CORNING NATURAL GAS HOLDING CORPORATION
AND
PURCHASE AGREEMENT
Dated as of March 27, 2020
TABLE OF CONTENTS
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Section 1 Sale and Purchase.
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1
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Section 2 Closing.
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1
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Section 3 Representations and Warranties of the Company.
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2
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Section 4 Representations and Warranties of the Purchaser.
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8
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Section 5 Covenants of the Company.
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10
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Section 6 Survival of Representations and Warranties.
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11
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Section 7 Notices.
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11
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Section 8 Entire Agreement.
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11
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Section 9 Successors and Assigns.
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12
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Section 10 Headings.
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12
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Section 11 Governing Law.
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12
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Section 12 Counterparts.
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13
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Section 13 No Delay, Waiver.
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13
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Section 14 Severability.
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13
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Schedules
Schedule 3.1(b) Schedule of Owned Entities including Subsidiaries
Schedule 3.7 Material liabilities
incurred or accrued since Form 10-K for fiscal year ended September 30, 2019, Forms 10-Q for 2020 Year to Date, and Forms 8-K
Schedule 3.11 Litigation, Applications
and Proceedings
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of March
27, 2020, between Corning Natural Gas Holding Corporation, a New York corporation (the “Company”), and ……
(the “Purchaser”).
W I T N E S S E T H :
WHEREAS, the Company desires to issue
and sell to the Purchaser, and the Purchaser desires to purchase from the Company, certain shares of the Company’s 6% Series
C Cumulative Preferred Stock, par value $0.01 per share (“Series C Preferred Stock”), at a price per share of $25.00,
in accordance with and subject to the terms and conditions set forth herein. The shares of Series C Preferred Stock to be purchased
under this Agreement are sometimes collectively referred to as the “Shares.”
NOW, THEREFORE, in consideration of the
representations, warranties and agreements herein contained, the parties hereto agree as follows:
Section 1
Sale and Purchase.
In reliance upon the representations
and warranties contained herein and the information provided and/or incorporated by reference herein, and subject to the terms
and conditions hereof, on the Closing Date, the Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase,
the Shares.
Section 2
Closing.
The closing of the sale and purchase
of the Shares (the “Closing”) is taking place at the offices of Kohrman Jackson & Krantz, on March 27, 2020 and
upon receipt of the Purchase Price (as defined below) and this Agreement.
2.1
Purchase of Shares; Payment of Purchase Price.
At the Closing, the Purchaser is purchasing,
and the Company is selling to the Purchaser, …. shares of Series C Preferred Stock at a per share cash price of $25.00 for
an aggregate cash purchase price of …… shares ($.........) (the “Purchase Price”). At the Closing, the
Purchaser is delivering cash in an amount equal to the Purchase Price by wire transfer in immediately available funds in full payment
for the Shares to the account designated by the Company and the Company is delivering to the Purchaser certificates representing
the Shares.
At the Closing:
(a)
the Company shall issue certificated Shares to:………………..;
(b)
the Purchaser shall deliver the Purchase Price to the order of the Company; and
(c)
the Purchaser shall deliver a Form W-9 or comparable substitute or appropriate alternative form to the Company, or the Purchaser
has previously delivered such for and no changes have occurred since such delivery.
2.2
Expenses.
Each party shall pay its own expenses incurred
in connection with this Agreement and the sale and purchase of the Shares.
Section 3
Representations and Warranties of the Company.
The Company represents and warrants to
the Purchaser as follows:
(a)
The Company is a corporation duly organized and validly existing under the laws of the State of New York and has all requisite
power and authority to enter into and perform its obligations under this Agreement and to own, lease and operate its properties
and conduct its business as now being conducted, and is duly qualified to transact business and is in good standing (to the extent
such concept is applicable) under the laws of each other jurisdiction in which its owns or leases properties, or conducts any business,
so as to require such qualification, except where the failure to do so would not have a Material Adverse Effect (as defined below).
(b)
The Company does not own any interest in any other entity other than the entities listed on Schedule 3.1(b). Schedule 3.1(b)
lists the ownership of the outstanding equity interests in such entities, their jurisdiction of organization and indicates whether
or not such entities are consolidated with the Company for financial reporting purposes. Each of the consolidated entities is referred
to as a “Subsidiary” and collectively as the “Subsidiaries”. Each of the Subsidiaries has been duly organized
and is validly existing and in good standing (to the extent such concept is applicable) under the laws of their respective jurisdictions
of incorporation or formation and have full power and authority to own, lease and operate their properties and to conduct their
businesses as now being conducted, and each Subsidiary is duly qualified to transact business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification,
except where the failure to be in good standing or to so qualify would not have a Material Adverse Effect.
(c)
As used in this Agreement, “Material Adverse Effect” means any event, circumstance or condition that has had
or is reasonably expected to have a material adverse effect on the business, assets, liabilities, results of operations or condition
(financial or otherwise) of the Company and the Subsidiaries taken as a whole or that would materially impair the Company’s
ability to perform its obligations under this Agreement.
(d)
The execution and delivery by the Company of this Agreement and the consummation of the transactions contemplated herein
and therein (including the sale and delivery of the Shares) will not conflict with or result in a breach by the Company of, or
constitute a default by the Company under or result in the creation of any lien, security interest or encumbrance upon the stock
or assets of the Company or any of the Subsidiaries under: (i) the
Company’s Certificate of Incorporation, filed with
the New York Secretary of State on July 19, 2013 (“Certificate of Incorporation”), as amended by the Certificates
of Amendment to the Certificate of Incorporation, filed with the New York Secretary of State on January 28, 2016, March 30,
2016, June 27, 2017, April 30, 2018, and March …, 2020 (the Certificate of Incorporation as so amended, the “Amended
Certificate of Incorporation”), or the Amended and Restated By-laws of the Company (the “By-Laws”), (ii) any
contract, agreement or instrument to which the Company is a party or by which its properties are subject, or (iii) any existing
applicable law, rule, published regulation, judgment, order or decree of any government, governmental instrumentality or court
having jurisdiction over the Company, except for such breaches, defaults, liens, security interests or encumbrances upon the stock
or assets of the Company, or imposition of additional burdens which, in the aggregate, would not have a Material Adverse Effect.
3.2
No Material Default.
None of the Company or the Subsidiaries:
(a) is in default in the performance, observance or fulfillment of any obligation, covenant or condition contained in any agreement,
contract, commitment, instrument, plan, undertaking or regulatory requirement (including, without limitation, any and all leases,
mortgages, and other contractual arrangements with respect to real property) material to the business of the Company and the Subsidiaries
taken as a whole (collectively, the “Contracts”), and (b) no event has occurred which, with or without the giving of
notice or lapse of time or both, would constitute or result in a default thereunder except, in the case of each of (a) and (b),
for such defaults as would not, individually or in the aggregate, have a Material Adverse Effect. Each of the Contracts is valid
and enforceable in accordance with its terms except to the extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar laws now or hereafter in effect relating to creditors’
rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding
at law or in equity) and except for those failures of Contracts (or provisions thereof) to be valid or enforceable which would
not, in the aggregate, have a Material Adverse Effect.
3.3
Shares.
The Company has all requisite corporate
right, power and authority to issue, sell, and deliver the Shares as contemplated by this Agreement; and upon such issuance, sale
and delivery, and payment of the Purchase Price therefor as contemplated by this Agreement, the Purchaser will receive good and
valid title to the Shares, free and clear of any pledge, lien, security interest, charge, claim, equity or encumbrance of any kind
and such Shares will be fully paid and non-assessable, except as may be otherwise provided by Section 630 of the New York Business
Corporation Law.
3.4
Obligations Binding.
This Agreement to has been duly executed
and delivered by the Company and constitutes the legal, valid and binding obligation of the Company enforceable against it in accordance
with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of
creditors’ rights generally, and (ii) equitable
principles of general applicability relating to the availability of specific performance, injunctive relief or other equitable
remedies.
3.5
Capitalization.
(a)
The authorized capital stock of the Company as of the date of this Agreement consists of: 4,500,000 shares of Common Stock,
par value $0.01 per share, of which 3,055,779 shares were issued and outstanding; 255,500 shares of Series A Preferred Stock, par
value $0.01 per share, of which 210,600 shares were issued and outstanding; 244,500 shares of Series B Preferred Stock, of which
244,263 shares were issued and outstanding; and 250,000 shares of preferred stock not designated to a class, of which 180,000 will
be designated as Series C Preferred Stock. A total of 750,000 preferred shares are authorized. All of the issued and outstanding
shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and nonassessable, except
as may be provided by Section 630 of the New York Business Corporation Law, and are free from preemptive rights.
