UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
August 31, 2020
(Date of earliest event reported)
Corning Natural Gas Holding Corporation
(Exact name of registrant as specified in its
charter)
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New York
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000-00643
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46-3235589
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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330 West William Street, Corning, New York
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14830
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(Address of principal executive offices)
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(Zip Code)
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(607) 936-3755
(Registrant’s telephone number, including
area code)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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[ ]
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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None
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N/A
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N/A
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Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter). [ ] Emerging growth company
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. [ ]
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Item 1.01
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Entry into a Material Definitive Agreement.
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On August 31, 2020, Corning Natural Gas Corporation
(“Corning Gas”), a wholly-owned subsidiary of Corning Natural Gas Holding Corporation, obtained a loan (the “Loan”)
from M&T Bank, a New York banking corporation (“M&T”). Corning Gas will use the Loan for 2020 capital expenditures
and to pay down $250,000 of existing indebtedness with M&T. Corning Gas can borrow up to $3.718 million under the Loan through
October 31, 2020, when the outstanding balance will convert to a fixed ten-year term loan.
To evidence the Loan, Corning Gas issued a
multiple disbursement term note to M&T in the principal amount of $3.718 million (the “Note”). Before converting
to a term loan, the Note bears interest at a rate equal to 3% plus the greater of 0.5% or the one-month LIBOR rate. After October
31, 2020, the Note will bear interest at a fixed rate equal to the then reported rate applicable to ten-year U.S. Treasury obligations,
plus 2.9%. The Note will then be payable in 119 equal monthly installments with an additional final installment of unpaid principal
and interest due of November 30, 2030 (the “Maturity Date”). The Note may be prepaid upon payment of a prepayment premium.
In connection with the Loan, Corning Gas entered
into a fourth amended replacement and restated credit agreement with M&T (the “Credit Agreement”). The Credit Agreement
contains various affirmative and negative covenants of Corning Gas including, among others: (i) a “Total Funded Debt to Tangible
Net Worth” ratio of not greater than 1.40 to 1.0; and (ii) a “Total Funded Debt to EBITDA” ratio of not greater
than 3.75 to 1.0, and (iii) a minimum “Cash Flow Coverage” of not less than 1.10 to 1.0; in each case measured quarterly
based on Corning Gas’s trailing twelve month operating performance and fiscal quarterly financial statements; delivery of
compliance and financial statement requirements; and prohibitions on any sale of all or substantially all of its assets, acquisitions
of substantially all the asset of any other entity, doing business under any assumed name, material changes to its business, purposes,
structure or operations which could materially adversely affect Corning Gas, or any merger, consolidation or other similar transaction.
Events of default under the Credit Agreement
and Note which permit M&T to exercise its remedies, including immediate acceleration of the principal and interest on the Note,
include, among others: (i) default in the payment of principal or interest on the Note, (ii) default by Corning Gas on any other
obligation under the Credit Agreement and related documents, (iii) failure to pay when due in any other obligations of Corning
Gas which could result in the acceleration of that obligation, (iv) entry of any judgments or order of any court or governmental
entity against Corning Gas, (v) various bankruptcy and insolvency events, (vi) any adverse change in Corning Gas, its business,
assets, operations, affairs or condition which M&T determines will have a material adverse effect on Corning Gas, its business,
assets, operation or condition (financial or otherwise) or on its ability to repay its debts, and (vii) at any time M&T in
good faith considers itself insecure with respect to payment of Corning Gas’s obligations to it or other performance of such
obligations.
In connection with the Loan, Corning Gas entered
into general security agreement with M&T (the “Security Agreement”). The Security Agreement secures all obligations
of Corning Gas to M&T including, without limitation, principal and interest on the Note and any fees and charges. The security
interest granted under the Security Agreement covers all personal property of Corning Gas including, among other things, accounts,
deposit accounts, general intangibles, inventory, and all fixtures, including, among other things, pipelines, easements, rights
of way and compressors in Corning Gas’s gas distribution system. The Security Agreement contains various representations,
warranties, covenants and agreements customary in security agreements and various events of default substantially similar to those
in the Credit Agreement with remedies under the New York Uniform Commercial Code and the Security Agreement.
The Note, Credit Agreement and Security Agreement
are filed as exhibits to this Current Report on Form 8-K. The descriptions above are qualified in their entirety by reference to
the full text of these documents.
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Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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The disclosure included under Item 1.01 above
is incorporated by reference to this Item 2.03.
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Item 9.01
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Financial Statements and Exhibits.
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Exhibit 10.1 Fourth Amended Replacement and Restated Credit Agreement, dated August 31, 2020, between Corning Natural Gas Company and M&T Bank.
Exhibit 10.2 Multiple Disbursement Term Note, dated August 31, 2020, from Corning Natural Gas Corporation to M&T Bank in the maximum principal amount of $3,718,000.
Exhibit 10.3 General Security Agreement, dated August 31, 2020, from Corning Natural Gas Corporation to M&T Bank.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Corning Natural Gas Holding Corporation
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By: /s/ Charles A. Lenns
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Chief Financial Officer
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Dated: September 4, 2020
FOURTH AMENDED REPLACEMENT AND RESTATED
CREDIT AGREEMENT
New York
August 31, 2020
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Borrower:
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Corning Natural Gas Corporation
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a(n) o individual x corporation o general partnership o limited liability company o
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organized under the laws of
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New York
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having its chief executive office at
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330 West William Street, Corning, New York 14830
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Bank:
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M&T BANK, a New York banking corporation with its chief executive office at One M&T
Plaza, Buffalo, NY 14203. Attention: Office of General Counsel.
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The Bank and the Borrower agree as follows:
1. DEFINITIONS.
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a.
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“Agreement” means this Fourth Amended Replacement and Restated Credit
Agreement.
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b.
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“Capital Expenditures” (“CAPEX”) means, at any time, all acquisitions
of machinery, equipment, land, leaseholds, buildings, improvements and all other expenditures considered to be for fixed assets
under G.A.A.P., consistently applied. Where an asset is acquired under a capital lease, the amount required to be capitalized shall
be considered a capital expenditure during the first year of the lease.
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c.
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“Cash Flow” means the sum of (i) net income after
tax, dividends and distributions, plus (ii) depreciation expense and amortization, plus (iii) Interest Expense, plus (iv) non-cash
expenses and minus (v) non-cash income, all determined in accordance with G.A.A.P.
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d.
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“Cash Flow Coverage” means the ratio of Cash Flow to the sum of (i) the current
portion of all Long Term Debt as specified in the financial statement dated twelve (12) months prior, plus (ii) Interest Expense,
all determined in accordance with G.A.A.P
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e.
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“Credit” means any and all credit facilities and any other financial accommodations
made by the Bank in favor of the Borrower whether now or hereafter in existence.
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f.
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“Current Assets” means, at any time, the aggregate amount of all current assets,
including, but not limited to, cash, cash equivalents, marketable securities, receivables maturing within twelve (12) months from
such time, and inventory (net of LIFO Reserve), but excluding prepaid expenses and officer, stockholder, employee and related entity
advances and receivables, all as determined in accordance with G.A.A.P.
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g.
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“Current Maturity of Long-Term Debt” (“CMLTD”) means, for any period,
the scheduled principal loan or capital lease payments paid or required to be paid during the applicable period.
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h.
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“Current Liabilities” means, at any time, the aggregate amount of all liabilities
and obligations which are due and payable on demand or within twelve (12) months from such time, or should be properly reflected
as attributable to such twelve (12) month period in accordance with G.A.A.P.
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i.
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“Current Ratio” means the ratio of Current Assets to Current Liabilities.
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j.
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“Distributions” means any dividend or other form of distribution (whether in
cash, securities or other property) with respect to any stock, membership or other form of equity interest in Borrower or any Subsidiary,
or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of any such interests or any option, warrant or other
right to acquire any such interests, in each case in accordance with the applicable governing documents of Borrower or Subsidiary,
as the case may be, or otherwise.
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k.
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“EBITDA” shall mean net income after tax, plus depreciation, plus amortization,
plus interest expense, plus non-cash expenses, less non-cash income, all as determined in accordance with G.A.A.P.
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l.
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“Fixed Charge Coverage Ratio” means, at any time, EBITDA less CAPEX less Distributions
(but not preferred dividends) plus rental and operating lease payments plus other defined fixed charges.
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m.
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“G.A.A.P.” means, with respect to any date of determination, generally accepted
accounting principles as used by the Financial Accounting Standards Board and/or the American Institute of Certified Public Accountants
consistently applied and maintained throughout the periods indicated.
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n.
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“Interest Expense” means all finance charges reflected on the income statement
as interest expense for all obligations of Borrower to any person, including, but not limited to, Bank, as shown on any properly
prepared balance sheet in accordance with G.A.A.P.
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o.
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“Long Term Debt” means all obligations of Borrower to any person, including,
but not limited to, the Obligations, payable more than twelve (12) months from the date of their creation, which in accordance
with G.A.A.P. are properly shown on the balance sheet as a liability (excluding reserves for deferred income taxes) for the period
then ended.
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p.
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“Obligations” means
any and all indebtedness or other obligations of the Borrower to the Bank 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 any indebtedness or obligations (i) not yet outstanding but contracted for, or with regard to which any other commitment
by the Bank 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 the Borrower to others and which the Bank
obtained, or may obtain, by assignment or otherwise; and (iv) payable under this Agreement.
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q.
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“Permitted Distributions” has the meaning set forth in the Schedule.
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r.
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“Permitted Guaranties” has the meaning set forth in the Schedule.
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s.
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“Permitted Indebtedness” has the meaning set forth in the Schedule.
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t.
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“Permitted Investments” has the meaning set forth in the Schedule.
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u.
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“Permitted Liens” has the meaning set forth in the Schedule.
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v.
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“Permitted Loans” has the meaning set forth in the Schedule.
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w.
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“Quick Ratio” means the ratio of Current Assets less inventory (net of LIFO
Reserve), to Current Liabilities.
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x.
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“Schedule” means Schedule A, attached hereto and made a part hereof.
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y.
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“Subordinated Debt” means all indebtedness of the Borrower which has been formally
subordinated to payment and collection of the Obligations on written terms approved by Bank in writing.
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z.
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“Subsidiary” means any corporation or other business entity of which at least
fifty percent (50%) of the voting stock or other ownership interest is owned by the Borrower directly or indirectly through one
or more Subsidiaries.
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aa.
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“Tangible Net Worth” means the aggregate assets
of Borrower excluding all intangible assets, including, but not limited to, goodwill, licenses, trademarks, patents, copyrights,
organization costs, appraisal surplus, officer, stockholder, related entity and employee advances or receivables, mineral rights
and the like, less liabilities, plus Subordinated Debt, all determined in accordance with G.A.A.P. (except to the extent that under
G.A.A.P. “tangible net worth” excludes leasehold improvements which are included in “Tangible Net Worth”
as defined herein).
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bb.
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“Total Funded Debt” means the sum of all obligations for borrowed money (including
Subordinated Debt and guaranties of obligations for borrowed money plus all capital lease obligations.
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cc.
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“Total Liabilities” means the aggregate amount of all assets of the Borrower
less the sum of shareholder equity and Subordinated Debt (if any), as shown on the balance sheet properly prepared in accordance
with G.A.A.P.
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dd.
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“Transaction Documents” means this Agreement and all documents, instruments
or other agreements by the Borrower in favor of the Bank in connection (directly or indirectly) with the Obligations, whether now
or hereafter in existence, including, without limitation, promissory notes, security agreements, guaranties and letter of credit
reimbursement agreements.
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ee.
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“Unencumbered Liquid Assets” means cash, cash equivalents and/or publicly traded/quoted
marketable securities acceptable to Bank in its sole discretion, free of any lien or other encumbrance. Account assets held in
a fiduciary capacity by Borrower shall not qualify as Unencumbered Liquid Assets.
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ff.
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“Unfunded Capital Expenditures” means, for any relevant period, the amount of
Capital Expenditures paid for out of ordinary operating cash flow and not financed through the incurrence of debt or the issuance
of equity.
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gg.
