COMMERCIAL LINE OF CREDIT Community Bank N.A.
Exhibit
10.1
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COMMERCIAL
LINE OF CREDIT
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Community
Bank N.A.
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AGREEMENT
AND NOTE
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000
Xxxx Xxxxxxxx Xxxxxx
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Xxxxxxx,
Xxx Xxxx 00000
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(000)
000-0000
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LOAN
NUMBER
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AGREEMENT
DATE
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LOAN
TERM
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LINE
OF CREDIT LIMIT
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C-08-10-062327
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December
10, 2008
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On
Demand
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$8,000,000.00
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LOAN
PURPOSE: Working
Capital
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BORROWER
INFORMATION
Corning
Natural Gas Corporation
000
Xxxxxxx Xxxxxx, X. 0. 00
Xxxxxx,
XX 00000-0000
LINE OF CREDIT AGREEMENT AND
NOTE. This Commercial Line of Credit Agreement and Note will be referred
to in this document as the "Agreement."
LENDER. "Lender" means
Community Bank N.A. whose address is 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx
00000, its successors and assigns.
BORROWER. "Borrower" means
each person or legal entity who signs this Agreement.
PROMISE TO PAY. For value
received, receipt of which is hereby acknowledged, the Borrower promises to pay,
on demand by Lender, the principal amount of Eight Million and 00/100 Dollars
($8,000,000.00) or such lesser amount as shall have been advanced by Lender,
from time to time, to or on behalf of Borrower under this Agreement, and all
interest and any other charges, including service charges, to the order of
Lender at its office at the address noted above or at such other place as Lender
may designate in writing. The Borrower will make all payments in
lawful money of the United States of America.
PAYMENT SCHEDULE. This
Agreement will be paid according to the following required payment schedule:
Beginning on January 1, 2009, monthly payments of accrued and unpaid interest.
All payments received by the Lender from the Borrower for application to the
Line of Credit may be applied to the Borrower’s obligations under the Line of
Credit in such order as determined by the Lender.
INTEREST RATE AND SCHEDULED PAYMENT
CHANGES. The initial variable interest rate on this Agreement will be
3.261% per annum. This interest rate may change on January 1, 2009,
and on the same day of each month thereafter. Each date on which the
interest rate may change is called the "Change Date." Beginning with
the first Change Date, Lender will calculate the new interest rate based on One
Month Libor Rate in effect on the Change Date (the "Index") plus 1.350
percentage points (the "Margin"). If the Index is not available at
that time, Lender will choose a new Index which is based on comparable
information. The Index is used solely to establish a base from which
the actual rate of interest payable under this Agreement will be calculated, and
is not a reference to any actual rate of interest charged by any lender to any
particular borrower.
Page 1 of
5
Nothing
contained herein shall be construed as to require the Borrower to pay interest
at a greater rate than the maximum allowed by law. If, however, from
any circumstances, Borrower pays interest at a greater rate than the maximum
allowed by law, the obligation to be fulfilled will be reduced to an amount
computed at the highest rate of interest permissible under applicable law and
if, for any reason whatsoever, Lender ever receives interest in an amount which
would be deemed unlawful under applicable law, such interest shall be
automatically applied to amounts owed, in Lender's sole discretion, or as
otherwise allowed by applicable law. An increase in the interest
rates will result in a higher payment amount. Interest on this
Agreement is calculated on a 365/360 day basis. The unpaid balance of
this loan shall, after an Event of Default exists under this Agreement or any
other agreement related to the loan, be subject to a Default Rate of interest
equal to 2.000 percentage points over the applicable variable interest rate in
effect from time to time, calculated as described above in the section "Interest
Rate."
LATE PAYMENT CHARGE. If any
required payment is more than 10 days late, then at Lender's option, Lender will
assess a late payment charge of $25.00 or 5% of the amount past due, whichever
is greater.
LINE OF CREDIT
TERMS. This Agreement is discretionary. The
Borrower acknowledges and agrees that although the Borrower may from time to
time request an advance under this Agreement up to a maximum amount equal to the
Line of Credit Limit, the Lender in no way is obligated to make such advance and
all advances will be made by Lender in its sole and absolute discretion and
subject to the terms and conditions of this Agreement.