(b)
Except for the Series B Preferred Stock which is convertible into common stock at a 1 for 1.2 basis (as adjusted from time
to time), there are no outstanding options, warrants, rights or other securities exercisable for, exchangeable for or convertible
into equity securities of the Company.
3.6
No Registration Under the Securities Act.
Assuming (a) the accuracy of the Purchaser’s
representations and warranties set forth in Section 4, and (b) the due performance by the Purchaser of its covenants and agreements
contained herein (including, without limitation, compliance with the restrictions set forth in the legends on the certificate(s)
evidencing the Shares), it is not necessary in connection with the offer, sale and delivery of the Shares in the manner contemplated
by this Agreement to register the Shares under the Securities Act of 1933, as amended (the “Securities Act”).
3.7
Financial Statements.
The financial statements and supporting
schedules included in the Company’s periodic filings filed pursuant to the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), on Form 10-K for the years ended September 30, 2019 and 2018, and Form 10-Q for the three months ended
December 31, 2019 and 2018, are complete and correct in all material respects and present fairly in all material respects the consolidated
financial position of the Company and the Subsidiaries as of the dates specified (subject to normal year-end audit adjustments
in the case of unaudited interim financial statements) and the consolidated results of their operations for the periods specified
(subject to normal year-end audit adjustments in the case of unaudited interim financial statements); such financial statements,
including the related schedules and notes thereto, were prepared in conformity with generally accepted accounting principles as
applied in the United States (“GAAP”) on a consistent basis during the periods involved, except as indicated therein
or in the notes thereto. None of the Company nor any of the Subsidiaries has any material liability (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due) known to the Company, other than: (i) liabilities disclosed
in any report filed by the Company under the Exchange Act including Form 10-K,
Forms 10-Q and Forms 8-K filed prior to the date of this
Agreement (collectively, the “Exchange Act Reports”), (ii) liabilities which have arisen after the date of the
last Exchange Act Report in the ordinary course of business, (iii) liabilities set forth on Schedule 3.7, and (iv) liabilities
which would not have, in aggregate, a Material Adverse Effect.
3.8
[Intentionaly ommited.]
3.9
Exchange Act Compliance.
The Company has timely filed all Exchange
Act Reports required to be filed with the Securities and Exchange Commission pursuant to the Exchange Act. All such Exchange Act
Reports, when so filed, complied in form and substance in all material respects with the Exchange Act and did not contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading.
3.10
No Material Adverse Changes.
Since December 31, 2019 except as stated
in any Exchange Act Report filed since such date or as disclosed herein pursuant to Section 3.7: (a) there has been no event,
circumstance or condition relating to or affecting the business, assets, liabilities, results of operations or condition (financial
or otherwise) of the Company and the Subsidiaries taken as a whole, or the ability of the Company to continue to conduct business
in the usual and ordinary course of the Company and the Subsidiaries taken as a whole, whether or not arising in the ordinary course
of business, which would have a Material Adverse Effect; and (b) except for the transactions contemplated by this Agreement,
as set forth on Schedule 3.7, or as set forth in the Exchange Act Reports, there has been no material transaction entered into
by the Company or any of the Subsidiaries other than (i) transactions in the ordinary course of business or (ii) transactions which
would not have a Material Adverse Effect; and (c) there have not been any changes in the capital stock of the Company. On the date
hereof, no dividend or other distribution with respect to the Company’s Common Stock has been declared but not yet paid or
distributed which has a record date prior to the date hereof, except as disclosed on Schedule 3.7.
3.11
Litigation.
Other than proceedings by Corning Natural
Gas with the New York Public Sevice Commission and its staff, proceedings by Pike County with the Pennsylvania Public Utility Commission,
proceedings with the Federal Energy Regulatory Commission, applications and proceedings with various municipal bodies with respect
to permits, franchises, rights-of-way and similar actions in the ordinary course of business, of which the material applications
and proceedings are listed on Schedule 3.11 hereof, there is no action, suit, investigation or proceeding (whether or not purportedly
on behalf of the Company or any of the Subsidiaries) before or by any court or governmental agency or body, domestic or foreign,
now pending or, to the knowledge of the Company, threatened against or affecting the Company or any of the Subsidiaries, which
in the aggregate, could reasonably be expected to have a Material Adverse Effect or materially impair the Company’s ability
to perform its obligations under this Agreement.
3.12
Title to Properties; Leasehold Interests.
(a)
Except as disclosed in any Exchange Act Report, or except to the extent that the inaccuracy of any of the following, in
the aggregate, would not have a Material Adverse Effect: (i) the Company or one or more of the Subsidiaries, has such title
to real properties where its assets are located as provides reasonable assurance of the Company’s ability to use such assets
in its business in the ordinary course, and has good title or an enforceable leasehold interest, license or other lawful right
to use all assets that are used in the Company’s or one or more of the Subsidiaries’ business substantially in the
manner in which they currently are operated, in each case, subject only to Permitted Exceptions (as herein defined); (ii) all
leases under which the Company or any of the Subsidiaries leases any property that is material to the business of the Company and
the Subsidiaries taken as a whole are in full force and effect, and none of the Company nor any such Subsidiary is in default in
any material respect of any of the terms or provisions of any of such leases and to the Company’s knowledge no claim has
been asserted by anyone adverse to any such entity’s rights as lessee under any of such leases, or affecting or questioning
any such entity’s right to the continued possession or use of the properties under any such leases or asserting a default
under any such leases, and (iii) all liens, charges or encumbrances on or affecting any of the property and assets of the
Company and the Subsidiaries which are required to be disclosed in the Company’s Exchange Act Rreports are disclosed therein.
(b)
As used in this Agreement, “Permitted Exceptions” means: (i) real estate taxes and assessments not yet
delinquent or being contested in good faith; (ii) covenants, restrictions, easements and other similar agreements; (iii) zoning
laws, ordinances and regulations, building codes, rules and other local governmental laws, regulations, rules and orders affecting
any of the Company’s or any Subsidiary’s property, provided that the same are not violated by existing improvements
or the current use and operation of such property; (iv) any imperfection of title which does not materially and adversely
affect the current use, operation or enjoyment of any of the Company’s real property and does not render title to such real
property unmarketable or uninsurable and does not materially impair the value of such property; and (v) liens securing financing
by the Company.
3.13
Environmental Compliance.
(a)
Except as disclosed in any Exchange Act Report, to the knowledge of the Company, the Company and each of the Subsidiaries
has complied and is in compliance with all Environmental Statutes (as hereinafter defined), except for such noncompliance as would
not have a Material Adverse Effect.
(b)
The Company has no knowledge of any occurrence or circumstance that, with notice or passage of time or both, would give
rise to a claim under or pursuant to any federal, state or local Environmental Statute pertaining to Hazardous Materials on or
originating from any real property owned or occupied by the Company or any of the Subsidiaries, including without limitation pursuant
to any Environmental Statute, which claim would have a Material Adverse Effect.
(c)
As used herein, “Hazardous Materials” means (i) petroleum and petroleum products, byproducts or breakdown products,
radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (ii) any other chemicals, materials
or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant or any other hazardous
material as defined by any federal, state or local environmental law, ordinance, rule or regulation, relating to pollution or protection
of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation,
treatment, storage, disposal, release or discharge of Hazardous Materials (individually, an “Environmental Statute”)
or by any federal, state or local governmental authority having or claiming jurisdiction over the properties and assets described
in the Company’s periodic reports filed pursuant to the Exchange Act (a “Governmental Authority”).
3.14
Taxes.
The Company has timely filed or filed for
extensions of the filing period and filed within such extended period all federal, state, local, foreign and other tax returns,
reports, information returns and statements (except for returns, reports, information returns and statements the failure timely
to file which will not result in any Material Adverse Effect) required to be filed by it. The Company has paid or caused to be
paid all material taxes (including interest and penalties) that are due and payable by the Company and the Subsidiaries, except
those taxes which are being contested by the Company and the Subsidiaries in good faith by appropriate proceedings and in respect
of which adequate reserves are being maintained on the Company’s books in accordance with GAAP. The Company and the Subsidiaries
do not have any material liabilities for taxes other than those incurred in the ordinary course of business and in respect of which
adequate reserves are being maintained by the Company in accordance with GAAP consistently applied. No deficiency or assessment
with respect to, or proposed adjustment of, the Company’s federal, state, local, foreign or other tax returns is pending
or, to the best of the Company’s knowledge, threatened. There is no tax lien, whether imposed by any federal, state, local
or other tax authority, outstanding against the assets, properties or business of the Company or any Subsidiary. There are no applicable
taxes, fees or other governmental charges payable by the Company or any of the Subsidiaries in connection with the execution and
delivery of this Agreement or the issuance to the Purchaser by the Company of the Shares.