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“Working Capital” means that amount which is equal to the excess of Current
Assets over Current Liabilities.
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hh.
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Corning Revolver. Means the Replacement Daily Adjusting LIBOR Revolving Note between Bank and
Corning Natural Gas Corporation dated August 31, 2020 in the maximum principal amount of $8,000,000.00, including any extension
or modification thereof.
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2.
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REPRESENTATIONS AND WARRANTIES. The Borrower makes the following representations and warranties
and any “Additional Representations and Warranties” on the Schedule, all of which shall be deemed to be continuing
representations and warranties as long as this Agreement is in effect:
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a)
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Good Standing; Authority. The Borrower and each Subsidiary (if either is not an individual) is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it was formed. The Borrower and each Subsidiary is duly
authorized to do business in each jurisdiction in which failure to be so qualified might have a material adverse effect on its
business or assets and has the power and authority to own each of its assets and to use them in the ordinary course of business
as contemplated now and in the future.
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b)
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Compliance. The Borrower and each Subsidiary conducts its business and operations and the ownership of its assets in compliance
with each applicable statute, regulation and other law, including environmental laws. All approvals, including authorizations,
permits, consents, franchises, licenses, registrations, filings, declarations, reports and notices (the “Approvals”)
necessary for the conduct of the Borrower’s and each Subsidiary’s business and for the Credit have been duly obtained
and are in full force and effect. The Borrower and each Subsidiary is in compliance with the Approvals. The Borrower and each
Subsidiary (if either is not an individual) is in compliance with its certificate of incorporation, by-laws, partnership agreement,
articles of organization, operating agreement or other applicable organizational or governing document as may be applicable to
the Borrower or a Subsidiary depending on its organizational structure (“Governing Documents”). The Borrower and each
Subsidiary is in compliance with each agreement to which it is a party or by which it or any of its assets is bound.
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c)
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Legality. The execution, delivery and performance by the Borrower of this Agreement and all related documents, including
the Transaction Documents, (i) are in furtherance of the Borrower’s purposes and within its power and authority; (ii) do
not (A) violate any statute, regulation or other law or any judgment, order or award of any court, agency or other governmental
authority or of any arbitrator with respect to the Borrower or any Subsidiary or (B) violate the Borrower’s or any Subsidiary’s
Governing Documents (if either is not an individual), constitute a default under any agreement binding on the Borrower or any
Subsidiary or result in a lien or encumbrance on any assets of the Borrower or any Subsidiary; and (iii) if the Borrower or any
Subsidiary is not an individual, have been duly authorized by all necessary organizational actions.
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d)
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Fiscal Year. The fiscal year of the Borrower is the calendar year unless the following blank states otherwise: year ending
September 30th.
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e)
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Title to Assets. The Borrower and each Subsidiary has good and marketable title to each of its assets free of security
interests, mortgages or other liens or encumbrances, except as set forth on the Schedule titled “Permitted Liens”
or pursuant to the Bank’s prior written consent.
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f)
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Judgments and Litigation. There is no pending or threatened claim, audit, investigation, action or other legal proceeding
or judgment, order or award of any court, agency or other governmental authority or arbitrator (any, an “Action”)
which involves the Borrower, its Subsidiaries or their respective assets and might have a material adverse effect upon the Borrower
or any Subsidiary or threaten the validity of the Credit, any Transaction Document or any related document or action. Borrower
will immediately notify the Bank in writing upon acquiring knowledge of any such Action.
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g)
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Full Disclosure. Neither this Agreement nor any certificate, financial statement or other writing provided to the Bank
by or on behalf of the Borrower or any Subsidiary contains any statement of fact that is incorrect or misleading in any material
respect or omits to state any fact necessary to make any such statement not incorrect or misleading. The Borrower has not failed
to disclose to the Bank any fact that might have a material adverse effect on the Borrower or any Subsidiary.
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3.
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AFFIRMATIVE COVENANTS. So long as this Agreement is in effect, the Borrower will comply,
and cause each of its Subsidiaries to comply, with the following covenants and any other “Additional Affirmative Covenant”
contained in the Schedule:
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a) Financial Statements and Other Information.
Promptly deliver to the Bank (i) within sixty (60) days after the end of each of its first three fiscal quarters, an internally
prepared financial statement of the Borrower and each subsidiary as of the end of such quarter, which financial statement
shall consist of income and cash flows for the quarter, for the corresponding quarter in the previous fiscal year and for the
period from the end of the previous fiscal year, with a consolidating and consolidated balance sheet as of the fiscal year
end all in such detail as the Bank may request; (ii) Borrower shall cause Corning Natural Gas Holding Corporation (“Holding”)
to promptly deliver to the Bank copies of all annual reports, proxy statements and similar information distributed to shareholders,
partners or members and of all filings with the Securities and Exchange Commission and the Pension Benefit Holding Corporation
and shall provide in form satisfactory to the Bank: (i) within sixty (60) days after the end of each of its first three
fiscal quarters, consolidating and consolidated statements of income and cash flows for the quarter, for the corresponding quarter
in the previous fiscal year and for the period from the end of the previous fiscal year, with a consolidating and consolidated
balance sheet as of the quarter end; and (ii) within one-hundred twenty days (120) after the end of each fiscal year, consolidating
and consolidated statements of Holding’s income and cash flows and its consolidating and consolidated balance sheet
as of the end of such fiscal year, setting forth comparative figures for the preceding fiscal year and to be:
x audited
o reviewed q compiled
by an independent certified public accountant
acceptable to the Bank; all such statements shall be certified by Holding’s chief financial officer or partner to
be correct, not misleading and in accordance with Holding’s records and to present fairly the results of Holding’s
operations and cash flows and if annual its financial position at year end in conformity with generally accepted accounting
principles. If no box is checked, Holding shall deliver financial statements and information in the form and at the times
satisfactory to the Bank. Holding represents that its assets are not subject to any liens, encumbrances or contingent liabilities
except as fully disclosed to the Bank in such statements. Holding authorizes the Bank from time to time to obtain, verify
and review all financial data deemed appropriate by the Bank in connection with the Obligations, including without limitation credit
reports from agencies. Holding understands this requirement and has satisfied itself as to its meaning and consequences
and acknowledges that it has made its own arrangements for keeping informed of changes or potential changes affecting the Borrower
including the Borrower’s financial condition; within one hundred twenty (120) days after the end of each fiscal year,
internally prepared statement of the Borrower and internally prepared consolidating and consolidated statements of income and
cash flows and its consolidating and consolidated balance sheet as of the end of such fiscal year, setting forth comparative figures
for the preceding fiscal year; all such statements shall be certified by the Borrower’s chief financial officer to be correct
and in accordance with the Borrower’s and each Subsidiary’s records and to present fairly the results of the Borrower’s
and each Subsidiary’s operations and cash flows and its financial position at year end; and (iii) with each of the financial
statements set forth above in clauses (i) and (ii) statement of income, a certificate executed by the Borrower’s chief executive
or chief financial officers or other such person responsible for the financial management of the Borrower (A) setting forth the
computations required to establish the Borrower’s compliance with each financial covenant, if any, during the statement period,
(B) stating that the signer of the certificate has reviewed this Agreement and the operations and condition (financial or other)
of the Borrower and each of its Subsidiaries during the relevant period and (C) stating that no Event of Default occurred during
the period, or if an Event of Default did occur, describing its nature, the date(s) of its occurrence or period of existence and
what action the Borrower has taken with respect thereto; and (iv) prior to December 31 of each year, Borrower’s operating
and capital budgets for the succeeding year. The Borrower shall also promptly provide the Bank with copies of all annual reports,
proxy statements and similar information distributed to shareholders, partners or members, and copies of all filings with the Securities
and Exchange Commission and the Pension Benefit Guaranty Corporation, and shall provide, in form satisfactory to the Bank, such
additional information, reports or other information as the Bank may from time to time reasonably request regarding the financial
and business affairs of the Borrower or any Subsidiary. If the Borrower is an individual, the Borrower shall provide annually a
personal financial statement in form and detail acceptable to the Bank and such other financial information as the Bank may from
time to time reasonably request. Promptly upon the request of the Bank from time to time, Borrower shall supply all additional
information requested and permit the Bank’s officers, employees, accountants, attorneys and other agents to (x) visit and
inspect each of Borrower’s premises, (y) Upon no less than seven (7) days advance written notice to Borrower Bank may, at
Bank’s sole expense, examine, audit, copy and extract from Borrower’s records and (z)
discuss Borrower’s or its
affiliates’ business, operations, assets, affairs or condition (financial or other) with its responsible officers and independent
accountants.
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a)
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Accounting; Tax Returns and Payment of Claims. Maintain a system of accounting and reserves in accordance with generally
accepted accounting principles, has filed and will file each tax return required of it and, except as disclosed in the Schedule,
has paid and will pay when due each tax, assessment, fee, charge, fine and penalty imposed by any taxing authority upon it or
any of its assets, income or franchises, as well as all amounts owed to mechanics, materialmen, landlords, suppliers and the like
in the normal course of business. Borrower shall notify Bank of any pending assessments or adjustments of its income tax payable
with respect to any year.
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b)
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Inspections. Promptly upon the Bank’s request permit the Bank’s officers, attorneys or other agents to inspect
its and its Subsidiary’s premises, examine and copy its records and discuss its and its Subsidiary’s business, operations
and financial or other condition with its and its Subsidiary’s responsible officers and independent accountants.
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c)
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Operating Accounts. Maintain all bank accounts with the Bank.
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d)
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Changes in Management and Control. Immediately upon any change in the identity of the Borrower’s chief executive
officers or in its beneficial ownership, the Borrower will provide to the Bank a certificate executed by its senior individual
authorized to transact business on behalf of the Borrower, specifying such change.
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e)
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Notice of Defaults, Change of Address and Material Adverse Changes. Immediately upon acquiring reason to know of (i) any
Event of Default, (ii) any event or condition that might have a material adverse effect upon the Borrower or any Subsidiary or
(iii) any change of its address or of the location of any collateral securing the Obligations, or (iv) any Action, the Borrower
will provide to the Bank a certificate executed by the Borrower’s senior individual authorized to transact business on behalf
of the Borrower, specifying the date(s) and nature of the event or the Action and what action the Borrower or its Subsidiary has
taken or proposes to take with respect to it.
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f)
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Insurance. Maintain its property in good repair and will on request provide the Bank with evidence of insurance coverage
satisfactory to the Bank, including fire and hazard, liability, workers’ compensation and business interruption insurance
and flood hazard insurance as required.
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g)
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Further Assurances. Promptly upon the request of the Bank, the Borrower will execute and deliver each writing and take
each other action that the Bank deems necessary or desirable in connection with any transaction contemplated by this Agreement.
In the event that Borrower or any of its Subsidiaries shall create or acquire a new Subsidiary after the date hereof but while
this Agreement is in effect or any Obligation remains outstanding, Borrower shall cause such new Subsidiary to execute such agreements
or other documents as shall be required in Bank’s sole and absolute discretion so as to join this Agreement as an additional
borrower, guarantor or such other capacity as Bank deems appropriate in its sole and absolute discretion. Borrower shall deliver
such resolutions, organizational documents, and such other items as Bank may reasonably requires in connection with same.
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i.
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Additional Closing Conditions. As an additional condition to any advance of new funds to Borrower
on or after the date of this Agreement to be evidenced by the Multiple Disbursement Term Note: (i) Borrower must provide to Bank
evidence that it has contributed from working capital the amount of not less than 40% of the cost of any capital expenditure project
financed with such advance; and (ii) Borrower must provide a copy of its most current capital expenditure tracking report submitted
to the State of New York Public Service Commission with any request for advance.
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4.
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NEGATIVE COVENANTS. As long as this Agreement is in effect, the Borrower shall not violate,
and shall not suffer or permit any of its Subsidiaries to violate, any of the following covenants and any “Additional Negative
Covenant” on the Schedule. The Borrower shall not:
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a)
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Intentionally Omitted.
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b)
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Intentionally Omitted.
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c)
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Intentionally Omitted.
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d)
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Intentionally Omitted.