Advances.
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Advances
under this Agreement may be requested orally or in writing by the Borrower
or by an authorized person.
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The
total of all advances requested and unpaid principal cannot exceed Eight
Million and 00/100 Dollars
($8,000,000.00).
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All
advances made will be charged to a loan account in Borrowers name on
Lender's books, and the Lender shall debit such account the amount of each
advance made to, and credit to such account the amount of each repayment
made by Borrower. Lender shall provide to Borrower periodic statements of
Borrower's loan account, which shall be deemed to be correct, accepted by,
and binding upon Borrower unless Lender receives a written statement of
exception from Borrower within 10 days after such statement is
furnished.
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Page 2 of
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Suspension and
Termination. Advances under this Agreement will be available
until the earlier to occur of (a) demand by the Lender; (b) the Line of Credit
is cancelled by Borrower; or (c) the occurrence of an Event of
Default.
Loan Type
Conversion. Provided no default or event of default shall have
occurred, the Borrower may, at its option, apply for conversion of this
Agreement into a Term loan 30 days prior to the Maturity Date. However, the
Lender shall have no obligation to approve the Borrower's
application.
SECURITY TO NOTE. Security
(the "Collateral") for this Agreement is granted pursuant to the following
security document(s):
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Security
Agreement - all business assets dated August 4,
2005.
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Security
Agreement - assignment of trust fund dated November 28,
2005.
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RIGHT OF SET-OFF. To the
extent permitted by law, Borrower agrees that Lender has the right to set-off
any amount due and payable under this Agreement, whether matured or unmatured,
against any amount owing by Lender to Borrower including any or all of
Borrower's accounts with Lender. This shall include all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future. Such
right of set-off may be exercised by Lender against Borrower or against any
assignee for the benefit of creditors, receiver, or execution, judgment or
attachment creditor of Borrower, or against anyone else claiming through or
against Borrower of such assignee for the benefit of creditors, receiver, or
execution, judgment or attachment creditor, notwithstanding the fact that such
right of set-off has not been exercised by Lender prior to the making, filing or
issuance or service upon Lender of, or of notice of, assignment for the benefit
of creditors, appointment or application for the appointment of a receiver, or issuance
of execution, subpoena or order or warrant.
PAYABLE ON
DEMAND. This is a demand note. Payment is due upon
Lender's demand.
DEFAULT. Upon the occurrence
of any one of the following events (each, an "Event of Default" or "default" or
"event of default"), Lender's obligations, if any, to make any advances will, at
Lender's option, immediately terminate and Lender, at its option, may declare
all indebtedness of Borrower to Lender under this Agreement to be immediately
due and payable without further notice of any kind notwithstanding anything to
the contrary in this Agreement or any other agreement: (a) Borrower's failure to
make any payment on time or in the amount due; (b) any default by Borrower under
the terms of this Agreement or any other agreement, security agreement executed
in connection with this Agreement (individually, a "Loan Document" and
collectively, the "Loan Documents"); (c) any default by Borrower under the terms
of any other loan agreement, security agreement, mortgage or other document in
favor of Lender;
(d) the death, dissolution, or termination of existence of Borrower or any
guarantor; (e) Borrower is not paying Borrower’s debts as such debts become
due; (f) the
commencement of any proceeding under bankruptcy or insolvency laws by or against
Borrower or any guarantor or the appointment of a receiver; (g) any default
under the terms of any other indebtedness of Borrower to any other creditor; (h)
any writ of attachment, garnishment, execution, tax lien or similar instrument
is issued against any collateral securing the loan, if any, or any of Borrower's
property or any judgment is entered against Borrower or any guarantor; (i) any
part of Borrower's business is sold to or merged with any other business,
individual, or entity; (j) any representation or warranty made by Borrower to
Lender in any of the Loan Documents or any financial statement delivered to
Lender proves to have been false in any maternal respect as of the time when
made or given; (k) if any guarantor, or any other party to any agreement or
instrument with or in favor of Lender entered into or delivered in connection
with the Loan terminates, attempts to terminate or defaults under any such
agreement or instrument; (l) Lender has deemed itself insecure or there has been
a material adverse change of condition of the financial prospects of Borrower or
any collateral securing the obligations owing to Lender by Borrower Upon the
occurrence of an event of default, Lender may pursue any remedy available under
any Related Document, at law or in equity.
