Exhibit 10.1
COMMUNITY BANK, N.A.
LINE OF CREDIT AGREEMENT
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Mr. Michael
German, President
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June 5, 2009
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Corning Natural
Gas Corp.
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330 West
William Street
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Corning, NY
14830
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Dear Mr.
German:
This letter
sets forth the governing terms of our agreement between Community
Bank, N.A. (the “Bank”) and Coming Natural Gas Corp.
(the “Borrower”) concerning a revolving line of credit
(the “Revolving Line”) in the aggregate maximum amount
outstanding at any one time of $8,000,000.00, subject to the terms
of this letter. This Revolving Line was committed by the provisions
of a commitment letter from the Bank to the Borrower dated April
21, 2009 (the “Commitment Letter”), the contents of
which are herein incorporated by reference.
General
Terms of Revolving Line
Proceeds of the
Revolving Line shall be used for Borrower’s working capital
purposes needs. So long as no Event of Default exists under this
Agreement or under the terms of any other agreement or loan
document between the Borrower or any Guarantor hereunder and the
Bank, the Borrower may borrow, repay, and reborrow under the
Revolving Line from time to time so long as the aggregate principal
amount outstanding at any one time does not exceed $8,000,000.00
and the Bank has not demanded payment in full. Advances in excess
of $4,000,000.00 will be limited to an amount equal to 100% of the
outstanding natural gas inventory as evidenced by the monthly
inventory report described herein below.
The Borrower
shall execute a Demand Grid Note (the “Revolving Line
Note”) evidencing obligations related to the Revolving Line
in a form acceptable to the Bank.
All outstanding
amounts under the Revolving Line shall bear interest until paid in
full. The rate of interest payable hereunder shall be a
fluctuating rate per annum (the “Stated Rate”) equal to
the great of 4% or the 30-day Libor Rate plus a 25%, with changes
to occur automatically with changes in the 30-day Libor Rate from
time to time in effect. Each change in the Stated Rate shall take
effect simultaneously with the corresponding change in such Libor
Rate. The “30-day Libor Rate” shall mean the 30-day
Libor Rate as published by the Wall Street Journal from time to
time during the period that any portion of the principal hereunder
remains unpaid. Interest shall be calculated based on actual days
elapsed divided by a year of 360 days. Changes in the rate of
interest applicable to the Revolving Line Note shall become
effective automatically and without notice at the time of changes
in the 30-day Libor Rate. The Bank, shall, however, provide the
Borrower with notice of changes which have occurred in the rate
applicable to the Revolving Line during the preceding billing
period in its regular billing statements.
Unless sooner demanded, payments of all accrued
interest under the Revolving Line are due and payable on the first
day of each month. All remaining outstanding principal and accrued
interest under the Revolving Line shall be due and payable in full
on the earlier of (i) August 31, 2009, or (ii) the date of a demand
by the Bank, or (iii) the date of an Event of Default
(collectively, the “Expiration Date”) unless the
Revolving Line is extended by the Bank in its sole discretion. The
Revolving Line will terminate on, and the Bank shall have no
further obligation to make credit available after, the Expiration
Date.
Any amount due not fully paid within ten (10)
days after the date due shall be subject to a late payment charge
of the greater of $25.00 or five percent (5%) of the total payment
due.
Fees and
Expenses
The Borrower shall pay any fees, expenses and
disbursements, including reasonable legal fees, of the Bank related
to the Revolving Line and the transactions contemplated by this
letter. Such payments shall be due from time to time upon the Bank
giving the Borrower notice of the amount of such
expenses.
At the request of the Bank, the Borrower shall
promptly pay any expenses, reasonable attorney’s fees, costs,
or disbursements in connection with collection of any of the
obligations related to the Revolving Line or enforcement of any of
the Bank’s rights hereunder or under any note, guaranty, or
other agreement related hereto. This obligation shall survive the
payment of the Revolving Line Note. The Bank may apply any payments
of any nature received by it first to the payment of obligations
under this paragraph, notwithstanding any conflicting provision
contained in this letter or any other agreement with the
Borrower.
Upon the occurrence of an Event of Default and
acceleration by the Bank of the Revolving Line Note such that it
becomes immediately due and payable in full, the rate of interest
on each of the obligations related thereto shall be increased to a
rate at all times equal to two percent (2%) above the rate of
interest which would be in effect absent such Event of Default,
such increased rate to remain in effect through and including
payment in full of all of the Obligations, or written waiver of
such Event of Default by the Bank.
Collateral and Guarantees
The Revolving
Line obligation shall be secured by the following:
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Those financial
assets of the Borrower now held by the Bank pursuant to a
“Collateral Assignment” dated November 28,
2005;
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A security
interest in accounts receivable, inventory and equipment arising
under a Security Agreement between the Borrower and the Bank dated
August 4, 2005 and spread to cover the credit line facility hereby
renewed, accomplished by “Collateral Security Spreader
Agreement” dated November 28, 2005; and
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No Guaranty of
the Revolving Line obligation is required to be furnished by the
Borrower.
Affirmative Covenants
So long as this agreement remains in effect or
there exists any indebtedness owing to the Bank by the Borrower
hereunder, it is agreed that the Borrower shall:
A. Keep proper books of account in a
man