3.15
Insurance.
The Company and the Subsidiaries each carry
or are entitled to the benefits of insurance in such amounts and covering such risks as is reasonably sufficient under the circumstances
or is customary in the industry and all such insurance is in full force and effect.
3.16
Employees, ERISA.
The Company and its Subsidiaries have good
relationships with its employees and, since September 30, 2017, have not had any labor issues which have has a MaterialAdverse
Effect on their business or operations. There is no strike or work stoppage existing or, to the knowledge of the Company threatened
against the Company or the Subsidiaries. Other than as disclosed in any Exchange Act Report, the Company and the Subsidiaries have
not established,
sponsored, maintained, made any contributions to or been
obligated by law to establish, maintain, sponsor or make any contributions to any “employee pension benefit plan” or
any material “employee welfare benefit plan” (as such terms are defined in the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”)), including, without limitation, any “multi-employer plan,” except where
the liabilities associated with such plan or plans would not have a Material Adverse Effect. The Company and the Subsidiaries are
in compliance with all applicable laws relating to the employment of labor, including bargaining and the payment of social security
and other taxes, and with ERISA, except where the failure to so comply would not have a Material Adverse Effect.
3.17
Governmental Consents.
Other than such consents as have been obtained
and filings under applicable federal and state securities laws, no consent, approval or authorization of, or declaration or filing
with, any governmental authority on the part of the Company is required for the valid execution, delivery or performance of this
Agreement or the valid offer, issuance, sale and delivery of the Shares.
3.18
Legal Compliance.
Except as disclosed in any Exchange Act
Report, the Company and the Subsidiaries are in compliance with all applicable laws, rules, regulations, orders, licenses, judgments,
writs, injunctions or decrees, except to the extent that failure to comply would not have a Material Adverse Effect. The Company
and the Subsidiaries have all necessary permits, licenses and other authorizations required to conduct their businesses as currently
conducted, and as proposed to be conducted, except where a failure to have such permits, licenses or other authorizations would
not have a Material Adverse Effect. Except as disclosed in the Exchange Act Reports, none of the Company nor any Subsidiary has
violated any domestic or foreign law or any regulation or requirement, which violation has or would be reasonably likely to have
a Material Adverse Effect, and none of the Company nor any Subsidiary has received notice of any such violation. There are no adverse
orders, judgments, writs, injunctions, decrees or demands of any court or administrative body, domestic or foreign, or of any other
governmental agency or instrumentality, domestic or foreign, outstanding against the Company or the Subsidiaries which would have
a Material Adverse Effect.
Section 4
Representations and Warranties of the Purchaser.
The Purchaser represents and warrants
to the Company as follows:
4.1
Agreement.
This Agreement has been duly authorized
by all necessary action on the part of the Purchaser, and this Agreement has been duly executed and delivered by the Purchaser
and constitute the legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with
its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
or other similar laws
now or hereafter in effect relating to creditors’ rights
generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in
equity).
4.2
Governmental and Other Consents.
No consent, approval or authorization of,
or registration, qualification, designation, declaration or filing with, any governmental authority or any other person is required
to be obtained by the Purchaser in connection with the execution, delivery or performance of this Agreement by the Purchaser or
of any of the transactions contemplated hereby or thereby.
4.3
Investment Representation, Transfer Restrictions.
The Purchaser is acquiring the Shares for
its own account and not with a view to, or for sale in connection with, any distribution thereof. The Purchaser was not solicited
by means of any general solicitation or advertising nor at any seminar or meeting whose attendees has been invited by any general
solicitation of advertising. The Purchaser understand that the Shares are being offered in a transaction not involving any public
offering within the meaning of the Securities Act, that the Shares have not been and will not be registered under the Securities
Act or any applicable blue sky or state securities laws and that if it decides to resell, pledge or otherwise transfer the Shares,
the Shares may be offered, resold, pledged or otherwise transferred only in accordance with any applicable securities laws of any
applicable jurisdiction and the restrictions set forth in the legends on the certificates evidencing the Shares. As of the date
hereof, none of the Purchaser or its “Affiliates” owns, directly or beneficially, 10% or more of the outstanding voting
equity in any gas or electric corporation subject to the jurisdiction of the New York State Public Service Commission or the Pennsylvania
Public Utility Commission. As used herein, “Affiliates” means any entity controlling or under direct or common control
with the Purchaser.
4.4
No Violation or Conflict.
The execution and delivery of this Agreement
by the Purchaser and the consummation of the transactions contemplated herein and therein (including the purchase and acceptance
of the Shares) will not conflict with or result in a breach by the Purchaser of, or constitute a default by the Purchaser under:
(i) organizational documents, (ii) any contract, agreement or instrument to which the Purchaser is a party or by which the Purchaser
is bound, or (iii) any existing applicable law, rule, published regulation, judgment, order or decree of any government, governmental
instrumentality or court having jurisdiction over the Purchaser, except for such breach or default as would not adversely affect
the ability of the Purchaser to perform its obligations under this Agreement.
4.5
Sophisticated Purchaser/Accredited Investor.
The Purchaser has such knowledge of business
and financial affairs to enable the Purchaser to evaluate the merits and risks of the investment, and the suitablity of an investment
in the Shares for the Purchaser. The Purchaser is an “accredited investor” as defined in Rule 501(a) of Regulation
D under the Securities Act (the definition of “accredited investor” includes
a natural person who had individual income in excess of $200,000,
or joint income with that person’s spouse in excess of $300,000, in each of the last two years and reasonably expects to
reach the same income level in the current year, or whose net worth, either individually or jointly with such person’s spouse,
at the time of his or her purchase, exceeds $1,000,000[1]).
4.6
Disclosure; Access to Information.
The Purchaser has had access to the Exchange
Act Reports and the Exhibits thereto and has reviewed the Disclosure Letter. The Purchaser has had the opportunity to ask questions
of, and receive answer from, officers of the Company concerning the terms and conditions of the offering of the Shares and to obtain
any additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary in
Purchaser’s sole judgment for the Purchaser to verify the accuracy of the information provided by the Company in the Exchange
Act Reports, in this Agreement, in the Disclosure Letter and otherwise. The Purchaser has conducted such diligence about the Shares,
the Company and its Subsidiaries as the Purchaser believes in connection with its investment.
Section 5
Covenants of the Company.
5.1
No Sale of Security.
Neither the Company nor any affiliate of
the Company will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in
the Securities Act) which would be integrated with the sale of the Shares in a manner which would require registration under the
Securities Act of the offer or sale of the Shares to the Purchaser.
5.2
No General Solicitation.
Neither the Company nor any affiliate of
the Company will solicit any offer to buy or offer to sell the Shares by means of any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Securities Act) or in any manner which would require registration of the offer
or sale of the Shares to the Purchaser under the Securities Act.
5.3
Filing of Exchange Act Reports.
After the date of this Agreement, the Company
will use commercially reasonable efforts to timely file all documents required to be filed with the Commission pursuant to Section
13 or 15 of the Exchange Act except where the failure to
so timely file would not have a Material Adverse Effect or cause the requirements of Rule 144(c) under the Securities Act not to
be met.
Section 6
Survival of Representations and Warranties.
The representations and warranties of the
parties hereto contained in this Agreement or otherwise made in writing in connection with the transactions contemplated herein
shall survive the making of this Agreement and sale of the Shares, through and until the earlier of the twelve month anniversary
of the date of this Agreement or the expiration of the applicable statute of limitations with respect thereto.
Section 7
Notices.
All notices and other communications hereunder
shall be in writing and shall be delivered by hand or overnight courier or sent by first-class mail, postage pre-paid, or by telecopy,
as follows:
If to the Purchaser:
………………………
………………………
……………………….
Telephone: …………..