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RELATED
DOCUMENTS. If this Agreement is secured by a security
agreement, mortgage, deed of trust, trust deed, security deed or loan agreement
of even or previous date, it is subject to all the terms thereof.
GENERAL WAIVERS. To
the extent permitted by law, the Borrower severally waives any required notice
of presentment, demand, acceleration, intent to accelerate, protest and any
other notice and defense due to extensions of time or other indulgence by Lender
or to any substitution or release of collateral. No failure or delay on the part
of Lender, and no course of dealing between Borrower and Lender, shall operate
as a waiver of such power or right, nor shall any single or partial exercise of
any power or right preclude other or further exercise thereof or the exercise of
any other power or right.
JOINT AND SEVERAL
LIABILITY. If permitted by law, each Borrower executing this
Agreement is jointly and
severally bound.
SEVERABILITY. If a
court of competent jurisdiction determines any term or provision of this
Agreement is invalid or prohibited by applicable law, that term or provision
will be ineffective to the extent required. Any term or provision that has been
determined to be invalid or prohibited will be severed from the rest of this
Agreement without invalidating the remainder of either the affected provision or
this Agreement.
SURVIVAL. The
rights and privileges of the Lender hereunder shall inure to the benefits of its
successors and assigns, and this Agreement shall be binding on all heirs,
executors, administrators, assigns and successors of Borrower.
ASSIGNABILITY. Lender
may assign, pledge or otherwise transfer this Agreement or any of its rights and
powers under this Agreement without notice, with all or any of the obligations
owing to Lender by Borrower, and in such event the assignee shall have the same
rights as if originally named herein in place of Lender. Borrower may not assign
this Agreement or any benefit accruing to it hereunder without the express
written consent of the Lender.
ORAL AGREEMENTS
DISCLAIMER. This Agreement represents the final agreement
between the parties and may not be contradicted by evidence of prior contemporaneous or
subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties.
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GOVERNING LAW. This
Agreement is governed by the laws of the state of New York except to the extent
that federal law controls.
HEADING AND
GENDER. The headings preceding text in this Agreement are for
general convenience in identifying subject matter, but have no limiting impact
on the text which follows any particular heading. All words used in this
Agreement shall be construed to be of such gender or number as the circumstances
require.
ATTORNEYS' FEES AND OTHER
COSTS. If legal proceedings are instituted to enforce the
terms of this Agreement, Borrower agrees to pay alt costs of the Lender in
connection therewith, including reasonable attorneys' fees, to the extent
permitted by law.
ADDITIONAL
PROVISIONS. The Commitment Letter from Lender to Borrower
dated September 12, 2008, and its terms and conditions, together with the Line
of Credit Agreement dated December 10, 2008, are incorporated by reference and
made a part hereof with the same force and effect as if it were set forth
herein. In the event that any of the provisions contained in the Commitment
Letter or the Line of Credit Agreement conflict in whole or in part with the
provisions contained in this Commercial Line of Credit Agreement and Note, the
provisions contained in the Commitment Letter and Line of Credit Agreement shall
control.
WAIVER OF JURY
TRIAL. All
parties to this Agreement hereby knowingly and voluntarily waive, to the fullest
extent permitted by law, any right to trial by jury of any dispute, whether in
contract, tort, or otherwise, arising out of, in connection with, related to, or
incidental to the relationship established between them in this Agreement or any
other instrument, document or agreement executed or delivered in connection with
this Agreement or the related
transactions.
By
signing this Agreement, Borrower acknowledges reading, understanding, and
agreeing to all its provisions and receipt hereof.
Corning
Natural Gas Corporation
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/s/ Xxxxxxxx Xxxxxxxx
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1/21/09
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By:
Xxxxxxxx Xxxxxxxx
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Date
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Its:
Chief Financial Officer
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Page 5 of
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0000
Xxxxxx Xxxx, Xxxxx, Xxxxxxx, XX 00000 Phone:
000-000-0000
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September
12, 2008
Xxxxxxx
Xxxxxx, President
000 Xxxx
Xxxxxxx Xxxxxx
Xxxxxxx,
XX 00000
Dear Mr.
