COMMUNITY BANK,
N.A.
LINE OF CREDIT AGREEMENT
September 30, 2009
Mr. Michael German, President
Corning Natural Gas Corp.
330 West William Street
Corning, NY 14830
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 August 26, 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.
Notwithstanding the foregoing, beginning January 1, 2010, aggregate
borrowings at any one time under the Revolving Line may not exceed
the sum then available according to the following formula:
100% of all "eligible accounts receivable" of the Borrower;
Plus 100% of all gas inventory of the Borrower;
Plus 50% of all "miscellaneous eligible inventories" of the
Borrower;
Plus 100% of the value of the "Rabbi Trust";
Minus the balance of term loan #4280406-9001.
Definitions:
"Eligible accounts receivable" shall be all trade accounts of
the Borrower less than 90 days beyond the date of invoice (and
originating in the ordinary course of business) minus all contra
accounts receivable, affiliate company accounts receivable and
employee accounts receivable.
"Miscellaneous eligible inventories" shall be all
ordinary-course non-gas inventories of the Borrower valued at
cost.
"Rabbi Trust" shall be the investment account of the Borrower
numbered 89151111309 held by Community Bank, N.A.
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 greater of 4% or the 30-day Libor Rate plus 2.25%, 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) March 31, 2010, 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:
- Those financial assets of the Borrower now
held by the Bank pursuant to a "Collateral Assignment" dated
November 28, 2005;
- A security interest in accounts receivable
and inventory 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
- A first security interest the Rabbi
Trust.
No Guaranty of the
Revolving