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e)
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Intentionally Omitted.
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f)
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Intentionally Omitted.
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g)
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Changes In Form or Control. (i) Transfer or dispose of substantially all of its assets, (ii) acquire substantially all
of the assets of any other entity, (iii) do business under or otherwise use any name other than its true name or (iv) make any
material change in its business, structure, ownership, purposes or operations that might have a material adverse effect on the
Borrower or any of its Subsidiaries. If the Borrower or any Subsidiary is not an individual, (i) participate in any merger, consolidation
or other absorption or (ii) make, terminate or permit to be revoked any election pursuant to Subchapter S of the Internal Revenue
Code.
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h.
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Sale of Assets. Sell, transfer lease or otherwise dispose of any assets (including, without
limitation, pursuant to any sale/leaseback transaction, securitization transaction, or with respect to any equity interest owned
by it) other than sales, transfers and dispositions of (y) inventory in the ordinary course of business and (z) used, obsolete,
worn out or surplus equipment or property in the ordinary course of business;
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5.
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FINANCIAL COVENANTS. During the term of this Agreement, the Borrower shall not violate,
and shall not suffer or permit any of its Subsidiaries to violate, any of the following covenants (complete applicable financial
covenant) or any Additional Financial Covenants on the Schedule. For purposes of this Section, if the Borrower has any Subsidiaries
all references to the Borrower shall include the Borrower and all of its Subsidiaries on a consolidated basis. Unless a different
measurement period is specified, compliance for the financial covenants shall be required at all times.
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o A. Borrower
shall maintain Tangible Net Worth of not less than $_________________, measured (select one: quarterly or annually) ______________
as of each (select one: quarter or fiscal year) ___________ end.
x B. Borrower
shall maintain a ratio of Total Funded Debt, excluding the then principal balance on the Corning Revolver, to Tangible
Net Worth of not greater than 1:40:1.0, measured quarterly based on Borrower’s trailing twelve (12) month
operating performance as reflected in Borrower’s fiscal quarterly financial statements.
o C. Borrower
shall maintain a Fixed Charge Coverage Ratio of not less than [___.___] to 1.00 measured quarterly on a trailing twelve month basis,
commencing with the period ending [__________________].
x D. Borrower
shall maintain a ratio of Total Funded Debt, excluding the then principal balance due on the Corning Revolver to EBITDA
of not greater than 3.75:1.0, measured quarterly based on Borrower’s trailing twelve (12) month operating
performance as reflected in Borrower’s fiscal quarterly financial statements
o E. Borrower
shall not have suffered a net loss as of each fiscal year end, as determined in accordance with G.A.A.P., as reflected on its financial
statements furnished to Bank pursuant to the requirements of this Agreement.
o F. Borrower
shall maintain a Current Ratio of not less than ________________:______________, measured (select one: quarterly or annually) ______________
as of each (select one: quarter or fiscal year) ___________ end.
o G. Borrower
shall maintain a Quick Ratio of not less than ________________ to 1.00, measured [quarterly/annually] as of each quarter/fiscal
year] end.
o H. Borrower
shall maintain Working Capital of not less than $______________________________, measured (select one: quarterly or annually) ______________
as of each (select one: quarter or fiscal year)___________ end.
x I. Minimum
Cash Flow Coverage ratio. Borrower shall maintain Cash Flow Coverage of not less than 1.10:1.0, measured
quarterly based on Borrower’s trailing twelve (12) month operating performance as reflected in Borrower’s fiscal quarterly
financial statements.
o J. Without
the prior written consent of Bank, Borrower shall not make any Capital Expenditures in excess of $______________ in the aggregate
during any fiscal year of Borrower.
o K. Borrower
shall not pay or accrue during any fiscal year compensation (including but not limited to all salary, bonuses, consulting, management
or other fees, rentals and other payments to any person owning or managing 5%or more of the Borrower or any relative or cohabitant
of such a person, and to any entity under common control with or controlling the Borrower) exceeding $_______________ in the aggregate.
o L. Borrower
shall not become obligated as lessee pursuant to operating leases exceeding $_______________ in the aggregate during any fiscal
year.
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a)
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Events of Default. Any of the following events or conditions shall constitute an “Event of Default”: (i) failure
by the Borrower 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 the Borrower in the performance of any obligation, term or condition
of this Agreement, the other Transaction Documents or any other agreement with the Bank or any of its affiliates or subsidiaries
(collectively, “Affiliates”); (iii) failure by the Borrower 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) the Borrower is dissolved, becomes insolvent, generally fails to pay or admits in writing
its inability generally to pay its debts as they become due; (v) the Borrower 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 the Borrower to a third party; or the cessation by the Borrower
as a going business concern; (vi) the Borrower 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
the Borrower (or the making of any agreement therefor); (viii) the death or judicial declaration of incompetency of the Borrower,
if an individual; (ix) the entry of any judgment or order of any court, other governmental authority or arbitrator against the
Borrower which Bank in good faith determines shall have a material adverse effect on the Borrower or the Borrower’s ability
to pay or perform the Obligations; (x) falsity, omission or inaccuracy of facts submitted to the Bank or any Affiliate (whether
in a financial statement or otherwise); (xi) an adverse change in the Borrower, its business, assets, operations, affairs or condition
(financial or otherwise) from the status shown on any financial statement or other document submitted to the Bank or any Affiliate,
and which change the Bank determines will have a material adverse effect on (a) the Borrower, its business, assets, operations
or condition (financial or otherwise), or (b) the ability of the Borrower to pay or perform the Obligations; (xii) any pension
plan of the Borrower fails to comply with applicable law or has vested unfunded liabilities that, in the opinion of the Bank,
might have a material adverse effect on the Borrower’s ability to repay its debts; (xiii) failure of the Borrower to supply
new or additional collateral within ten (10) days of request by the Bank; (xiv) the occurrence of any event described in sub-paragraph(i)
through and including(xiii) hereof with respect to any Subsidiary or 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) the Bank in good faith deems itself
insecure with respect to payment or performance of the Obligations.
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b)
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Rights and Remedies Upon Default. Upon the occurrence of any Event of Default, the Bank without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law) to or upon the Borrower,
any Subsidiary or any other person (all and each of which demands, presentments, protests, advertisements and notices are hereby
waived), may exercise all rights and remedies under the Borrower’s or its Subsidiaries’ agreements with the Bank or
its Affiliates, applicable law, in equity or otherwise and 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 and terminate any obligation it may have to grant any additional
loan, credit or other financial accommodation to the Borrower or any Subsidiary. 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 sub-paragraph
(vi) above. The provisions hereof are not intended in any way to affect any rights of the Bank with respect to any Obligations
which may now or hereafter be payable on demand.
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7.
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EXPENSES. The Borrower shall pay to the Bank on demand all costs and expenses (including
all fees and disbursements of counsel retained for advice, suit, appeal or other proceedings or purpose and of any experts or agents
it may retain), which the Bank may incur in connection with (i) the administration of the Obligations, including any administrative
fees the Bank may impose for the preparation of discharges, releases or assignments to third-parties; (ii) the enforcement and
collection of any Obligations or any guaranty thereof; (iii) the exercise, performance, enforcement or protection of any of the
rights of the Bank hereunder; or (iv) the failure of the Borrower or any Subsidiary 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, the Borrower shall
pay interest at the highest default rate specified in any instrument evidencing any of the Obligations from the date payment is
demanded by the Bank to the date reimbursed by the Borrower. All such costs, expenses or fees under this Agreement shall be added
to the Obligations.
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8.
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TERMINATION. This Agreement shall remain in full force and effect until (i) all Obligations
outstanding, or contracted or committed for (whether or not outstanding), shall be finally and irrevocably paid in full and (ii)
all Transaction Documents have been terminated by the Bank.
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9.
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RIGHT OF SETOFF. If an Event of Default occurs, the Bank shall have the right to set off
against the amounts owing under this Agreement and the other Transaction Documents any property held in a deposit or other account
or otherwise with the Bank or its Affiliates or otherwise owing by the Bank or its Affiliates in any capacity to the Borrower,
its Subsidiary or any guarantor of, or endorser of any of the Transaction Documents evidencing, the Obligations. Such setoff shall
be deemed to have been exercised immediately at the time the Bank or such Affiliate elect to do so.
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10.
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USA PATRIOT ACT NOTICE. Bank hereby notifies the Borrower that pursuant to the requirements
of the USA PATRIOT Act (“Patriot Act”), it is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and other information that will allow Bank to identify
the Borrower in accordance with the Patriot Act. The Borrower agrees to, promptly following a request by Bank, provide all
such other documentation and information that Bank requests in order to comply with its ongoing obligations under applicable “know
your customer” and anti-money laundering rules and regulations, including the Patriot Act.
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a)
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Notices. Any demand or notice hereunder or under any applicable law pertaining hereto shall be in writing and duly given
if delivered to Borrower (at its address on the Bank’s records) or to the Bank (at the address on page one and separately
to the Bank officer responsible for Borrower’s relationship with the Bank). 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 Borrower and the
Bank.
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b)
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Generally Accepted Accounting Principles. Any financial calculation to be made, all financial statements and other financial
information to be provided, and all books and records, system of accounting and reserves to be kept in connection with the provisions
of this Agreement, shall be in accordance with generally accepted accounting principles consistently applied during each interval
and from interval to interval; provided, however, that in the event changes in generally accepted accounting principles shall
be mandated by the Financial Accounting Standards Board or any similar accounting body of comparable standing, or should be recommended
by Borrower’s certified public accountants, to the extent such changes would affect any financial calculations to be made
in connection herewith, such changes shall be implemented in making such calculations only from and after such date as Borrower
and the Bank shall have amended this Agreement to the extent necessary to reflect such changes in the financial and other covenants
to which such calculations relate.
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c)
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Indemnification. If after receipt of any payment of all, or any part of, the Obligations, the Bank 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,
an impermissible setoff, or a diversion of trust funds, or for any other reason, the Transaction Documents shall continue in full
force and the Borrower shall be liable, and shall indemnify and hold the Bank harmless for, the amount of such payment surrendered.
The provisions of this Section shall be and remain effective notwithstanding any contrary action which may have been taken by
the Bank in reliance upon such payment, and any such contrary action so taken shall be without prejudice to the Bank’s rights
under the Transaction Documents and shall be deemed to have been conditioned upon such payment having become final and irrevocable.
The provisions of this Section shall survive the termination of this Agreement and the Transaction Documents.
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d)
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Further Assurances. From time to time, the Borrower shall take, and cause its Subsidiaries to take, such action and execute
and deliver to the Bank such additional documents, instruments, certificates, and agreements as the Bank may reasonably request
to effectuate the purposes of the Transaction Documents.
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e)
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Cumulative Nature and Non-Exclusive Exercise of Rights and Remedies. All rights and remedies of the Bank pursuant to this
Agreement and the Transaction Documents shall be cumulative, and no such right or remedy shall be exclusive of any other such
right or remedy. In the event of any unreconcilable inconsistencies, this Agreement shall control. No single or partial exercise
by the Bank of any right or remedy pursuant to this Agreement or otherwise shall preclude any other or further exercise thereof,
or any exercise of any other such right or remedy, by the Bank.
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f)
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Governing Law; Jurisdiction. This Agreement has been delivered to and accepted by the Bank 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. BORROWER 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 THE BANK MAINTAINS
A BRANCH AND CONSENTS THAT THE BANK MAY EFFECT ANY SERVICE OF PROCESS IN THE MANNER AND AT BORROWER’S ADDRESS SET FORTH
ABOVE FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED IN THIS AGREEMENT WILL PREVENT THE BANK FROM BRINGING ANY
ACTION, ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST BORROWER INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST
ANY PROPERTY OF BORROWER WITHIN ANY OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC JURISDICTION. Borrower acknowledges and
agrees that the venue provided above is the most convenient forum for both the Bank and Borrower. Borrower waives any objection
to venue and any objection based on a more convenient forum in any action instituted under this Agreement.