If to the Company, at:
Corning Natural Gas Holding Corporation
330 West William Street
Corning, New York 14830
Attention: Michael I. German, President and Chief Executive
Officer
Telephone: 607-936-3755 ext. 239
and to:
Kohrman Jackson & Krantz
One Cleveland Center
1375 E. Ninth Street
29th Floor
Cleveland, Ohio 44114
Attention: Christopher Hubbert
Telephone: 216-736-7215
or, in each case, at such address and to the attention of such
person as either party shall have furnished to the other by notice.
Section 8
Entire Agreement.
This Agreement constitutes the entire understanding
between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings of the
parties, whether oral or written. This Agreement may be modified or terminated only by an instrument in writing signed by the parties
hereto. Representations made by the Company in
this Agreement are modified by any disclosures with respect
thereto made in the schedules to this Agreement and are solely for the benefit of the Purchaser and may not be relied upon by any
other person. Where a specific representation applies to any matter of fact or law, such representation shall be the exclusive
representation with respect to the subject matter thereof and no other or general representation shall be deemed to apply to such
matter of fact or law.
Section 9
Successors and Assigns.
This Agreement shall not be assigned by
any party without the prior written consent of the other party, provided, however, that Purchaser may assign all or any portion
of this Agreement to any Affiliate. Any attempted assignment in contravention with the foregoing shall be void. This Agreement
shall be binding on and shall inure to the benefit of the successors and assigns of the parties hereto and any permitted assignee
and/or successor of the Purchaser shall succeed to (and have the right to enforce) all of the Purchaser’s rights hereunder.
Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective
successors and permitted assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement.
Section 10
Headings.
The headings of the sections of this Agreement
are solely for convenience of reference and shall not affect the meaning of any of the provisions hereof.
Section 11
Governing Law.
This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, including, without limitation, Section 5-1401 of the New York General
Obligations Law, without giving effect to the principles of conflicts of law. Each of the parties hereto irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the State of New York and of the United States of America, in
each case located in the County of Steuben, for any action, proceeding or investigation in any court or before any governmental
authority (“Litigation”) arising out of or relating to this Agreement and the transactions contemplated hereby and
thereby, and further agrees that service of any process, summons, notice or document by U.S. Registered Mail to its respective
address set forth in this Agreement shall be effective service of process for any Litigation brought against it in any such court.
Each of the parties hereto hereby irrevocably and unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Agreement or the transactions contemplated hereby and thereby in the courts of the State of New York or the
United States of America, in each case located in the County of Steuben, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such Litigation brought in any such court has been brought in an inconvenient
forum. Each of the parties irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any and all
rights to trial by jury in connection with any Litigation arising out of or relating to this Agreement or the transactions contemplated
hereby and thereby.
Section 12
Counterparts.
This Agreement may be executed in one or
more separate counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same
instrument.
Section 13
No Delay, Waiver.
No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor shall any waiver on the part of any party of any
such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege.
Section 14
Severability.
The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance,
is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of
this Agreement and the application of such provision to other persons, entities or circumstances shall not be affected by such
invalidity or unenforceability.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have signed this Agreement
on the dates set forth below, to be effective as of the date first above-written.
CORNING NATURAL GAS HOLDING CORPORATION
By:
Michael I. German, President and
Chief Executive Officer
Date: …… __, 2020
PURCHASER
________________________
Name:
Title: Date: …… __, 2020
Schedule 3.1(b): Schedule of Owned Entities
including Subsidiaries
Subsidiaries: Corning Natural Gas Corporation
Corning Natural Gas Appliance
Corporation
330 West William Street
Corning, NY 14830
Pike County Light &
Power Company
105 Schneider Lane
Milford, PA 18337
Each wholly owned by CORNING NATURAL GAS HOLDING
CORPORATION
Joint Ventures: Leatherstocking Gas Company,
LLC
Leatherstocking Pipeline
Company, LLC
330 West William Street
Corning, NY 14830
The Company and Mirabito Regulated Industries,
LLC each own 50% of the joint venture and each appoint three managers to operate the companies. The seventh manager is a neutral
manager agreed to by the Company and Mirabito Regulated Industries who is not an officer, director or employee of either company.
The current managers are Joseph P. Mirabito, John J. Mirabito and William Mirabito from Mirabito Regulated Industries; Matthew
J. Cook, Michael I. German and Russell S. Miller from the Company; and Carl T. Hayden as the neutral manager. Joseph P. Mirabito
and William Mirabito are stockholders and current board members of the Company. The Company has entered into a purchase agreement
to acquire the 50% interest of Mirabito Regulated Industries in the Leatherstocking companies.
Schedule 3.7: Liabilities incurred or accrued
since Form 10-Q for the quarter ended December 31, 2019 and not described in any Form 8-K filed as of the date of this Agreement
The outstanding shares of Class A Preferred Stock and the Class
B Preferred are redeemable at the option of the holder upon the occurrence of certain events constituting a “Fundamental
Change” as defined in the Amended Certificate of Incorporation.
The outstanding shares of Class A Preferred Stock mature and must
be redeemed by the Company on September 30, 2023 at their $25.00 Liquidation Preference together with all accrued and unpaid dividends.
The outstanding shares of Class B Preferred Stock mature and must
be redeemed by the Company on September 30, 2026 at their $20.75 Liquidation Preference together with all accrued and unpaid dividends.
Schedule 3.11: Litigation and Material Applications
and Proceedings
Litigation:
No changes since December 31, 2019.
Other Proceedings:
Corning Natural Gas Company has ongoing reporting and other
obligations under its proceedings and orders with the New York Public Service Commission.
Pike County has ongoing reporting and other obligations under
its proceedings before the Pennsylvania Public Utility Commission.
[1]
As used above, the term “net worth” means the excess of total assets over total liabilities, excluding the value of
the Purchaser’s primary residence as an asset and exclude any indebtedness secured by the primary residence, up to its fair
market value (unless the amount of indebtedness secured by the primary residence in excess of the fair market value of the residence
in which case such indebtedness should be considered a liability and deducted from net worth). In addition, if the amount of indebtedness
secured by the primary residence is increased within 60 days prior to the purchase of securities under this Agreement, other than
as a result of purchasing a new principal residence, the amount of the increase should be included as a liability for purposes
of calculating net worth, even if the total indebtedness on the primary residence remains below its fair market value.
DocuSign Envelope ID: BDB65C32-AOB8-4911-9C2C-07F660D13A92
M&TBank
Thank you for banking with M&T.
In this packet you will
find details regarding your loan approval. We encourage you to review the information below before proceeding.
Next steps
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•
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Review loan structure information below, as well
as the entire Note carefully.
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•
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This loan approval will be valid for s
calendar days. Please sign and and return the Note within
5 calendar days
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of
receipt, otherwise the loan approval and terms of the Note will expire and the loan proceeds will be reallocated to other businesses.
Loan structure
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a.
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The approved loan amount
was based on your application. To secure
funding for as many business owners as possible, we cannot change the amount requested.
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b.
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The loan has a fixed rate of 1.00% for a term of
2 years.
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c.
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There will be no payments for the first 6 months
- neither principal nor interest payments are due.
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d.
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Starting
with the 7th month,
you will begin making fixed payments of principal and interest outlined in the Note. This amount will be based on a repayment of
the entire loan amount. As part of the PPP, you may be eligible for loan forgiveness. See below for Important Information.
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e.
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There are no prepayment
fees associated with this loan. You can prepay at any time, Including tomorrow, for
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any amount without providing notice
to the M&T Bank.
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f.
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Please be sure to
double check the M&T checking account number which will be the account that M&T Bank will deposit the loan funds into and
will automatically debit your monthly payments of principal & interest payment pursuant to the Note.
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Important information
Please review the
criteria for use of proceeds that were included in the application. This will be important in determining loan forgiveness in the
future. At least 75% of the loan proceeds must be used for payroll.
This loan is not guaranteed
to be 100% forgiven. Keeping detailed records of your expenses over the next 8 weeks from the date you receive the loan proceeds,
specifically as it relates to payroll, mortgage interest, rent and utility costs will be important for when you request loan forgiveness.
You can refer to our
Be Informed page Thank you for being our customer.
for any updates during the process
M&TBank
TERM NOTE
U.S. Small Business Administration Paycheck Protection
Program
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SBA Loan#
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1219637201
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SBA Loan Name
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Corning Natural Gas Corp
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Date
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4/17/2020
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Loan Amount
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$970,900.00
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Interest Rate
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Fixed at 1.00% per year
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Borrower
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Corning Natural Gas Corp
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Lender
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M&T Bank
One M&T
Plaza (Attn:
Office of General Counsel), Buffalo, New York
14203
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In return for the Loan, Borrower promises to pay to
the order of Lender the amount of
Nine Hundred Seventy Thousand Nine Hundred
and 00/100 Dollars,
interest on the unpaid principal balance, and a11 other
amounts, fees, and costs, required by this Note.