German:
I am
pleased to inform you that Community Bank, N.A. has approved the renewal and an
increase in the Line of Credit up to $8,000,000. This approval is
subject to the following terms and conditions:
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BORROWER:
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AMOUNT OF
LOAN:
Under the
Line of Credit, the Borrower may borrow from time to time up to an aggregate
maximum amount of $8,000,000.
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USE OF
PROCEEDS:
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Proceeds
will be used to finance working capital
needs.
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INTEREST
RATE:
Interest
will be charged on the outstanding principal balance at 30 day Libor Rate plus
1.35%, as published in the Wall Street Journal, with changes to occur
automatically with changes in the 30 day Libor Rate.
PAYMENTS:
Payments
of all interest accrued on the outstanding principal balance hereunder shall be
due on the first day of every month.
ADVANCES:
Advances
in excess of $4,000,000.00 will be limited to an amount equal to 100% of the
outstanding inventory. This will be monitored at month-end only via
monthly inventory reports showing the volume, cost and market value of gas in
storage.
EXPIRATION:
This Line
of Credit will expire February 28, 2009, unless extended in writing by the
Bank. All advances under the Line shall remain repayable upon
demand.
LATE
CHARGE:
In the
event that any payment shall be past due in excess of 10 days, a late charge
equal to 5% of the total payment or $25.00, whichever is greater, shall be
imposed.
COLLATERAL:
The Line
of Credit shall be secured by:
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1)
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Assignment
of trust fund.
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2)
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Accounts
receivable, inventory and equipment. It is understood that M
& T Bank has a prior lien on the
equipment.
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LOAN
DOCUMENTS:
Borrower
agrees to execute a revised Line of Credit Agreement. This Line of
Credit Agreement will include but not be limited to the following
covenants:
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1)
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Borrower
is to maintain a leverage ratio of less then 4 to 1. This
requirement will be measured annually based on the audited financial
statements starting with the fiscal year ending
9/30/08.
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2)
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Borrower
is prohibited from paying cash dividends or stock buy-backs until its
actual regulated capital structure supports an equity ratio of 70%
debt/30% equity.
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3)
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Borrower
is to maintain a net worth of at least $8,000,000. This
requirement will be measured annually based on the audited financial
statements starting with the fiscal year ending
9/30/08.
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STATEMENTS:
Borrower
agrees to furnish, within 90 days after the end of your fiscal year, an audited
financial statement.
Borrower
shall also furnish to us your unaudited financial statements not more than
thirty (30) days after the close of each quarter.
Borrower
shall furnish to us natural gas inventory volumes, cost and market value on a
monthly basis when this line of credit is over $4,000,000 at month
end.
WARRANTY:
Borrower
warrants that all matters, documents and instruments furnished to the Bank and
upon which this commitment is based, including without limitation, financial
statements are complete and that there has been no material omission
therefrom.
FURTHER
ASSURANCES:
Borrower
agrees to execute and/or deliver to us further documentation, covenants and
items as we or our counsel may reasonably require or as may become necessary to
effect the closing of the Line of Credit.
SURVIVAL:
The terms
and conditions of this letter shall survive the closing of the Line of
Credit.
ADVERSE
CHANGES:
This
commitment is contingent upon there being no materially detrimental or adverse
change in the financial condition of the Borrower prior to closing of the Line
of Credit.
ASSIGNABILITY/ACCEPTANCE:
This
commitment is not assignable and will expire in the event it is not accepted and
returned to Community Bank, N. A. on or before September 30, 2008.
Thank you
for giving us the opportunity to make this commitment available to
you.
Sincerely,
COMMUNITY
BANK, N.A.
/s/
Xxxxxx X. Xxxxx
Xxxxxx X.
Xxxxx
Vice
President
ACCEPTANCE AND
CONFIRMATION
We hereby
accept and confirm the conditions of this commitment dated September 12,
2008.
| By: |
/s/ Xxxxxxx Xxxxxx
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9/12/08 | |
| Xxxxxxx Xxxxxx, President | Date |