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g)
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Joint and Several; Successors and Assigns. If there is more than one Borrower, 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 “the
Borrower” shall include each as well as all of them. This Agreement shall be binding upon the Borrower and upon its heirs
and legal representatives, its successors and assignees, and shall inure to the benefit of, and be enforceable by, the Bank, 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 the Borrower without the prior written consent of the Bank.
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h)
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Waivers; Changes in Writing. No failure or delay of the Bank 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.
The Borrower expressly disclaims any reliance on any course of dealing or usage of trade or oral representation of the Bank (including
representations to make loans to the Borrower) and agrees that none of the foregoing shall operate as a waiver of any right or
remedy of the Bank. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice
or demand in similar or other circumstances. No waiver of any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless made specifically in writing by the Bank 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 the Borrower and the Bank.
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i)
|
Interpretation. Unless the context otherwise clearly requires, references to plural includes the singular and references
to the singular include the plural; references to “individual” shall mean a natural person and shall include a natural
person doing business under an assumed name (e.g., a “DBA”); 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. The Borrower agrees that in any legal proceeding,
a photocopy of this Agreement kept in the Bank’s course of business may be admitted into evidence as an original.
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j.
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Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same instrument.
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k.
|
Waiver of Jury Trial. The Borrower and the Bank hereby
knowingly, voluntarily, and intentionally waive any right to trial by jury the Borrower and the Bank may have in any action or
proceeding, in law or in equity, in connection with this Agreement or any transactions related hereto. The Borrower represents
and warrants that no representative or agent of the Bank has represented, expressly or otherwise, that the Bank will not, in the
event of litigation, seek to enforce this jury trial waiver. The Borrower acknowledges that the Bank has been induced to enter
into this Agreement by, among other things, the provisions of this Section.
|
This Fourth Amended Replacement
and Restated Credit Agreement is intended to supersede and fully replace the previous Third Amended Replacement and Restated Credit
Agreement which was executed by the parties hereto on June 27, 2019. This Fourth Amended Replacement Credit Agreement shall govern
the Replacement Term Note between Borrower and Bank in the principal amount of $29,000,000.00 dated November 30, 2017, the Multiple
Disbursement Term Note between Borrower and Bank in the principal amount of $3,600,000.00
dated August 15, 2018,
the Multiple Disbursement Term Note between Borrower and Bank in the principal amount of $3,127,000.00 dated June 27, 2019, the
Replacement Daily Adjusting Libor Revolving Line Note between Borrower and Bank in the principal amount of $8,000,000.00 dated
August 31, 2020 and the Multiple Disbursement Term Note between Borrower and Bank in the principal amount of $3,178,000.00 dated
August 31, 2020, including extensions or modifications thereto.
Acknowledgment. Borrower acknowledges
that it has read and understands all the provisions of this Agreement, including the Governing Law, Jurisdiction
and Waiver of Jury Trial, and has been advised by counsel as necessary or appropriate.
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M&T BANK
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By
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/s/ Edgar B. Parsons, III
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Signature of Witness
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Name:
|
Edgar B. Parsons, III
|
|
Typed Name of Witness
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Title:
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Vice President
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CORNING NATURAL GAS CORPORATION
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By
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/s/ Michael I. German
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Signature of Witness
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Name:
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Michael I. German
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Typed Name of Witness
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Title:
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President/Chief Executive Officer
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MULTIPLE DISBURSEMENT
TERM NOTE
New York
|
August 31, 2020
|
$3,718,000.00
|
BORROWER (Name): Corning Natural
Gas Corporation
(Organizational Structure): Corporation
(State Law organized under): New York
(Address of residence/chief executive office):
330 West William Street, P.O. Box 58, Corning, New York 14830
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BANK:
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M&T BANK, a New York banking corporation with its banking offices at One M&T Plaza, Buffalo,
NY 14203. Attention: Office of the General Counsel.
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Definitions. The following terms shall
have the indicated meanings in this Note:
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|
1.
|
“Amortization Commencement Date” shall mean the first day of the Permanent Loan
Period, which shall be October 31, 2020.
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|
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2.
|
“Amortization Period” shall be ten (10) years, and shall mean the approximate
number of years, starting on the Amortization Commencement Date, needed to result in the full repayment of the Principal Amount,
if all regularly scheduled payments are made at the required intervals over that period. The Amortization Period may be longer
than the remaining term of this loan and shall not compromise the enforceability of the Maturity Date.
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3.
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“Disbursement Period” shall mean the period from the date of this Note to, but
not including, the Amortization Commencement Date, during which the Bank may advance funds to Borrower in accordance with the terms
of this Note and/or a Loan Agreement, if applicable.
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4.
|
“First Installment Payment Date” shall mean the first Payment Due Date following
the Amortization Commencement Date.
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5.
|
“Loan Agreement” shall mean any supplementary agreement, if any, between Borrower
and the Bank dated on or about the date hereof and/or in connection herewith, providing for the disbursement of funds under this
Note, as the same may be amended, modified or replaced from time to time.
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6.
|
“Maturity Date” shall mean the Payment Due Date in the 120th
month following the Amortization Commencement Date.
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7.
|
“New York Business Day” shall mean any day other than Saturday, Sunday or other
day in which commercial banking institutions in New York, New York are authorized or required by law or other governmental action
to remain closed for business.
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8.
|
“Payment Due Date” shall mean the 31st day of the applicable
calendar month (or if there is no numerically corresponding day in a particular month, the last calendar day of such month); provided,
however, to the extent, if at all, that a non-daily adjusting LIBOR-based interest rate is in effect, if in any applicable month
the day identified above is not a Joint Business Day, the Payment Due Date shall be extended to the next succeeding Joint Business
Day unless such next succeeding Joint Business Day would fall in the next calendar month, in which case such Payment Due Date shall
be the immediately preceding Joint Business Day, so as to, in all instances, coincide with the end of the applicable Interest Period.
See attached LIBOR Rate Rider, the terms of which are incorporated herein by reference, for definitions and additional provisions.
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9.
|
“Permanent Loan Period” shall mean the period from and including the Amortization Commencement Date to the
Maturity Date, during which Borrower shall repay the outstanding Principal Amount, with interest, as set forth below.
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10.
|
“Principal Amount” shall mean the amount actually advanced, which sum shall not exceed Three Million
Seven Hundred Eighteen Thousand and 00/100 Dollars ($3,718,000.00).
|
Promise to Pay. For value received,
intending to be legally bound, Borrower promises to pay to the order of the Bank, on the dates set forth below, the Principal Amount
plus interest as agreed below, all payments required by the Bank to fund any escrow accounts for the payment of taxes, insurance
and/or other charges (collectively, “Escrow”), and all fees and costs (including without limitation attorneys’
fees and disbursements whether for internal or outside counsel) the Bank incurs in order to collect any amount due under this Note,
to negotiate or document a workout or restructuring, or to preserve its rights or realize upon any guaranty or other security for
the payment of this Note (“Expenses”).
Authorized Representatives. During the
Disbursement Period, the Bank may fund loan proceeds hereunder in reliance upon any oral, telephonic, written, teletransmitted
or other request (the “Request(s)”) that the Bank in good faith believes to be valid and to have been made by Borrower
or on behalf of Borrower by Michael I. German as President or Charles Lenns as Vice President and Chief Financial Officer
(include name(s) and title(s), as appropriate) or any other officer, employee or representative of Borrower who is authorized or
designated as a signer of loan documents under the provisions of Borrower’s most recent resolutions or similar documents
on file with the Bank (each an “Authorized Person”). Notwithstanding that individual names may have been provided to
the Bank, the Bank shall be permitted at any time to rely solely on an individual’s title to ascertain whether that individual
is an Authorized Person. The Bank may act on the Request of any Authorized Person until the Bank shall have received from Borrower,
and had a reasonable time to act on, written notice revoking the authority of such Authorized Person. Borrower acknowledges that
the transmission between Borrower and Bank of any Request or other instructions involves the possibility of errors, omissions,
misinterpretations, fraud and mistakes, and agrees to adopt such internal measures and operational procedures as may be necessary
to prevent such occurrences. By reason thereof, Borrower hereby assumes all risk of loss and responsibility for, and releases and
discharges the Bank from any and all responsibility or liability for, and agrees to indemnify, reimburse on demand and hold Bank
harmless from, any and all claims, actions, damages, losses, liability and expenses by reason of, arising out of, or in any way
connected with or related to: (i) Bank’s accepting, relying on and acting upon any Request or other instructions with respect
to the loan evidenced by this Note; or (ii) any such error, omission, misinterpretation, fraud or mistake, provided such error,
omission, misinterpretation, fraud or mistake is not directly caused by the Bank’s gross negligence or willful misconduct.
The Bank shall incur no liability to Borrower or to any other person as a direct or indirect result of funding any advance pursuant
to this paragraph.
Availability; Non-Revolving Credit. As a
condition to the advance of any funds hereunder, Borrower must demonstrate that it has funded 40% of the PSC approval capital expenditure
costs to be financed hereunder as described in the Revised Commitment Letter dated June 24, 2020 issued by Bank to Borrower. Borrower
also agrees that any request for an advance must be accompanied with a copy of a State of New York Public Service Commission capital
expenditure tracker report. Once the Disbursement Period ends, no further advances shall be Requested under this Note. The
aggregate amount of all advances made pursuant to this Note shall not exceed the Principal Amount, but in the event of any excess
advances, the amount of any such excess shall be due and payable immediately, with interest calculated at the applicable rate.
Repayment of any portion of any advance made hereunder shall NOT increase the remaining availability for future advances.
Interest. The unpaid Principal Amount
of this Note shall, at all times, earn interest calculated on the basis of a 360-day year for the actual number of days of each
year (365 or 366), from and including the date the proceeds of this Note are disbursed to, but not including, the date all amounts
hereunder are paid in full, at a rate per year which shall be:
During the Disbursement Period:
3.00 percentage points above the greater of
(i) One month LIBOR adjusting daily or (ii) .5 percentage points
During the Permanent Loan Period:
Fixed at 2.90 percentage points
above the sum of the yield on United States Treasury Obligations adjusted to a constant maturity of ten (10) years
in effect two (2) New York Business Days prior to the Amortization Commencement Date, as published by the Board of Governors of
the Federal Reserve System in the Federal Reserve Statistical Release H.15 (519), or by such other quoting service, index or commonly
available source utilized by the Bank.
At no time during the term
of the loan shall the rate fall below 340 percentage points (3.40%) (the “Interest Rate Floor”)
If no rate is specified above, interest shall
accrue at the Maximum Legal Rate (defined below) for the applicable period.
Maximum Legal Rate. It is the intent
of the Bank and Borrower that in no event shall interest be payable at a rate in excess of the maximum rate permitted by applicable
law (the “Maximum Legal Rate”). Solely to the extent necessary to prevent interest under this Note from exceeding the
Maximum Legal Rate, Borrower agrees that any amount that would be treated as excessive under a final judicial interpretation of
applicable law shall be deemed to have been a mistake and automatically canceled, and, if received by the Bank, shall be refunded
to Borrower, without interest.
Default Rate. If an Event of Default
(defined below) occurs, the interest rate on the unpaid Principal Amount shall immediately be automatically increased to five (5)
percentage points per year above the otherwise applicable rate per year, and any judgment entered hereon or otherwise in connection
with any suit to collect amounts due hereunder shall bear interest at such default rate.
Payments. Payments shall be made in
immediately available United States funds at any banking office of the Bank.
Preauthorized Transfers from Deposit Account.
If a deposit account number is provided in the following blank, Borrower hereby authorizes the Bank to debit Borrower’s deposit
account #___________________ with the Bank automatically for any amount which becomes due under this Note.
Interest Accrual; Application of Payments.
Interest will continue to accrue on the actual principal balance outstanding until the Principal Amount is paid in full. All installment
payments (excluding voluntary prepayments of principal) will be applied as of the date each payment is received and processed.
Payments may be applied in any order in the sole discretion of the Bank, but, prior to an Event of Default, may be applied chronologically
(i.e., oldest invoice first) to unpaid amounts due and owing, in the following order: first to accrued interest, then to principal,
then to Escrow, then to late charges and other fees, and then to all other Expenses.