"Loan'' means the loan evidenced by
this Note.
"Loan Documents"
means the documents related to this loan signed by
Borrower, including, but not limited to, the Paycheck Protection Program Application.
"Note"
means this Tenn Note executed by Borrower in favor of Lender of even date
herewith. "SBA" means the Small Business Administration, an Agency of the United States of America.
""Paycheck
Protection Program" means the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act.
Borrower must make all payments at the place Lender designates.
The payment terms for this Note are:
Maturity: This is a
term loan that will mature in 2 years (24 months) from the date of this Note (the "Maturity Date"). The interest rate
is fixed at 1.00% per year. The interest rate may not be changed during the life of the loan unless changed in accordance with
H,R. 748 Coronavirus Aid, Relief, and Economic Security Act or "CARES Act".
The term of this loan is 24 months. During the
first 6 months of the loan term, (referred to herein as the "Deferral Period"), required payments of principal and interest
shall be deferred. During the Deferral Period, interest on the outstanding principal balance will continue to accrue, After the
Deferral Period, beginning in the seventh month of the loan term, this Note shall be repaid in installments comprised of principal
and interest based upon an 18-month amortization period. Borrower must pay principal and interest payments of$ 54366.91
every month, beginning seven months from the date of this Note; payments must be made on the 17th calendar day
in the months they are due.
The amortization period
for this loan is 18 months, meaning that this is the approximate number of months that would be needed to repay the principal amount
in full, based on the installment amount and payment frequency stated above
,
Lender must adjust the payment amount at least annually as needed to amortize principal over the remaining term of the Note. Principal
and interest payment amounts are subject to change, in accordance with
any loan forgiveness or other adjustments made in connection with the Paycheck Protection Program. Absent manifest error, the Lender's
determination of any amount due in connection herewith shall be conclusive.
Interest
shall be calculated on the basis of actual number of days elapsed in each year, 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. Interest will continue to accrue on
the actual principal balance outstanding until the Loan is paid in full.
Lender will
apply each installment payment first to pay interest accrued to the day Lender receives the payment, then to bring principal
current, and will apply any remaining balance to reduce principal.
Loan Prepayment: Borrower may prepay this Note at any
time without notice or penalty.
All remaining principal
and accrued interest, and any other amounts due pursuant to this Note, shall be due and payable on the Maturity Date.
Preauthorized
Transfers from Deposit Account. Borrower hereby authorizes Lender to debit Borrower's deposit account # 9842431208 with
M&T Bank automatically for any amount which becomes due under this Note.
Default Rate. Upon the
occurrence of a default, but at all times subject to the restrictions and requirements of the Paycheck Protection Program and all
other applicable laws, Lender, in Lender's sole discretion and without notice or demand, may raise the rate of interest accruing
on the principal balance outstanding under this Note by the lesser of (i) 5% above the rate otherwise applicable or (ii) such amount
as permitted under the Paycheck Protection Program or otherwise under applicable law, independent of whether the Lender elects
to accelerate the principal balance under this Note. 1nterest shall continue to accrue at the default rate set forth in this Note
on any judgment Lender may obtain against Borrower, to the extent permitted under the Paycheck Protection Program or otherwise
under applicable law.
Borrower is in default
under this Note if Borrower does not make a payment when due under this Note, or if Borrower:
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A.
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Fails to do anything required by
this_ Note and other Loan Documents;
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B.
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Defaults on any other loan, liability, covenant, or agreement with Lender;
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C.
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Does not disclose, or anyone acting on their behalf does not disclose, any material fact to Lender
or SBA;
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D.
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Makes, or anyone acting on their behalf makes, a materially false or misleading representation
to Lender or SBA;
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E.
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Defaults on any loan or agreement with another creditor, if Lender
believes the default may materially affect Borrower's ability to pay this Note;
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F.
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Fails to pay any taxes when due;
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G.
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Becomes the subject of a proceeding
under any bankruptcy or insolvency law;
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H.
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Has a receiver or liquidator appointed for any part of their business or property;
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I.
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Makes an assignment for the benefit of creditors;
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J.
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Has any adverse change in financial condition or business operation
that Lender believes may materially affect Borrower's ability to pay or perf01m any obligation of Borrower to Lender;
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K.
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Reorganizes, merges, consolidates, or otherwise changes ownership
or business structure without Lender's prior written consent; or
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L.
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Becomes the subject of a civil or criminal action that Lender believes may materially affect Borrower's
ability to
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pay this Note.
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5.
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LENDER'S RIGHTS IF THERE IS A DEFAULT:
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Without notice or demand and without giving up any of
its rights, Lender may:
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A.
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Requite immediate payment of all amounts owing under this Note;
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B.
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Collect all amounts owing from any Borrower; or
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C.
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File suit and obtain judgment.
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6.
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LENDER'S GENERAL POWERS:
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Without notice and without Borrower's consent, Lender
may:
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A.
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Incur expenses to collect amounts due under this Note, enforce the
terms of this Note or any other Loan Document. Among other things, the expenses may include payments for property taxes, prior
liens, insurance, appraisals, environmental remediation costs, and reasonable attorney’s fees and costs. If
Lender incurs such expenses, it may demand immediate repayment from Borrower or add the expenses
to the principal balance. Borrower understands and agrees that upon an event of default, Lender may incur costs of collection,
including attorneys' fees, after the date of any judgment that Lender may obtain against Borrower. Borrower agrees to pay all of
such costs and fees. Borrower further agrees that Borrower's obligation to pay such costs and fees, which are incurred by Lender
after the date of any judgment obtained by Lender, shall survive the entry of, and shall not be merged into, any such judgment;
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B.
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Release anyone obligated to pay this Note; and
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C.
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Take any action necessary to collect amounts owing on this Note.
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7.
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WHEN FEDERAL LAW APPLIES:
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When SBA is the holder,
this Note will be interpreted and enforced under federal law, including SBA regulations. Lender or SBA may use state or local procedures
for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does
not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim
or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.
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8.
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SUCCESSORS ANDASSIGNS:
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Under this Note, Borrower includes its successors, and
Lender includes its successors and assigns.
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A.
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Borrower waives all suretyship defenses.
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B.
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Borrower must sign all documents necessary at any time to comply with the Loan Documents.
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C.
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Lender may exercise any of its rights separately or together, as
many times and in any order it chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them,
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D.
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Borrower may not use an oral statement of Lender or SBA to contradict or alter the written terms
of this Note.
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E.
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If any part of this Note is unenforceable, all other parts remain in effect.
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F.
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To the extent allowed by law, Bo1rnwer waives all demands and notices
in connection with this Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any defenses
based upon any claim that Lender did not obtain any guarantee.
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G.
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Collateral Exclusion. Any indebtedness and related obligations
evidenced herein shall not be collateralized by any security interest or lien granted to Lender by Borrower or other obligor, if
any, in any real property or tangible personal property, notwithstanding any provisions to the contrary in any other agreements
(including any unrelated lien instrument) now or hereafter existing between Lender and Borrower or other obligor. It is acknowledged
and understood by Borrower that the preceding sentence shall be at all times subject to, and shall not in any way compromise or
impair, any other rights and remedies of Lender, including, without limitation, rights of setoff, rights to enforce judgment liens
and rights related to judgment execution against applicable assets of any judgment debtor.
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H.
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Business Purpose, The Loan proceeds shall be used only for a business
purpose and pursuant to, and in accordance with, the terms of the Paycheck Protection Program. Borrower acknowledges that at least
75 percent of the Loan proceeds must be used for payroll costs.
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l.
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Further Assurances. The Borrower shall take such action and execute and deliver to Lender such
additional documents, instruments, certificates, and agreements as Lender may reasonably request to effectuate the terms and purposes
of this Note, and as may otherwise be required for Lender to comply with terms and conditions of the Paycheck Protection Program
Loan Authorization.
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9. GENERAL PROVISIONS CONT.
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J.
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Good Standing. Borrower represents and warrants that it 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.
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K.
Sale of Interest. There shall not be any sale or transfer of ownership of any interest in
Borrower without the Lender's prior written consent.
L.
Change of Name. Borrower shall not change its legal name or the State or the type of its
formation, without giving the Lender at least 30 days prior written notice thereof.
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M.
