off against the Obligations
any property held in a deposit or other account with Secured Party or any of
its
Affiliates or otherwise owing by Secured Party or any of its Affiliates in
any
capacity to Debtor. Such set-off shall be deemed to have been exercised
immediately at the time Secured Party or such Affiliate elects to do
so.
8. Expenses.
Debtor
shall pay to Secured Party on demand all costs and expenses (including all
reasonable fees and disbursements of all counsel retained for advice, suit,
appeal or other proceedings or purpose and of any experts or agents it may
retain), which Secured Party may incur in connection with (i) the administration
of this Agreement, including any administrative fees Secured Party may impose
for the preparation of discharges, releases or assignments to third-parties;
(ii) the custody or preservation of, or the sale, lease or other disposition
or
realization on the Collateral; (iii) the enforcement and collection of any
Obligations or any guaranty thereof; (iv) the exercise, performance ,enforcement
or protection of any of the rights of Secured Party hereunder; or (v) the
failure of Debtor to perform or observe any provisions hereof. After such demand
for payment of any cost, expense or fee under this Section or elsewhere under
this Agreement, Debtor shall pay interest at the highest default rate specified
in any instrument evidencing any of the Obligations from the date payment is
demanded by Secured Party to the date reimbursed by Debtor. All such costs,
expenses or fees under this Agreement shall be added to the
Obligations.
9. Indemnification.
Debtor
shall indemnify Secured Party and its Affiliates and each officer, employee,
accountant, attorney and other agent thereof (each such person being an
“Indemnified Party”) on demand, without any limitation as to amount, against
each liability, cost and expense (including all reasonable fees and
disbursements of all counsel retained for advice, suit, appeal or other
proceedings or purpose, and of any expert or agents an Indemnified Party may
retain) heretofore or hereafter imposed on, incurred by or asserted against
any
Indemnified Party (including any claim involving any allegation of any violation
of applicable law of any governmental authority (including any environmental
law
or criminal law)), however asserted and whether now existing or hereafter
arising, arising out of any ownership, disposition or use of any of the
Collateral; provided, however, the foregoing indemnity shall not apply to
liability, cost or expense solely attributable to an Indemnified Party’s gross
negligence or willful misconduct. This indemnity agreement shall survive the
termination of this Agreement. Any amounts payable under this or any other
section of this Agreement shall be additional Obligations secured
hereby.
10. Miscellaneous.
10.1 Notices.
Any
demand or notice hereunder or under any applicable law pertaining hereto shall
be in writing and duly given if delivered to Debtor (at its address on Secured
Party’s records) or to Secured Party (at the address on page one and separately
to Secured Party’s officer responsible for Debtor’s relationship with Secured
Party). Such notice or demand shall be deemed sufficiently given for all
purposes when delivered (i) by personal delivery and shall be deemed effective
when delivered, or (ii) by mail or courier and shall be deemed effective three
(3) business days after deposit in an official depository maintained by the
United States Post Office for the collection of mail or one (1) business day
after delivery to a nationally recognized overnight courier service (e.g.,
Federal Express). Notice by e-mail is not valid notice under this or any other
agreement between Debtor and Secured Party.
10.2 Governing
Law; Jurisdiction.
This
Agreement has been delivered to and accepted by Secured Party and will be deemed
to be made in the State of New York. Except as otherwise provided under federal
law, this Agreement will be interpreted in accordance with the laws of the
State
of New York excluding its conflict of laws rules. DEBTOR
HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT IN THE STATE OF NEW YORK IN A COUNTY OR JUDICIAL DISTRICT WHERE
SECURED PARTY MAINTAINS A BRANCH AND CONSENTS THAT SECURED PARTY MAY EFFECT
ANY
SERVICE OF PROCESS IN THE MANNER AND AT DEBTOR’S ADDRESS SET FORTH ABOVE FOR
PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED IN THIS AGREEMENT
WILL PREVENT SECURED PARTY FROM BRINGING ANY ACTION, ENFORCING ANY AWARD OR
JUDGMENT OR EXERCISING ANY RIGHTS AGAINST DEBTOR INDIVIDUALLY, AGAINST ANY
SECURITY OR AGAINST ANY PROPERTY OF DEBTOR WITHIN ANY OTHER COUNTY, STATE OR
OTHER FOREIGN OR DOMESTIC JURISDICTION.
Debtor
acknowledges and agrees that the venue provided above is the most convenient
forum for both Secured Party and Debtor. Debtor waives any objection to venue
and any objection based on a more convenient forum in any action instituted
under this Agreement.
7
10.3 Security
Interest Absolute.