Repayment Terms. Borrower
shall pay to the Bank the Principal Amount and all interest owing pursuant to this Note in installments as follows:
During the Disbursement
Period:
All accrued and
unpaid interest, in amounts that may vary, on the Payment Due Date of each month, beginning on the first Payment Due Date following
the date of this Note, and continuing through and including the Amortization Commencement Date, or as otherwise invoiced by the
Bank.
During the
Permanent Loan Period:
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(i)
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119 consecutive level monthly installments consisting of both principal and interest,
each in the amount that would result in the outstanding Principal Amount, as of the Amortization Commencement Date, plus interest
at the applicable rate, being repaid in full over the course of the Amortization Period, due and payable on the First Installment
Payment Date and each Payment Due Date thereafter, and
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(ii)
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ONE (1) FINAL INSTALLMENT, due and payable on the Maturity Date, in an amount equal to the outstanding
Principal Amount, together with all other amounts outstanding hereunder, including, without limitation, accrued interest, costs
and expenses.
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To the extent, if at all, that (i)
the repayment terms of this Note contemplate level installments of principal and interest during any period in which the applicable
interest rate is a variable rate (“Variable Rate P&I Period”), and (ii) during any such Variable Rate P&I Period,
the applicable interest rate changes in accordance with the terms of this Note, the Bank may, but shall be under no obligation
to, recalculate and adjust at any time the installment amount due and payable to the Bank, so as to appropriately reamortize the
unpaid Principal Amount, as of the date of such adjustment through the Maturity Date (or such other date as may be provided for
herein). Borrower understands that non-adjustment of the installment amount as described herein could result in a greater portion
of the unadjusted installment amount being applied to interest due, leaving less available to reduce the Principal Amount balance,
resulting in a higher than expected Principal Amount balance due and payable to the Bank on the Maturity Date. Absent manifest
error, the Bank’s determination of any amount due in connection herewith shall be conclusive.
Late Charge. If Borrower fails to pay,
within five (5) days of its due date, any amount due and owing pursuant to this Note or any other agreement executed and delivered
to the Bank in connection with this Note, including, without limitation, any Escrow payment due and owing, Borrower shall immediately
pay to the Bank a late charge equal to the greatest of (a) $50.00, (b) five percent (5%) of the delinquent amount or (c) the Bank’s
then current late charge as announced from time to time. Notwithstanding the above, if this Note is secured by a one- to six-family
owner-occupied residence, the late charge shall equal 2% of the delinquent amount and shall be payable if payment is not received
within fifteen days of its due date.
Prepayment Premium. During the term
of this Note, Borrower shall have the option of paying the unpaid Principal Amount to the Bank in advance of the Maturity Date,
in whole or in part, at any time and from time to time upon written notice received by the Bank at least three (3) days prior to
making such payment; provided, however, as consideration for the privilege of making such prepayment, Borrower shall pay to the
Bank a fee (the “Premium”) equal to the amount provided for on the attached Prepayment Premium Rider (or LIBOR Rate
Rider, as applicable). Any partial prepayment of principal shall be posted as of the date received and applied in inverse order
of maturity. With any prepayment in full of the Principal Amount balance, Borrower shall also pay to the Bank all accrued interest
and Expenses owing pursuant to this Note. In the event the Maturity Date of this Note is accelerated following an Event of Default,
the Bank’s right to collect the Premium, as liquidated damages, shall accrue immediately, with the amount of the Premium
to be determined in accordance with the terms of this Note at the time of any actual prepayment or other satisfaction, in whole
or in part, by any means, of the principal indebtedness evidenced by this Note. Any tender of payment by or on behalf of the Borrower
made after such Event of Default to satisfy or reduce the principal indebtedness shall be expressly deemed a voluntary prepayment,
in which case, to the extent permitted by law, the Bank shall be entitled to the amount necessary to satisfy the entire indebtedness,
plus the appropriate Premium calculated in accordance with the terms of this Note.
Representations, Warranties and Covenants.
Borrower represents and warrants to and agrees and covenants with the Bank that now and until this Note is paid in full:
a) Business
Purpose. The Loan proceeds shall be used only for a business purpose and not for any personal, family or household purpose.
b) Good Standing;
Authority. Borrower is an entity or sole proprietor (i) duly organized and existing and in good standing under the laws of
the jurisdiction in which it was formed, (ii) duly qualified, in good standing and authorized to do business in every jurisdiction
in which failure to be so qualified might have a material adverse effect on its business or assets and (iii) has the power and
authority to own each of its assets and to use them as contemplated now or in the future.
c) Legality.
The execution, issuance, delivery to the Bank and performance by Borrower of this Note (i) are in furtherance of Borrower’s
purposes and within its power and authority; (ii) do not (A) violate any statute, regulation or other law or any judgment, order
or award of any court, agency or other governmental authority or of any arbitrator or (B) violate Borrower’s certificate
of incorporation or other governing instrument, constitute a default under any agreement binding on Borrower, or result in a lien
or encumbrance on any assets of Borrower; and (iii) have been duly authorized by all necessary corporate or partnership action.
d) Compliance.
The Borrower conducts its business and operations and the ownership of its assets in compliance with each applicable statute, regulation
and other law, including without limitation environmental laws. All approvals, including without limitation authorizations, permits,
consents, franchises, licenses, registrations, filings, declarations, reports and notices (the “Approvals”) necessary
to the conduct of Borrower’s business and for Borrower’s due issuance of this Note have been duly obtained and are
in full force and effect. The Borrower is in compliance with all conditions of each Approval.
e) Financial Statements
and Other Information. Promptly deliver to the Bank (i) within sixty (60) days after the end of each of its first three fiscal
quarters, an internally prepared financial statement of the Borrower and each subsidiary as of the end of such quarter, which financial
statement shall consist of income and cash flows for the quarter, for the corresponding quarter in the previous fiscal year and
for the period from the end of the previous fiscal year, with a consolidating and consolidated balance sheet as of the quarter
end all in such detail as the Bank may request; (ii) within one hundred twenty (120) days after the end of each fiscal year,
internally prepared consolidating and consolidated statements of the Borrower’s and each subsidiary’s income and
cash flows and its consolidating and consolidated balance sheet as of the end of such fiscal year, setting forth comparative figures
for the preceding fiscal year; all such statements shall be certified by the Borrower’s chief financial officer to
be correct and in accordance with the Borrower’s and each Subsidiary’s records and to present fairly the results of
the Borrower’s and each Subsidiary’s operations and cash flows and its financial position at year end; and (iii) with
each of the financial statements set forth above in clauses (i) and (ii) statement of income, a certificate executed by the Borrower’s
chief executive or chief financial officers or other such person responsible for the financial management of the Borrower (A) setting
forth the computations required to establish the Borrower’s compliance with each financial covenant, if any, during the statement
period, (B) stating that the signer of the certificate has reviewed the Credit Agreement and the operations and condition (financial
or other) of the Borrower and each of its Subsidiaries during the relevant period and (C) stating that no Event of Default occurred
during the period, or if an Event of Default did occur, describing its nature, the date(s) of its occurrence or period of existence
and what action the Borrower has taken with respect thereto; and (iv) prior to December 31 of each year, Borrower’s operating
and capital budgets for the succeeding year. The Borrower shall also promptly provide the Bank with copies of all annual reports,
proxy statements and similar information distributed to shareholders, partners or members, and copies of all filings with the Securities
and Exchange Commission and the Pension Benefit Guaranty Corporation, and shall provide, in form satisfactory to the Bank, such
additional information, reports or other information as the Bank may from time to time reasonably request regarding the financial
and business affairs of the Borrower or any Subsidiary. If the Borrower is an individual, the Borrower shall provide annually a
personal financial statement in form and detail acceptable to the Bank and such other financial information as the Bank may from
time to time reasonably request. Promptly upon the request of the Bank from time to time, Borrower shall supply all additional
information requested and permit the Bank’s officers, employees, accountants, attorneys and other agents to (x) visit and
inspect each of Borrower’s premises, (y) Upon no less than seven (7) days advance written notice to Borrower Bank may, at
Bank’s sole expense, examine, audit, copy and extract from Borrower’s records and (z) discuss Borrower’s or its
affiliates’ business, operations, assets, affairs or condition (financial or other) with its responsible officers and independent
accountants. Borrower shall cause Corning Natural Gas Holding Corporation (“Holding”) to (i) promptly deliver to
the Bank copies of all annual reports, proxy statements and similar information distributed to shareholders, partners or members
and of all filings with the Securities and Exchange Commission and the Pension Benefit Guaranty Corporation, and (ii) provide in
form satisfactory to the Bank: (a) within sixty (60) days after the end of each of its first three fiscal quarters, consolidating
and consolidated statements of income and cash flows for the quarter, for the corresponding quarter in the previous fiscal year
and for the period from the end of the previous fiscal year, with a consolidating and consolidated balance sheet as of the quarter
end; and (b) within one-hundred twenty days (120) after the end of each fiscal year, consolidating and consolidated statements
of Holding’s income and cash flows and its consolidating and consolidated balance sheet as of the end of such fiscal year,
setting forth comparative figures for the preceding fiscal year and to be:
x
audited o reviewed q
compiled
by an independent certified
public accountant acceptable to the Bank; all such statements shall be certified by Holding’s chief financial officer or
partner to be correct, not misleading and in accordance with Holding’s records and to present fairly the results of Holding’s
operations and cash flows and if annual its financial position at year end in conformity with generally accepted accounting principles.
If no box is checked, Holding shall deliver financial statements and information in the form and at the times satisfactory to the
Bank. Holding represents that its assets are not subject to any liens, encumbrances or contingent liabilities except as fully disclosed
to the Bank in such statements. Holding authorizes the Bank from time to time to obtain, verify and review all financial data deemed
appropriate by the Bank in connection with the Obligations, including without limitation credit reports from agencies. Holding
understands this requirement and has satisfied itself as to its meaning and consequences and acknowledges that it has made its
own arrangements for keeping informed of changes or potential changes affecting the Borrower including the Borrower’s financial
condition.
f) Accounting; Tax
Returns and Payment of Claims. Borrower will maintain a system of accounting and reserves in accordance with generally accepted
accounting principles, has filed and will file each tax return required of it and, except as disclosed in an attached schedule,
has paid and will pay when due each tax, assessment, fee, charge, fine and penalty imposed by any taxing authority upon Borrower
or any of its assets, income or franchises, as well as all amounts owed to mechanics, materialmen, landlords, suppliers and the
like in the ordinary course of business.
g) Title to Assets;
Insurance. Borrower has good and marketable title to each of its assets free of security interests and mortgages and other
liens except as disclosed in its financial statements or on a schedule attached to this Note or pursuant to the Bank’s prior
written consent. Borrower will maintain its property in good repair and will maintain and on request provide the Bank with evidence
of insurance coverage satisfactory to the Bank including without limitation fire and hazard, liability, worker’s compensation
and business interruption insurance and flood hazard insurance as required.
h) Judgments and
Litigation. There is no pending or threatened claim, audit, investigation, action or other legal proceeding or judgment, order
or award of any court, agency or other governmental authority or arbitrator (each an “Action”) which involves Borrower
or its assets and might have a material adverse effect upon Borrower or threaten the validity of this Note or any related document
or transaction. Borrower will immediately notify the Bank in writing upon acquiring knowledge of any such Action.
i) Borrower Notices.
Borrower will immediately notify the Bank in writing (i) of any change in its address or of the location of any collateral securing
this Note, (ii) of the occurrence of any Event of Default defined below, (iii) of any material change in Borrower’s ownership
or management and (iv) of any material adverse change in Borrower’s ability to repay this Note.
j) No Transfer of
Assets. Until this Note is paid in full, Borrower shall not without the prior written consent of the Bank (i) sell or otherwise
dispose of substantially all of its assets, (ii) acquire substantially all of the assets of another entity, (iii) if it is a corporation,
participate in any merger, consolidation or other absorption or (iv) agree to do any of these things.
k. Further
Assurances. The Borrower shall, and shall cause its affiliates to take such action and execute and deliver to the Bank such
additional documents, instruments, certificates, and agreements as the Bank may reasonably request from time to time to effectuate
the purposes and intent of the transaction(s) contemplated hereby, including, without limitation, causing any affiliate, entity
or series of entities it may create hereafter through merger, division or otherwise, to execute agreements, in form and substance
acceptable to Bank, (i) assuming or guarantying the Borrower’s obligations under this Note and all related agreements and
(ii) pledging assets to the Bank to the same extent as the Borrower.