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Borrower will furnish to Lender from time to time, such financial
data and information about Borrower as Lender may reasonably request and Borrower represents and warrants the accuracy of any information
contained therein.
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N.
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Electronic
Signatures, The individual executing this Note agrees that electronic signatures, whether pdf, scanned, digital, encrypted, captured
or otherwise attached or imposed hereto, are intended to authenticate this Note and to have the same effect, validity, and enforceability
as manually executed signatures. For purposes hereof; electronic signature means any electronic sound, symbol or process attached
to or logically associated with a record and executed and adopted by an individual with the intent to sign such record.
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0.
Loan Forgiveness under the Paycheck Protection Program. The Loan amount may be eligible for forgiveness pursuant to the Paycheck
Protection Program. which minimally requires (1)
at least 75% of the loan proceeds are used to cover payroll costs and the remainder is used
for mortgage interest, rent and utility costs over the 8 week period after the loan is made, and
(2) the number of
employees and compensation levels are generally maintained. Additional requirements may apply. Further details on how to request
loan forgiveness shall be made available to you upon further guidance from the SBA.
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P.
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Indemnification. Borrower shall indemnify, defend and hold Lender and Lender Affiliates and
their directors, officers,
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employees, agents and attorneys (each an 11indemnitee11
) harmless against any claim brought or threatened against any Indemnitee by Borrower or
by any other person (as well as from attorneys' reasonable fees and expenses in connection therewith) on account of Lenders relationship
with Borrower (each of which may be defended, compromised, settled or pursued by Lender with counsel of Lender's selection, but
at the expense of the Borrower), except for any claim arising out of the gross negligence or willful misconduct of Lender.
Q.
Representations and Warranties, Borrower represents and warrants to, and with regard to item
(a) the individual executing this Note also represents and warrants, in his/her individual capacity, to, and covenants with Lender
as follows: (a) the individual executing this Note is duly authorized to do so and to bind Borrower and Borrower's heirs, successors
and/or assigns to the terms hereof; (b) each of the Loan Documents is a valid and legal binding obligation of Borrower, enforceable
in accordance with its terms, and is not subject to any defenses, counterclaims, or offsets of any kind; (c) there exists no action,
suit, proceeding or investigation, at law or in equity, before any court board, administrative body or other entity, pending or
threatened, affecting Borrower's property, wherein an unfavorable decision, ruling or finding would materially adversely affect
the business operations, property or financial condition of Borrower; (d) Borrower shall advise Lender if there is an adverse change
in Borrower's financial condition, organization, operations or fixed assets since the date this Note is signed; (e)
Borrower attests to the accuracy of and reaffirms each certification made in the Paycheck Protection Program Application
as if fully set f011h herein.
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R.
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Credit Repot1ing. The undersigned authorizes Lender and its affiliates
to request and review all data it deems appropriate about Borrower and the undersigned, including credit reports from agencies,
now and for all future reviews, extensions, or renewals of credit extended to Borrower, or for collection of loans. The undersigned
may inquire whether a credit report was requested and if so) obtain the name and address of the credit reporting agency furnishing
the credit report.
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S.
Reproductions. A photographic
or other reproduction of this Note may be made by Lender, and any such reproduction shall be admissible in evidence with the same
effect as the original itself in any judicial or administrative proceeding, whether or not the original is in existence.
T,
Right of Setoff. The Lender 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 Lender or any affiliates or otherwise owing by the Lender or any affiliates in any capacity to Borrower.
Such set-off shall be deemed to have been exercised immediately at the time the lender or such affiliate elects to do so.
-
---- .,,.,
U.
Notices. Any demand or notice hereunder or under any applicable law pertaining hereto shall
be in writing and duly given if delivered to Brrower (at its address on the Lender's records) or to the Lender (at the address
on page one and separately to the Lender officer responsible for Borrower's relationship with the Lender). 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 Lender.
V.
Complete Agreement. This Note, together with any related Loan Documents, contains the entire
agreement between Borrower and Lender with respect to the Note, and supersedes every course of dealing, other conduct, oral agreement,
and representation previously made by Lender. No waiver or amendment of any provision of this Note shall be effective unless made
specifically in writing by the Lender. No course of dealing or other conduct, no oral agreement or representation made by the Lender,
and no usage of trade, shall operate as a waiver of any right or remedy of the Lender. No waiver of any right or remedy of the
Lender shall be effective unless made specifically in writing by the Lender.
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W.
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Governing
Law/Jurisdiction. This Note has been delivered to and accepted by the Lender 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 Lender maintains a branch and consents that Lender may
effect any service of process in the manner and at Borrower's address set f011h in Lender's records for providing notice or demand;
provided that nothing contained in this note will prevent Lender 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 county, state, or
other foreign or domestic jurisdiction.
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Borrower acknowledges and agrees that the venue
provided above is the most convenient forum for both Lender and Borrower, Borrower waives any objection to
venue and any objection based on a more convenient forum in any action instituted under this Note.
X.
Waiver of Jury Trial. Borrower and Lender hereby knowingly, voluntarily, and intentionally
waive any right to trial by jury Borrower and Lender 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 Lender has represented,
expressly or otherwise, that Lender will not, in the event of litigation, seek to enforce this jury trial waiver. Borrower acknowledges
that Lender has been induced to enter into this Note by, among other things, the provisions of this section.
10. BORROWER'S NAME(S) ANDSIGNATURE(S):
By signing below, each individual or entity becomes
obligated under this Note as Borrower.
Borrower acknowledges that
it has read and understands all the provisions of this Note and has been advised by counsel as necessary or appropriate.
Executed effective as of the date first written above.
Borrower:
By:
Signature
FIROUZEH SARHANGI
Printed Name
Authorized Representative
of Borrower Title
330 West William Street CorninJ,_, NY 14830
Address
BORROWER CERTIFICATION
In order to induce M&T
Bank (the "Lender") to make a Small Business Administration ("SBA") guaranteed loan under the Paycheck Protection
Program (the "Program") to _Corning Natural Gas Corporation (the "Borrower"),
the undersigned, an authorized representative of the Borrower, certifies that:
I am an authorized
1·epresentative of the Borrower and am authorized lo obtain loan, credits and other financial accommodations on behalf of
and in the name of the Borrower, and to execute all instruments, agreements, certifications and related documents in furtherance
thereof.
The Borrower is
eligible to receive a Program loan under the Program rules in effect at the time the Application was submitted, as issued and clarified
from time to time by the SBA and Treasury Department (such as through FAQs) implementing the Paycheck Protection Program under
Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") (collectively, the "PPP
Rule").
Consistent with the
Borrower's Application, information, business records and supporting documents submitted with the Application, Borrower certifies
that, in addition to all other eligibility rules for the Program, it has assessed its economic needs for the Program loan requested
in the Application under the standards established by the CARES Act and the PPP Rule at the time of the loan Application .
Specially
before submitting the Application, Borrower has reviewed carefully the required certification that"[current economic uncertainty
makes this loan request necessary to support the ongoing operations of the Applicant" as required under the PPP Rule. Borrower
must make this certification in good faith, taking into account its current business activity and ability to access other sources
of liquidity sufficient to support its ongoing operation in a manner that is not significantly detrimental to the business. Borrower
should be prepared to demonstrate to Lender and SBA, upon request, the basis for its certification.
Borrower understands
and agrees that Lender shall rely on Borrower's certification regarding the necessity of the loan request.
All Program loan
proceeds will be used only for business-related purposes as specified in the Application and consistent with the PPP Rule. The
Borrower is not engaged in any activity that is illegal under federal, state or local law.
The
Program funds will be used to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility
payments, as specified under the PPP Rule. If the Program funds are knowingly used for unauthorized purposes, I understand that
the federal government may hold the Borrower and loan applicant legally liable, such as for cha1·ges of fraud.
The
Borrower will provide to the Lender documentation verifying the number of full-time equivalent employees on the Borrower's payroll,
including those employees of its affiliated entities that are part of the Borrower's payroll, as well as the dollar amounts of
payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight-week period following
the loan.
I
further certify that the information provided in connection with the Application and the information provided herein is true and
accurate in all material respects. I understand that knowingly making a false statement to obtain a guaranteed loan from SBA is
punishable under the law, including under 18 USC 1001
and
3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under 15 USC 645 by imprisonment of not more
than two years and/or a fine of not more than $5,000; and, if submitted to a federally insured institution, under 18 USC 1014 by
imprisonment of not more than thirty years and/or a fine of not more than $1,000,000 .