All
rights of Secured Party hereunder, the Security Interest and all obligations
of
Debtor hereunder shall be absolute and unconditional irrespective of (i) any
filing by or against Debtor of any petition in bankruptcy or any action under
federal or state law for the relief of debtors or the seeking or consenting
to
of the appointment of an administrator, receiver, custodian or similar officer
for the wind up of its business; (ii) any lack of validity or enforceability
of
any agreement with respect to any of the Obligations, (iii) any change in the
time, manner or place of payment of, or in any other term of, all or any of
the
Obligations, or any other amendment or waiver of or any consent to any departure
from any agreement or instrument with respect to the Obligations, (iv)any
exchange, release or non-perfection of any lien or any release or amendment
or
waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations, or (v) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, Debtor
in
respect of the Obligations or this Agreement. If, after receipt of any payment
of all or any part of the Obligations, Secured Party is for any reason compelled
to surrender such payment to any person or entity, because such payment is
determined to be void or voidable as a preference, impermissible setoff, or
a
diversion of trust funds, or for any other reason, such payment shall be
reinstated as part of the Obligations and this Agreement shall continue in
full
force notwithstanding any contrary action which may have been taken by Secured
Party in reliance upon such payment, and any such contrary action so taken
shall
be without prejudice to Secured Party’s rights under this Agreement and shall be
deemed to have been conditioned upon such payment having become final and
irrevocable.
10.4 Remedies
Cumulative; Preservation of Rights.
The
rights and remedies herein are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies which Secured
Party may have under other agreements now or hereafter in effect between Debtor
and Secured Party, at law (including under the UCC) or in equity. No failure
or
delay of Secured Party in exercising any power or right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of
any
other right or power. Debtor expressly disclaims any reliance on any course
of
dealing or usage of trade or oral representation of Secured Party including
representations to make loans to Debtor. No notice to or demand on Debtor in
any
case shall entitle Debtor to any other or further notice or demand in similar
or
other circumstances.
10.5 Joint
and Several; Successors and Assigns.
If
there is more than one Debtor, each of them shall be jointly and severally
liable for all amounts, which become due, and the performance of all obligations
under this Agreement and the term “Debtor” shall include each as well as all of
them. This Agreement shall be binding upon Debtor and upon its heirs and legal
representatives, its successors and assignees, and shall inure to the benefit
of, and be enforceable by, Secured Party, its successors and assignees and
each
direct or indirect assignee or other transferee of any of the Obligations;
provided, however, that this Agreement may not be assigned by Debtor without
the
prior written consent of Secured Party.
10.6 Waivers;
Changes in Writing.
No
course of dealing or other conduct, no oral agreement or representation made
by
Secured Party or usage of trade shall operate as a waiver of any right or remedy
of Secured Party. No waiver of any provision of this Agreement or consent to
any
departure by Debtor therefrom shall in any event be effective unless made
specifically in writing by Secured Party and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
No modification to any provision of this Agreement shall be effective unless
made in writing in an agreement signed by Debtor and Secured Party.
10.7 Interpretation.
Unless
the context otherwise clearly requires, references to plural includes the
singular and references to the singular include the plural; the word “or” has
the inclusive meaning represented by the phrase “and/or”; the word “including”,
“includes” and “include” shall be deemed to be followed by the words “without
limitation”; and captions or section headings are solely for convenience and not
part of the substance of this Agreement. Any representation, warranty, covenant
or agreement herein shall survive execution and delivery of this Agreement
and
shall be deemed continuous. Each provision of this Agreement shall be
interpreted as consistent with existing law and shall be deemed amended to
the
extent necessary to comply with any conflicting law. If any provision
nevertheless is held invalid, the other provisions shall remain in effect.
Debtor agrees that in any legal proceeding, a photocopy of this Agreement kept
in Secured Party’s course of business may be admitted into evidence as an
original. Terms not otherwise defined in this Agreement shall have the meanings
attributed to such terms in the UCC.
10.8 Waiver
of Jury Trial.
DEBTOR
AND SECURED PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY
RIGHT TO TRIAL BY JURY DEBTOR AND SECURED PARTY MAY HAVE IN ANY ACTION OR
PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTIONS RELATED HERETO. DEBTOR REPRESENTS AND WARRANTS THAT NO
REPRESENTATIVE OR AGENT OF SECURED PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SECURED PARTY WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THIS JURY TRIAL WAIVER. DEBTOR ACKNOWLEDGES THAT SECURED PARTY HAS
BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE PROVISIONS
OF
THIS SECTION.
8
|
Dated:
May 7, 2008
|
CORNING
NATURAL GAS CORPORATION
|
|
By:
/s/ Xxxxxxx X. German
|
|
|
Name:
Xxxxxxx I German
|
|
|
Title:
President
|
ACKNOWLEDGMENT
STATE
OF
NEW YORK )
:
SS.
COUNTY
OF
XXXXXX )
On
the
______ day of May, in the year 2008, 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(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
Notary
Public
________________________________________________________________________________________________________________________________________
FOR
SECURED PARTY USE ONLY:
Authorization
confirmed:
If
Debtor’s Obligations arise under a guaranty in favor of Secured Party, list the
name whose indebtedness is being guaranteed under such
guaranty:
9
Exhibit
A
1. Permitted
Liens (§3.1)
2. Residence,
principal place of business or chief executive office (§3.5(i))
3. Location
of Books and Records (§3.5(ii))
4. Location
of Equipment, Fixtures, Crops or Timber (§3.5(iii) and §3.5(iv))
5. Locations
Not Owned by Debtor and Name of Record Owner (§3.5)
6. Trade
Name, “Doing Business As” Name or Assumed Name (§3.6)