Events of Default. The following constitute
an event of default (“Event of Default”): (i) failure by Borrower to make any payment when due (whether at the stated
maturity, by acceleration or otherwise) of the amounts due under the Note, or any part thereof, or there occurs any event or condition
which after notice, lapse of time or both will permit such acceleration of any Note; (ii) Borrower defaults in the performance
of any covenant or other provision with respect to this Note or any other agreement between Borrower and the Bank or any of its
affiliates or subsidiaries (collectively, “Affiliates”); (iii) Borrower fails to pay when due (whether at the stated
maturity, by acceleration or otherwise) any indebtedness for borrowed money owing to the Bank (other than under this Note), any
third party or Affiliate or the occurrence of any event which could result in acceleration of payment of any such indebtedness
or the failure to perform any agreement with any third party or Affiliate; (iv) the reorganization, merger, consolidation or dissolution
of Borrower (or the making of any agreement therefor); the sale, assignment, transfer or delivery of all or substantially all of
the assets of Borrower to a third party; or the cessation by Borrower as a going business concern; (v) the death or judicial declaration
of incompetency of Borrower, if an individual; (vi) failure to pay, withhold or collect any tax as required by law; the service
or filing against Borrower or any of its assets of any lien (other than a lien permitted in writing by the Bank), judgment, garnishment,
order or award which Bank in good faith determines shall have a material adverse effect on the Borrower or the Borrower’s
ability to pay or perform the Obligations; (vii) if Borrower becomes insolvent or is generally not paying its debts as such
debts become due; (viii) the making of any general assignment by Borrower for the benefit of creditors; the appointment of a receiver
or similar trustee for Borrower or its assets; or the making of any, or sending notice of any intended, bulk sale; (ix) Borrower
commences, or has commenced against it, any proceeding or request for relief under any bankruptcy, insolvency or similar laws now
or hereafter in effect in the United States of America or any state or territory thereof or any foreign jurisdiction or any formal
or informal proceeding for the dissolution or liquidation of, settlement of claims against or winding up of affairs of Borrower,
and such petition, action or appointment is not dismissed or stayed within forty-five (45) days; (x) any representation
or warranty made in this Note, any related document, any agreement between Borrower and the Bank or any Affiliate or in any financial
statement of Borrower proves to have been misleading in any material respect when made; Borrower omits to state a material fact
necessary to make the statements made in this Note, any related document, any agreement between Borrower and the Bank or any Affiliate
or any financial statement of Borrower not misleading in light of the circumstances in which they were made; or, if upon the date
of execution of this Note, there shall have been any material
adverse change in any of the facts disclosed in any financial statement,
representation or warranty that was not disclosed in writing to the Bank at or prior to the time of execution hereof; (xi) any
pension plan of Borrower fails to comply with applicable law or has vested unfunded liabilities that, in the opinion of the Bank,
might have a material adverse effect on Borrower’s ability to repay its debts; (xii) an adverse change in the Borrower, its
business, assets, operations, management, ownership, affairs or condition (financial or otherwise) from the status shown on any
financial statement or other document submitted to the Bank or any Affiliate, and which change the Bank determines will have a
material adverse effect on (a) the Borrower, its business, assets, operations or condition (financial or otherwise), or (b) the
ability of the Borrower to pay or perform any obligation to the Bank; (xiii) the occurrence of any event described in sub-paragraph
(i) through and including (xii) hereof with respect to any guarantor or any other party liable for, or whose assets or any interest
therein secures, payment of any of the amounts due under this Note (“Guarantor”); (xiv) Borrower fails to supply new
or additional collateral within ten (10) days of request by the Bank; or (xv) the Bank in good faith deems itself insecure with
respect to payment or performance under the Note.
Rights and Remedies Upon Default. Upon
the occurrence of any Event of Default, the Bank without demand of performance or other demand, presentment, protest, advertisement
or notice of any kind (except any notice required by law) to or upon the Borrower or any other person (all and each of which demands,
presentments, protests, advertisements and notices are hereby waived), may exercise all rights and remedies under the Borrower’s
agreements with the Bank or its Affiliates, applicable law, in equity or otherwise and may declare all or any part of any amounts
due hereunder not payable on demand to be immediately due and payable without demand or notice of any kind and terminate any obligation
it may have to grant any additional loan, credit or other financial accommodation to the Borrower. All or any part of any amounts
due hereunder whether or not payable on demand, shall be immediately due and payable automatically upon the occurrence of an Event
of Default in sub-paragraphs (ix) or (x) above, or at the Bank’s option, upon the occurrence of any other Event of Default.
The provisions hereof are not intended in any way to affect any rights of the Bank with respect to any amounts due hereunder which
may now or hereafter be payable on demand.
Right of Setoff. The Bank shall have
the right to set off against the amounts owing under this Note any property held in a deposit or other account with the Bank or
any Affiliates or otherwise owing by the Bank or any Affiliates in any capacity to Borrower or any Guarantor or endorser of this
Note. Such set-off shall be deemed to have been exercised immediately at the time the Bank or such Affiliate elects to do so.
USA PATRIOT Act Notice. Bank hereby
notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (“Patriot Act”), it is required to obtain,
verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and
other information that will allow Bank to identify the Borrower in accordance with the Patriot Act. The Borrower agrees to,
promptly following a request by Bank, provide all such other documentation and information that Bank requests in order to comply
with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations,
including the Patriot Act.
Miscellaneous. Simultaneously herewith,
the Borrower and Bank have entered into a Third Amended Replacement and Restated Credit Agreement, (the “Credit Agreement”),
the terms of which control and are incorporated in this Note. This Note, together with the Credit Agreement and any
related loan and collateral agreements and guaranties, contains the entire agreement between the Bank and Borrower with respect
to the Note, and supersedes every course of dealing, other conduct, oral agreement and representation previously made by the Bank.
All rights and remedies of the Bank under applicable law and this Note or amendment of any provision of this Note are cumulative
and not exclusive. No single, partial or delayed exercise by the Bank of any right or remedy shall preclude the subsequent exercise
by the Bank at any time of any right or remedy of the Bank without notice. No waiver or amendment of any provision of this Note
shall be effective unless made specifically in writing by the Bank. No course of dealing or other conduct, no oral agreement or
representation made by the Bank, and no usage of trade, shall operate as a waiver of any right or remedy of the Bank. No waiver
of any right or remedy of the Bank shall be effective unless made specifically in writing by the Bank. Borrower agrees that in
any legal proceeding, a copy of this Note kept in the Bank’s course of business may be admitted into evidence as an original.
This Note is a binding obligation enforceable against Borrower and its successors and assigns and shall inure to the benefit of
the Bank and its successors and assigns. If a court deems any provision of this Note invalid, the remainder of the Note shall remain
in effect. Section headings are for convenience only. Singular number includes plural and neuter gender includes masculine and
feminine as appropriate.
Notices. Any demand or notice hereunder
or under any applicable law pertaining hereto shall be in writing and duly given if delivered to Borrower (at its address on the
Bank’s records) or to the Bank (at the address on page one and separately to the Bank officer responsible for Borrower’s
relationship with the Bank). 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 Borrower and the Bank.
Joint and Several. If there is more
than one Borrower, each of them shall be jointly and severally liable for all amounts and obligations that become due under this
Note and the term “Borrower” shall include each as well as all of them.
Governing Law; Jurisdiction. This Note
has been delivered to and accepted by the Bank and will be deemed to be made in the State of New York. Except as otherwise provided
under federal law, this Note will be interpreted in accordance with the laws of the State of New York excluding its conflict of
laws rules. Borrower hereby irrevocably consents to the exclusive jurisdiction of any
state or federal court in New York State in a County or Judicial district where the Bank maintains a branch and consents that the
Bank may effect any service of process in the manner and at Borrower’s address set forth above for providing notice or demand;
provided that nothing contained in this Note will prevent the Bank from bringing any action, enforcing any award or judgment or
exercising any rights against Borrower individually, against any security or against any property of Borrower within any other
county, state or other foreign or domestic jurisdiction. Borrower acknowledges and agrees that the venue provided above
is the most convenient forum for both the Bank and Borrower. Borrower waives any objection to venue and any objection based on
a more convenient forum in any action instituted under this Note.
Waiver of Jury Trial. Borrower
and the Bank hereby knowingly, voluntarily, and intentionally waive any right to trial by jury Borrower and the Bank may have in
any action or proceeding, in law or in equity, in connection with this note or the transactions related hereto. Borrower represents
and warrants that no representative or agent of the Bank has represented, expressly or otherwise, that the Bank will not, in the
event of litigation, seek to enforce this jury trial waiver. Borrower Acknowledges that the Bank has been induced to enter into
this note by, among other things, the provisions of this Section.
o Amended
and Restated Note. The Borrower acknowledges, agrees and understands
that this Note is given in replacement of and in substitution for, but not in payment of, a prior note dated on or about ____________,
____, in the original principal amount of $__________, given by Borrower in favor of the Bank (or its predecessor-in-interest),
as the same may have been amended or modified from time to time (“Prior Note”), and further, that: (a) the obligations
of the Borrower as evidenced by the Prior Note shall continue in full force and effect, as amended and restated by this Note, all
of such obligations being hereby ratified and confirmed by the Borrower; (b) any and all liens, pledges, assignments and security
interests securing the Borrower's obligations under the Prior Note shall continue in full force and effect, are hereby ratified
and confirmed by the Borrower, and are hereby acknowledged by the Borrower to secure, among other things, all of the Borrower's
obligations to the Bank under this Note, with the same priority, operation and effect as that relating to the obligations under
the Prior Note; and (c) nothing herein contained shall be construed to extinguish, release, or discharge, or constitute, create,
or effect a novation of, or an agreement to extinguish, the obligations of the Borrower with respect to the indebtedness originally
described in the Prior Note or any of the liens, pledges, assignments and security interests securing such obligations.
Acknowledgment. Borrower acknowledges
that it has read and understands all the provisions of this Note, including the provisions relating to Governing Law, Jurisdiction
and Waiver of Jury Trial, and has been advised by counsel as necessary or appropriate.
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CORNING NATURAL GAS CORPORATION
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By:
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/s/ Michael I. German
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Name: Michael I. German
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Title: President/Chief Executive Officer
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LIBOR RATE RIDER
(For Actual Balance Promissory Notes)
Borrower: Corning Natural Gas Corporation
Promissory Note Original Principal Amount:
$3,718,000.00
Promissory Note Date: August 31, 2020
DEFINITIONS. The above-referenced Promissory
Note is referred to herein as the “Note”. As used in the Note and this Rider, each capitalized term shall have the
meaning specified in the Note, and the following terms shall have the indicated meanings:
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a.
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“Base Rate” shall mean the rate of interest announced by the Bank each day as
its prime rate of interest (“Prime Rate”). If the prior blank is not completed, the Base Rate shall be two (2) percentage
points above the Prime Rate. To the extent the Prime Rate shall, at any time, be less than zero percent (0.00%), the Prime Rate
shall be deemed to be zero percent (0.00%) for purposes hereof.
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b.
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“Interest Period” shall mean, as used in connection with a non-daily adjusting
LIBOR Rate, the period commencing on the date of this Note or any Rate Adjustment Date (as the case may be) and ending on, as applicable,
the next succeeding Payment Due Date or the Payment Due Date of the calendar month that is one (1) or three (3) months thereafter
(as applicable in accordance with the LIBOR Rate in effect); provided, however, that if an Interest Period would end on a day that
is not a Joint Business Day, such Interest Period shall be extended to the next succeeding Joint Business Day unless such next
succeeding Joint Business Day would fall in the next calendar month, in which case such Interest Period shall end on the immediately
preceding Joint Business Day. To the extent that the preceding clause results in either the extension or shortening of an Interest
Period, the Bank shall have the right (but not the obligation) to shorten or extend, respectively, the succeeding Interest Period
so that it shall end on a day that numerically corresponds to the intended Payment Due Date indicated in the Note.