The
Borrower understands and acknowledges that the Lender and the SBA are relying upon this Certification and e information submitted
by the Borrower.
IN WITNESS WHEREOF,
the Borrower, on behalf of itself, acknowledges having read this Borrower Certification
and certifies as
to the above
statements.
BORROWER:
Coming Natural Gas Corporation
By: Corning Natural Gas Holding Corporation
Its Sole
Owner:
/s/: Mike German
Name:
Title:
OocuSign Envelope 10: 6C1C6100-C86B-4DFA-8F23-1081FDFB2C37
Thank you for banking with M&T.
In this packet you will
find details regarding your loan approval. We encourage you to review the information below before proceeding.
Next steps
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•
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Review loan structure information below, as well as the entire Note carefully.
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•
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This loan approval
will be valid for 5 calendar days. Please sign and return the Note within 5 calendar days of receipt, otherwise the loan approval
and terms of the Note will expire and the loan proceeds will be reallocated to other businesses.
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Loan structure
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a.
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The approved loan amount
was based on your application. To secure funding for as many business owners as possible, we cannot change the amount requested.
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b.
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The loan has a fixed rate of 1.00% for a term of
2 years.
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c.
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There will be no payments for the first 6 months
- neither principal nor interest payments are due.
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d.
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Starting
with the 7th month,
you will begin making fixed payments of principal and interest outlined in the Note. This amount will be based on a repayment of
the entire loan amount. As part of the PPP, you may be eligible for loan forgiveness. See below for Important Information.
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e.
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There are no prepayment
fees associated with this loan. You can prepay at any time, including tomorrow, for any amount without providing notice to the
M&T Bank.
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f.
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Please be sure to
double check the M&T checking account number which will be the account that M&T Bank will deposit the loan funds into and
will automatically debit your monthly payments of principal & interest payment pursuant to the Note.
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Important information
Please review the criteria
for use of proceeds that were included in the application. This will be important in determining loan forgiveness in the future.
At least 75% of the loan proceeds must be used for payroll.
This loan is not guaranteed
to be 100% forgiven. Keeping detailed records of your expenses over the next 8 weeks from the date you receive the loan proceeds,
specifically as it relates to payroll, mortgage interest, rent and utility costs will be important for when you request loan forgiveness.
You can refer to our Be
Informed page Thank you for being our customer.
for any updates during the process
M&TBank
TERM NOTE
U.S. Small Business Administration Paycheck Protection
Program
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SBA Loan#
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9322447110
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SBA Loan Name
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Pike County Light & Power Company
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Date
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4/2212020
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Loan Amount
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$137,200.00
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Interest Rate
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Fixed at 1.00% per year
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Borrower
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Pike County Light &
Power Company
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Lender
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M&T Bank
One M&T Plaza (Attn: Office of General Counsel),
Buffalo, New York 14203
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In return for the Loan, Borrower promises to pay
to the order of Lender the amount of
One Hundred Thi1ty Seven Thousand Two Hundred
Dollars and 00/100 Dollars,
interest on the unpaid principal balance, and all other
amounts, fees, and costs, required by this Note.
"Loan" means the loan evidenced by
this No1e.
"Loan Documents"
means the documents related to this loan signed by Borrower, h1eluding, but not limited to, the Paycheck Protection Program Application.
"Note" means
this Term Note executed by Borrower in favor of Lender of even date herewith. ''SBA" means the Small Business Administration,
an Agency of the United States of America.
"Paycheck Protection
Program" means the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act.
Borrower must make all payments at the place Lender designates.
The payment terms for this Note are:
Maturity: This is a term
loan that will mature in 2 years (24 months) from the date of this Note
(the "Maturity Date"). The interest rate is fixed at I .00% per year. The interest rate may not be changed during the
life of the loan unless changed in accordance with H.R. 748 Corona virus Aid, Relief, and Economic Security Act or "CARES
Act".
The term of this loan is 24 months. During
the first 6 months of the loan term, (referred to herein as the "Deferral Period"), required payments of principal and
interest shall be deferred. During the Deferral Period, interest on the outstanding principal balance will continue to accrue.
After the Deferral Period, beginning in the seventh month of the loan term, this Note shall be repaid in installments comprised
of principal and interest based upon an 18-month amortization period. 801Tower must pay principal and interest payments of$ 7682
71 every month, beginning seven months from the date of this Note; payments must be made on the calendar day in the months
they are due.
The amortization period for
this loan is 18 months, meaning that this is the approximate number of months that would be needed to repay the principal amount
in full, based on the installment amount and payment frequency stated above.
Lender must adjust the
payment amount at least annually as needed to amortize principal over the remaining term of the Note. Principal and interest payment
amounts are subject to change, in accordance with any loan forgiveness or other adjustments made in connection with the Paycheck
Protection Program. Absent manifest error, the Lender's determination of any amount due in connection herewith shall he conclusive.
Interest
shall be calculated on the basis of actual number of days elapsed in each year, 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. Interest will
continue to accrue on the actual principal balance outstanding until the Loan is paid in full.
Lender will
apply each installment payment first to pay interest accrued to the day Lender receives the payment, then to bring principal
current, and will apply any remaining balance to reduce principal.
Loan Prepayment: Borrower may
prepay this Note at any time without notice or penalty.
All remaining principal
and accrued interest, and any other amounts due pursuant to this Note, shall be due and payable on the Maturity Date.
Preauthorized
Transfers from Deposit Account. Borrower hereby authorizes Lender to debit Borrower's deposit account # 9864919171 with
M&T Bank automatically for any amount which becomes due under this Note.
Default Rate. Upon the occurrence
ofa default, but at all times subject to the restrictions and requirements of the Paycheck Protection Program and all other applicable
laws, Lender, in Lender's sole discretion and without notice or demand, may raise the rate of interest accruing on the principal
balance outstanding under this Note by the lesser of(i) 5% above the rate otherwise applicable or (ii) such amount as permitted
under the Paycheck Protection Program or otherwise under applicable law, independent of whether the Lender elects to accelerate
the principal balance under this Note. Interest shall continue to accrue at the default rate set fo1th
in this Note on any judgment Lender may obtain against Borrower, to the extent permitted under the Paycheck Protection Program
or otherwise under applicable law.
Borrower is in default under this Note if Borrower
does not make a payment when due under this Note, or if Borrower:
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A.
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Fails to do anything required by this Note and other Loan Documents;
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B.
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Defaults on any other loan, liability, covenant, or agreement with Lender;
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C.
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Does not disclose, or anyone acting on their behalf does not disclose, any material fact to Lender
or SBA;
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D.
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Makes, or anyone acting on their behalf makes, a materially false or misleading representation
to Lender or SBA;
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E.
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Defaults on any loan or agreement with another creditor, if Lender believes the default may materially
affect
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. Borrower's ability to pay this Note;
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F.
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Fails to pay any taxes when due;
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G.
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Becomes the subject of a proceeding under any bankruptcy or insolvency law:
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H.
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Has a receiver or liquidator appointed for any part of their business or property;
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I.
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Makes an assignment for the benefit of creditors;
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J.
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Has any adverse change in financial condition or business operation
that Lender believes may materially affect Borrower's ability to pay or perform any obligation of Borrower to Lender;
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K.
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Reorganizes, merges, consolidates, or otherwise changes ownership
or business structure without Lender's prior written consent; or
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L.
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Becomes the subject ofa civil or criminal action that Lender believes may materially affect Borrower's
ability to
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pay this Note.
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5.
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LENDER'S RIGHTS IF THERE ISA DEFAULT:
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Without notice or demand and without giving up any of
its rights, Lender may:
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A.
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Require immediate payment of all amounts owing under this Note;
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B.
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Collect all amounts owing from any Borrower; or
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C.
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File suit and obtain judgment.
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6.
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LENDER'S GENERAL POWERS:
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Without notice and without Borrower's consent, Lender
may:
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A.
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Incur expenses to collect amounts due under this Note, enforce the
terms of this Note. or any other Loan Document. Among other things, the expenses may include payments for property taxes, prior
liens, insurance, appraisals, environmental remediation costs, and reasonable attorney's fees and costs. If Lender incurs such
expenses, it may demand immediate repayment from Borrower
or add the expenses to the principal balance. Borrower understands and agrees that upon an event of default, Lender may incur costs
of collection, including attorneys' fees, after the date of any judgment that Lender may obtain against Borrower. Borrower agrees
to pay all of such costs and fees. Borrower further agrees that Borrower's obligation to pay such costs and fees, which are incurred
by Lender after the date of any judgment obtained by Lender, shall survive the entry of, and shall not be merged into, any such
judgment;
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B.