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c.
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“Joint Business Day” shall mean a day that is both a New York Business Day and
a London Business Day.
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d.
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“LIBOR” shall mean the rate per annum (rounded upward to the nearest 1/16th
of 1%) obtained by dividing (i) either the one-day (i.e., overnight), one-month or three-month interest period London Interbank
Offered Rate (as applicable in accordance with the LIBOR Rate in effect) as set and administered by ICE Benchmark Administration
Limited (or such other administrator of LIBOR, as may be duly authorized by the UK Financial Conduct Authority or such other proper
authority from time to time) for United States dollar deposits in the London interbank market at approximately 11:00 a.m. London,
England time (or as soon thereafter as practicable) as determined by the Bank from any broker, quoting service or commonly available
source utilized by the Bank, by (ii) a percentage equal to 100% minus the stated maximum rate of all reserves required to be maintained
against “Eurocurrency Liabilities” as specified in Regulation D (or against any other category of liabilities which
includes deposits by reference to which the interest rate on LIBOR-based loans is determined or any category of extensions of credit
or other assets which includes loans by a non-United States’ office of a bank to United States residents) on such date to
any member bank of the Federal Reserve System. Notwithstanding any provision above, the practice of rounding to determine LIBOR
may be discontinued at any time in the Bank’s sole discretion. In the event and to the extent the applicable London Interbank
Offered Rate index (“Index”) utilized for determining LIBOR shall, at any time, be less than zero percent (0.00%),
such Index shall be deemed to be zero percent (0.00%) for purposes hereof (“Negative Index Restriction”). Notwithstanding
the foregoing, to the extent an interest rate swap agreement (“Swap”) between Borrower and the Bank shall at any time
be in effect in connection with the credit facility evidenced by this Note, the Negative Index Restriction shall not apply to such
credit facility during such period as the Swap is in effect; provided, however, at such time and to the extent such Swap is terminated,
cancelled or otherwise not in effect, the Negative Index Restriction shall be deemed reinstated.
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e.
|
“LIBOR Rate” shall mean the applicable LIBOR-based interest rate in effect from
time to time, as provided for in the Note and this Rider.
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f.
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“London Business Day” shall mean any day on which dealings in United States
dollar deposits are carried on by banking institutions in the London interbank market.
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g.
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“New York Business Day” shall mean any day other than Saturday, Sunday or other
day in which commercial banking institutions in New York, New York are authorized or required by law or other governmental action
to remain closed for business.
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h. “One-Month
LIBOR” shall mean LIBOR as fixed for a one-month interest period.
i. “Rate
Adjustment Date” shall mean the effective date of a change in the applicable LIBOR Rate, as follows:
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i.
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For a daily-adjusting LIBOR Rate, the Rate Adjustment Date shall be each London Business
Day.
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ii.
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For a monthly-adjusting LIBOR Rate (i.e., having an Interest Period of one (1) month),
the Rate Adjustment Date shall be, in each month, the calendar day of that month that corresponds with the Payment Due Date in
such month (as may be adjusted pursuant to the definition of “Payment Due Date” in the Note).
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iii.
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For a quarterly-adjusting LIBOR Rate (i.e., having an Interest Period of three (3) months),
the Rate Adjustment Date shall be, initially, the Payment Due Date that is three (3) months after the first day such LIBOR Rate
is in effect (“Effective Date”), and thereafter, the Payment Due Date that is three (3) months after each prior Rate
Adjustment Date, respectively; provided, however, that if the Effective Date is not a Payment Due Date, the first Rate Adjustment
Date shall be the next succeeding Payment Due Date, after which a new three-month Interest Period shall begin with quarterly Rate
Adjustment Dates thereafter, as provided above.
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ADDITIONAL PROVISIONS:
Disclosure Regarding the Availability of
LIBOR. Borrower acknowledges and understands that (i) the London Interbank Offered Rate (defined above as the “Index”),
which is used to calculate LIBOR for purposes of this Note, is established, issued and regulated by third parties, and that its
continuing existence and ongoing viability as a source and basis for establishing contractual interest rates is entirely outside
the control of the Bank, (ii) regulatory agencies in the United States and worldwide have advised that the Index may be discontinued
after 2021, or possibly sooner, (iii) in order to address the possibility of a discontinuance of the Index, this Note includes
provisions that contemplate the replacement of the Index as a basis for establishing the applicable interest rate for the loan(s)
evidenced hereby, and (iv) should the actual discontinuance of the Index occur, any replacement index may be materially different
than the Index, and necessitate substantive changes to the manner in which the applicable interest rate for the loan(s) evidenced
hereby is calculated and applied. Notwithstanding the above, Borrower has knowingly and voluntarily requested and/or accepted utilization
of the Index for all purposes provided for herein, accepting any inherent risks associated with such utilization and any subsequent
discontinuance of the Index, and hereby waives any claims or defenses against the Bank in connection therewith.
Interest Rate Determinations and Adjustments.
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·
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To the extent a daily-adjusting
LIBOR Rate is in effect, the LIBOR Rate shall be determined using the One-Month LIBOR in effect on the date of the Note (or if
such day is not a London Business Day, on the immediately preceding London Business Day), and shall be adjusted thereafter on each
subsequent Rate Adjustment Date using the One-Month LIBOR in effect on each respective Rate Adjustment Date.
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·
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To the extent a monthly-adjusting
LIBOR Rate (i.e., a LIBOR Rate adjusting each month) or a quarterly-adjusting LIBOR Rate (i.e., a LIBOR Rate adjusting every
three (3) months) is in effect, the initial LIBOR Rate shall be determined using the applicable LIBOR in effect two (2) London
Business Days prior to the date of the Note (or two (2) London Business Days prior to the Amortization Commencement Date, as applicable),
and shall be adjusted thereafter on each subsequent Rate Adjustment Date using the applicable LIBOR in effect two (2) London Business
Days prior to each Rate Adjustment Date, respectively.
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Prepayment; Breakage Fee. Subject to
the following, during the term of this Note, Borrower shall have the option of paying the Principal Amount to the Bank in advance
of the Maturity Date, in whole or in part, at any time and from time to time upon written notice received by the Bank at least
three (3) days prior to making such payment; provided, however, that if (i) Borrower prepays, in whole or in part, any Principal
Amount, when a LIBOR Rate is in effect (other than on a Rate Adjustment Date), or (ii) the LIBOR Rate is converted to the Base
Rate on any day other than a Rate Adjustment Date, then Borrower shall be liable for and shall pay the Bank, on demand, the higher
of $250.00 or the actual amount of the liabilities, expenses, costs or funding losses that are a direct or indirect result of such
prepayment or other condition described above, whether such liability, expense, cost or loss is by reason of (a) any reduction
in yield, by reason of the liquidation or reemployment of any deposit or other funds acquired by the Bank, (b) the fixing of the
interest rate payable on any LIBOR-based loan or (c) otherwise (collectively, the “Breakage Fee”). The determination
by the Bank of the foregoing amount shall, in the absence of manifest error, be conclusive and binding upon Borrower. The provisions
of this paragraph shall not be applicable if the LIBOR Rate in effect at the time of the prepayment has an Interest Period of one
day.
Inability to Determine LIBOR Rates, Increased
Costs, Illegality.
a) Increased Costs.
If the Bank shall determine that, due to either (a) the introduction of any change (other than any change by way of imposition
of or increase in reserve requirements included in the calculation of the LIBOR Rate) in or in the interpretation of any requirement
of law or (b) the compliance with any guideline or request from any central bank or other governmental authority (whether or not
having the force of law), there shall be any increase in the cost to the Bank of agreeing to make or making, funding or maintaining
any loans based on LIBOR, then Borrower shall be liable for, and shall from time to time, upon demand therefor by the Bank, pay
to the Bank such additional amounts as are sufficient to compensate the Bank for such increased costs.
b) Inability to
Determine Rates. If the Bank shall determine that for any reason adequate and reasonable means do not exist for ascertaining
LIBOR, the Bank will give notice of such determination to Borrower. Thereafter, the Bank may not maintain the loan
hereunder at
the LIBOR Rate until the Bank revokes such notice in writing and, until such revocation, the Bank may convert the applicable interest
rate to the Base Rate, subject to the terms of the section below entitled “Effect of Benchmark Transition Event”.
c) Illegality.
If the Bank shall determine that the introduction of any law (statutory or common), treaty, rule, regulation, guideline or determination
of an arbitrator or of a governmental authority or in the interpretation or administration thereof, has made it unlawful, or that
any central bank or other governmental authority has asserted that it is unlawful for the Bank to make LIBOR-based loans, then,
on notice thereof by the Bank to Borrower, the Bank may suspend the maintaining of the loan hereunder at the LIBOR Rate until the
Bank shall have notified Borrower that the circumstances giving rise to such determination shall no longer exist. If the Bank shall
determine that it is unlawful to maintain the loan hereunder based on LIBOR, the Bank may convert the applicable interest rate
to the Base Rate, subject to the terms of the section below entitled “Effect of Benchmark Transition Event”.
Conversion to Base Rate Upon Default.
Unless the Bank shall otherwise and in its sole discretion consent in writing, if (i) an event of default (with respect to any
payment obligation or otherwise, as may be defined or described in the Note or related documents) has occurred and is continuing,
or (ii) there exists a condition or event that, with the passage of time, the giving of notice, or both, shall constitute such
an event of default, the Bank, in its sole discretion, may convert the applicable interest rate from the LIBOR Rate to the Base
Rate, and each reference in the Note and herein to the LIBOR Rate shall be deemed to be a reference to the Base Rate. Nothing
herein shall be construed to be a waiver by the Bank of its right to have the outstanding principal balance accrue interest at
the Default Rate, accelerate the indebtedness and/or exercise any other remedies available to the Bank under the terms hereof or
applicable law.
Repayment Upon Conversion to Base Rate. Except as otherwise
provided herein, during the time of any conversion of the LIBOR Rate to the Base Rate, whether temporary or permanent, and whether
pursuant to an event of default or otherwise, and without compromising any other rights and remedies of the Bank, and in the absence
of the Bank exercising any such other rights or remedies as may be applicable, Borrower shall continue to repay all indebtedness
in accordance with the terms of the Note. The determination by the Bank of the foregoing amounts shall, in the absence of
manifest error, be conclusive and binding upon Borrower.
Effect of Benchmark Transition Event.
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(a)
|
Benchmark Replacement. Notwithstanding anything to the contrary herein or in the Note or any related
agreement, upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, the Bank may unilaterally
amend the terms hereof to replace LIBOR with a Benchmark Replacement. Any such amendment will become effective as soon as practicable
for the Bank and upon notice to the Borrower, without any further action or consent of the Borrower, except that with respect
to an amendment pursuant to an Early Opt-in Election, such amendment will become effective at 5:00 p.m. on the fifth (5th) New
York Business Day after the Bank has provided such proposed amendment to the Borrower, so long as the Bank has not received, by
such time, written notice of objection to such amendment from the Borrower. No replacement of LIBOR with a Benchmark Replacement
pursuant to this Section titled “Effect of Benchmark Transition Event” (“this Section”) will occur prior
to the applicable Benchmark Transition Start Date. Borrower shall pay all out-of-pocket costs (including reasonable attorney fees)
incurred by the Bank in connection with any amendment and related actions contemplated in this Section.
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(b)
|
Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark
Replacement, the Bank will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding
anything to the contrary herein or in any related document or agreement, any amendments implementing such Benchmark Replacement
Conforming Changes will become effective without any further action or consent of the Borrower. The Bank shall not be liable to
the Borrower for any Benchmark Replacement Conforming Changes made by the Bank in good faith.
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(c)
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Notices; Standards for Decisions and Determinations. The Bank will endeavor to promptly notify
the Borrower of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related
Benchmark Replacement Date and Benchmark Transition Start Date, (ii) the implementation of any Benchmark Replacement, (iii) the
effectiveness of any Benchmark Replacement Conforming Changes and (iv) the commencement or conclusion of any Benchmark Unavailability
Period. Any determination, decision or election that may be made by the Bank pursuant to this Section, including, without limitation,
any determination with respect to a tenor, rate or adjustment, or of the occurrence or non-occurrence of an event, circumstance
or date, and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may
be made in the Bank’s sole discretion and without consent from the Borrower (except, in each case, as expressly required
pursuant to this Section) and shall not be a basis of any claim of liability of any kind or nature against the Bank, all such claims
being hereby waived by the Borrower.
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(d)
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Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement
of a Benchmark Unavailability Period, the Borrower may revoke (as applicable) any request for an advance/borrowing of, conversion
to, or continuation of a LIBOR-based loan to be made, converted or continued during any Benchmark Unavailability Period and, failing
that, the Borrower will be deemed to have converted any such request (as applicable) into a request for an advance/borrowing of
or conversion to a loan that shall accrue interest at the Base Rate. During any Benchmark Unavailability Period, the component
of the Base Rate based upon LIBOR (if any) will not be used in any determination of the Base Rate.
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(e)
|
Certain Defined Terms. As used in this Section:
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1.
|
“Benchmark Replacement” means the sum of: (a) the alternate benchmark rate (which may
include Term SOFR) that has been selected by the Bank giving due consideration to (i) any selection or recommendation of a replacement
rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market
convention for determining a rate of interest as a replacement to LIBOR for U.S. dollar-denominated syndicated or bilateral credit
facilities and (b) the Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be
less than zero, the Benchmark Replacement will be deemed to be zero for the purposes hereof.
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2.
|
“Benchmark Replacement Adjustment” means, with respect to any replacement of LIBOR
with an Unadjusted Benchmark Replacement for each applicable Interest Period, the spread adjustment, or method for calculating
or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Bank giving
due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such
spread adjustment, for the replacement of LIBOR with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental
Body or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or
determining such spread adjustment, for the replacement of LIBOR with the applicable Unadjusted Benchmark Replacement for U.S.
dollar-denominated syndicated or bilateral credit facilities at such time.
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3.
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“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement,
any technical, administrative or operational changes (including, without limitation, changes to the definition of “Base Rate,”
the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest and
other administrative matters) that the Bank decides may be appropriate to reflect the adoption and implementation of such Benchmark
Replacement and to permit the administration thereof by the Bank in a manner substantially consistent with market practice (or,
if the Bank decides that adoption of any portion of such market practice is not administratively feasible or if the Bank determines
that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the
Bank decides is reasonably necessary in connection with the administration of the loan(s) evidenced hereby).
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4.
|
“Benchmark Replacement Date” means the earlier to occur of the following events with
respect to LIBOR:
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|
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1)
|
in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,”
the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the
administrator of LIBOR permanently or indefinitely ceases to provide LIBOR; or
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2)
|
in the case of clause (3) of the definition of “Benchmark Transition Event,” the date
of the public statement or publication of information referenced therein.
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5.
|
“Benchmark Transition Event” means the occurrence of one or more of the following events
with respect to LIBOR:
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|
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1)
|
a public statement or publication of information by or on behalf of the administrator of LIBOR
announcing that such administrator has ceased or will cease to provide LIBOR, permanently or indefinitely, provided that, at the
time of such statement or publication, there is no successor administrator that will continue to provide LIBOR;
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2)
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a public statement or publication of information by the regulatory supervisor for the administrator
of LIBOR, the U.S. Federal Reserve System, an insolvency official with jurisdiction over the administrator for LIBOR, a resolution
authority with jurisdiction over the administrator for LIBOR or a court or an entity with similar insolvency or resolution authority
over the administrator for LIBOR, which states that the administrator of LIBOR has ceased or will cease to provide LIBOR permanently
or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue
to provide LIBOR; or
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3)
|
a public statement or publication of information by the regulatory supervisor for the administrator
of LIBOR announcing that LIBOR is no longer representative.
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6.
|
“Benchmark Transition Start Date” means (a) in the case of a Benchmark Transition Event,
the earlier of (i) the applicable Benchmark Replacement Date and (ii) if such Benchmark Transition Event is a public statement
or publication of information of a prospective event, the 180th day prior to the expected date of such event as of such public
statement or publication of information (or if the expected date of such prospective event is fewer than 180 days after such statement
or publication, the date of such statement or publication) and (b) in the case of an Early Opt-in Election, the date specified
by the Bank by notice to the Borrower, so long as the Bank has not received, by such date, written notice of objection to such
Early Opt-In Election from the Borrower.
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7.
|
“Benchmark Unavailability Period” means, if a Benchmark Transition Event and its related
Benchmark Replacement Date have occurred with respect to LIBOR and solely to the extent that LIBOR has not been replaced with a
Benchmark Replacement, the period (x) beginning at the time that such Benchmark Replacement Date has occurred if, at such time,
no Benchmark Replacement has replaced LIBOR for all purposes hereunder in accordance with this Section and (y) ending at the time
that a Benchmark Replacement has replaced LIBOR for all purposes hereunder pursuant to this Section.
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8.
|
“Early Opt-in Election” means the occurrence of:
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|
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1)
|
a determination by the Bank that currently outstanding U.S. dollar-denominated syndicated or bilateral
credit facilities at such time contain (as a result of amendment or as originally executed) as a benchmark interest rate, in lieu
of LIBOR, a new benchmark interest rate to replace LIBOR, and
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2)
|
the election by the Bank to declare that an Early Opt-in Election has occurred and the provision
by the Bank of written notice of such election to the Borrower.
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9.
|
“Federal Reserve Bank of New York’s Website”
means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org,
or any successor source.
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10.
|
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve
Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of
New York or any successor thereto.
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11.
|
“SOFR” with respect to any day means the secured overnight financing rate published
for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) on
the Federal Reserve Bank of New York’s Website.
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|
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12.
|
“Term SOFR” means the forward-looking term rate based on SOFR that has been selected
or recommended by the Relevant Governmental Body.
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|
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13.
|
“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark
Replacement Adjustment.
|
Acknowledgment. Borrower acknowledges that it has read and
understands all the provisions of this Rider and has been advised by counsel as necessary or appropriate.
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CORNING NATURAL GAS CORPORATION
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By: /s/ Michael I. German
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Name: Michael I. German
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|
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Title: President/Chief Executive Officer
|
PREPAYMENT PREMIUM RIDER
(Yield Maintenance)
|
Borrower:
|
Corning Natural Gas Corporation
|
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|
|
|
Title of Promissory Note:
|
Multiple Disbursement Term Note
|
|
|
|
|
Date of Promissory Note:
|
August 31, 2020
|
|
|
|
|
Principal Amount of Promissory Note:
|
$3,718,000.00
|
(The above-referenced promissory note is referred
to herein as the “Note”.)
Each capitalized term used herein shall have
the meaning specified in the Note, except as otherwise defined herein.
Prepayment Premium. If the interest
rate in effect at the time of any prepayment is a fixed percentage rate (whether in effect since the date of this Note or any subsequent
date in connection with an interest rate adjustment), as consideration of the privilege of making such prepayment, Borrower shall
pay to M&T Bank (“Bank”) a premium equal to the greater of (a) one percent (1%) of the amount prepaid, or (b) the
present value of the difference between (i) the amount of interest that would have accrued on the prepaid principal from the date
of prepayment through the earlier of the Maturity Date or the date of the next scheduled interest rate adjustment, if any (“Measurement
Period”) at the fixed interest rate in effect on the date of prepayment and (ii) the amount of interest that would have accrued
on the prepaid principal during the Measurement Period at the Current Market Rate. “Current Market Rate” shall mean
the most recent yield on United States Treasury Obligations adjusted to a constant maturity having a term most nearly corresponding
to the Measurement Period, in effect two (2) business days prior to the date of prepayment, as published by the Board of Governors
of the Federal Reserve System in the Federal Reserve Statistical Release H.15 (519), or by such other quoting service, index or
commonly available source utilized by the Bank for such purposes. The present value calculation used herein shall use the Current
Market Rate as the discount rate and shall be calculated as if each installment of principal had been made as scheduled pursuant
to the terms of this Note.
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|
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|
CORNING NATURAL GAS CORPORATION
|
|
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|
|
By:
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/s/ Michael I. German
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|
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|
Name: Michael I. German
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|
|
Title: President/Chief Executive Officer
|
GENERAL SECURITY AGREEMENT
New York
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):
330 West William Street, Corning, New York 14830
Bank/Secured Party: M&T Bank, 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, inventory, 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.
If, now or
in the future, any of the obligations secured pursuant to any security interest or lien created by this instrument include any
Special Flood Zone Loan, then the following shall apply: any such Special Flood Zone Loan shall not be secured pursuant
to any security interest or lien created by this instrument in personal property that would constitute "contents" located
within Flood Zone Improvements securing such Special Flood Zone Loan, where, for purposes of the foregoing, "Flood Zone Improvements"
means any "improved" real property that is located within a Special Flood Hazard Area, a "Special Flood Zone Loan"
means a loan, line of credit or other credit facility which is secured by Flood Zone Improvements,
and the terms "improved" real property, "Special Flood Hazard Area," and
"contents" shall have the meaning ascribed to them by the Flood Disaster Protection Act of 1973, 42 U.S.C.
§ 4001 et seq., and implementing regulations, 44 C.F.R. Parts 59 et seq., and/or the Federal
Emergency Management Agency, all as may be amended from time to time.
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; (iii) collect Collateral consisting of accounts
or assign such Collateral for purposes of collection; or (iv) sell or lease Collateral consisting of inventory. A sale, lease or
other transfer of such Collateral consisting of inventory in the ordinary course of Debtor’s business does not include a
transfer in partial or complete satisfaction of any liability or obligation or any bulk sale.
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.
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 Debtor Notices.
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. Debtor shall, and shall cause its affiliates to take such action and execute and deliver
to the Secured Party such additional documents, instruments, certificates, and agreements as the Secured Party may reasonably request
from time to time to effectuate the purposes and intent of the transaction(s) contemplated hereby, including, without limitation,
(i) to attach, continue, preserve, perfect or protect the Security Interest and Secured Party’s interests in the Collateral
and rights hereunder, including obtaining waivers (in form and content acceptable to Secured Party) from landlords, warehousemen
and mortgagees and (ii) causing any affiliate, entity or series of entities it may create hereafter through merger, division or
otherwise, to execute agreements, in form and substance acceptable to Secured Party, (a) assuming or guarantying the Debtor’s
obligations under this Agreement and all related agreements and (b) pledging assets to the Secured Party to the same extent as
the Debtor. 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.
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 inventory, equipment, goods, fixtures and other tangible personal property
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, or 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.
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.
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 which Secured Party in good faith determines shall have a material adverse effect on the Borrower or the Borrower’s
ability to pay or perform the Obligations; (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 effect 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 faith deems 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 (ix) or (x) 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”.
7.2.4 Collect Revenues. Secured
Party may either directly or through a receiver (i) demand, collect and sue 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. USA PATRIOT Act
Notice. Secured Party hereby notifies the Debtor that pursuant to the requirements of the USA PATRIOT Act (“Patriot Act”),
it is required to obtain, verify and record information that identifies the Debtor, which information includes the name and address
of the Debtor and other information that will allow Secured Party to identify the Debtor in accordance with the Patriot Act.
The Debtor agrees to, promptly following a request by Secured Party, provide all such other documentation and information that
Secured Party requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money
laundering rules and regulations, including the Patriot Act.
11. Miscellaneous.
11.1 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.
11.2 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.
11.3 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.
11.4 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.
11.5 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.
11.6 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.
11.7 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.
11.8 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.
Dated August 31, 2020
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CORNING NATURAL GAS CORPORATION
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By
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/s/ Michael I. German
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Signature of Witness
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Name:
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Michael I. German
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Typed Name of Witness
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Title:
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President/Chief Executive Officer
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