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Release anyone obligated to pay this Note; and
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C.
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Take any action necessary to collect amounts owing on this Note.
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7.
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WHEN FEDERAL LAW APPLIES:
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When SBA is the holder,
this Note will be interpreted and enforced under federal law, including SBA regulations, Lender or SBA may use state or local procedures
for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does
not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim
or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.
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8.
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SUCCESSORS ANDASSIGNS:
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Under this Note, Borrower includes its successors, and
Lender includes its successors and assigns.
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A.
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Borrower waives all suretyship defenses.
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B.
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Borrower must sign all documents necessary at any time to comply with the Loan Documents,
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C.
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Lender may exercise any of its rights separately or together, as
many times and in any order it chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them.
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D.
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Borrower may not use an oral statement of Lender or SBA to contradict or alter the written terms
of this Note.
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E.
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If any part of this Note is unenforceable, all other parts
remain in effect.
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F.
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To the extent allowed by law, B01rower waives all demands and notices
in connection with this Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any defenses
based upon any claim that Lender did not obtain any guarantee.
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G.
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Collateral Exclusion. Any indebtedness and related obligations
evidenced herein shall not be collateralized by any security interest or lien granted to Lender by Borrower or other obligor, if
any, in any real prope1ty or tangible personal property, notwithstanding any provisions to
the contrary in any other agreements (including any unrelated lien instrument) now or hereafter existing between Lender and Borrower
or other obligor. It is acknowledged and understood by
Borrower that the preceding sentence shall be at all times subject to, and shall not in any way compromise or impair, any other
rights and remedies of Lender, including, without limitation, rights of setoff: rig1,ts to enforce judgment liens and rights related
to judgment execution against applicable
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assets of any judgment debtor.
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H.
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Business Purpose. The Loan proceeds shall be used only for a business
purpose and pursuant to, and in accordance with, the terms of the Paycheck Protection Program. Borrower acknowledges that at least
75 percent of the Loan proceeds must be used for payroll costs.
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L
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Further Assurances. The Borrower shall take such action and execute and deliver to Lender such additional
documents, instruments, certificates, and agreements as Lender may reasonably request to effectuate the terms and purposes of this Note, and as may otherwise be required for Lender to comply with terms and conditions of the Paycheck Protection Program Loan Authorization.
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9. GENERAL PROVISIONS CONT.
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J.
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Good Standing. Borrower represents and ,warrants that it 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.
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K.
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Sale of Interest. There shall not be any sale or transfer of ownership
of any interest in Borrower without the Lender's prior written consent.
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L.
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Change of Name. Borrower shall not change its legal name or the
State or the type of its formation, without giving the Lender at least 30 days prior written notice thereof.
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M.
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Borrower will furnish to Lender from time to time, such financial
data and information about Borrower as Lender may reasonably request and Borrower represents and warrants the accuracy of any information
contained therein.
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N.
Electronic Signatures. The individual executing this Note agrees that electronic signatures,
whether pdf, scanned, digital, encrypted, captured or otherwise attached or imposed hereto, are intended to authenticate this Note
and to have the same effect, validity, and enforceability as manually executed signatures. For purposes hereof: electronic signature
means any electronic sound, symbol or process attached to or logically associated with a record and executed and adopted by an
individual with the intent to sign such record.
0. Loan Forgiveness
under the Paycheck Protection Program. The Loan amount may be eligible for forgiveness pursuant to the Paycheck Protection Program,
which minimally requires (1) at least 75% of the loan proceeds are used to cover payroll costs and the remainder is used for mortgage
interest, rent and utility costs over the 8 week period after the loan is made, and
(2) the number of
employees and compensation levels are generally maintained. Additional requirements may apply. Further details on how to request
loan forgiveness shall be made available to you upon further guidance from the SBA.
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P.
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indemnification. Borrower shall indemnify, defend and hold Lender
and Lender Affiliates and their directors, officers, employees, agents and attorneys (each an "indemnitee") harmless
against any claim brought or threatened against any Indemnitee by 801Tower or by any other person (as well as from attorneys' reasonable
fees and expenses in connection therewith) on account of Lender's relationship with Borrower (each of which may be defended, compromised,
settled or pursued by Lender with counsel of Lender's selection, but at the expense of the Borrower), except for any claim arising
out of the gross negligence or willful misconduct of Lender.
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Q.
Representations and Wal1'anties. Borrower represents and warrants to, and with regard to item (a)
the individual executing this Note also represents and wan-ants, in his/her individual capacity, to, and covenants with Lender
as follows: (a) the individual executing this Note is
duly authorized to do so and to bind Borrower and Borrower's heirs, successors and/or assigns to the terms hereof; (b) each of
the Loan Documents is a valid and legal binding obligation of Borrower, enforceable in accordance with its terms, and is not subject
to any defenses, counterclaims, or offsets of any kind; (c) there exists no action, suit, proceeding or investigation, at law or
in equity, before any court board, administrative body or other entity, pending or threatened, affecting Borrower's property, wherein
an unfavorable decision, ruling or finding would materially adversely affect the business operations, property or financial condition
of Borrower; (d) Borrower shall advise Lender if there is an adverse change in Borrower's financial condition, organization, operations
or fixed assets since the date this Note is signed; (e) Borrower attests to the accuracy of and reaffirms each certification made
in the Paycheck Protection Program Application as if fully set fo1ih herein.
R.
Credit Reporting. The undersigned authorizes Lender and its affiliates to request and review all data it deems appropriate about
Borrower and the undersigned, including credit reports from agencies, now and for all future reviews, extensions, or renewals of
credit extended to Borrower, or for collection of loans. The undersigned may inquire whether a credit report was requested and
if so, obtain the name and address of the credit reporting agency furnishing the credit report.
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S.
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Reproductions. A photographic or other reproduction of this Note may
be made by Lender, and any such reproduction shall be admissible in evidence with the same effect as the original itself in any
judicial or administrative proceeding, whether or not the original is in existence.
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T.
Right of Setoff. The Lender 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 Lender or any affiliates or otherwise owing by the Lender or
any affiliates in any capacity to Borrower. Such set-off shall be deemed to have been exercised immediately at the time the lender
or such affiliate elects to do so.
U.
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 Lender's records) or to the Lender (at the address on page
one and separately to the Lender office1· responsible for Borrower's relationship with the Lender). 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 Lender.
V.
Complete Agreement. This Note, together with any related Loan Documents, contains the entire
agreement between Borrower and Lender with respect to
the Note, and supersedes every course of dealing, other conduct, oral agreement and representation
previously made by Lender. No waiver or amendment of any provision of this Note shall be effective unless made specifically in
writing by the Lender. No course of dealing or other conduct, no oral agreement or representation made by the Lender, and no usage
of trade, shall operate as a waiver of any right or remedy of the Lender. No waiver of any right or remedy of the Lender shall
be effective unless made specifically in writing by the Lender.
W.
Governing Law/Jurisdiction. This Note has been delivered to and accepted by the Lender 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 Lender maintains
a branch and consents that Lender may affect any service of process in the manner and at Borrower's address set forth in Lender's
records for providing notice or demand; provided that nothing contained in this note will
prevent Lender 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 county, state, or other
foreign or domestic jurisdiction.
Borrower acknowledges and agrees
that the venue provided above is the most convenient forum for both Lender
and Borrower, Borrower waives any objection to venue and any objection based on a
more convenient forum in any action instituted under this Note,
X.
Waiver of Jury Trial. Borrower and Lender hereby knowingly, voluntarily, and intentionally
waive any right to trial by jury Borrower and Lender 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 Lender has represented,
expressly or otherwise, that Lender will not, in the event of Litigation, seek to enforce this jury trial waiver. Borrower acknowledges
that Lender has been induced to enter into this Note by, among other things, the provisions of this section,
10. BORROWER'S NAME(S) ANDSIGNATURE(S):
By signing below, each individual or entity becomes obligated
under this Note as Borrower.
Borrower acknowledges that it has
read and understands all the provisions of this Note, and has been advised by counsel as
necessary or appropriate,
Executed effective as of the date first written above.
Borrower:
By:
Signature 4/22/2020
/s/Firouzeh
Sarhangi
Printed Name
Authorized Representative
of Borrower
Title
105 Schneider Lane Milford,
PA 18337
Address