COMMUNITY BANK, N.A.
LINE OF CREDIT AGREEMENT
As of: February 28, 2011
- Mr. Michael German, President
- Corning Natural Gas Corp.
- 330 West William Street
- Corning, NY 14830
- Dear Mr. German:
This letter sets forth the governing terms of our agreement between Community Bank, N.A. (the "Bank") and Corning Natural Gas Corp. (the "Borrower") concerning a revolving line of credit (the "Revolving Line") in the aggregate maximum amount outstanding at any one time of $7,000,000.00, subject to the terms of this letter. This Revolving Line was committed by the provisions of a commitment letter from the Bank to the Borrower dated February 16, 2011 (the "Commitment Letter"), the contents of which are herein incorporated by reference.
General Terms of Revolving Line
Proceeds of the Revolving Line shall be used for Borrower's working capital purposes needs. So long as no Event of Default exists under this Agreement or under the terms of any other agreement or loan document between the Borrower or any Guarantor hereunder and the Bank, the Borrower may borrow, repay, and reborrow under the Revolving Line from time to time so long as the aggregate principal amount outstanding at any one time does not exceed $7,000,000.00 and the Bank has not demanded payment in full. Notwithstanding the foregoing, beginning March 31, 2010, aggregate borrowings at any one time under the Revolving Line may not exceed the sum then available according to the following formula:
100% of all "eligible accounts receivable" of the Borrower;
Plus 100% of all gas inventory of the Borrower;
Plus 50% of all "miscellaneous eligible inventories" of the Borrower;
Plus 100% of the value of the "Rabbi Trust";
Minus the balance of term loan #4280406-9001.
"Eligible accounts receivable" shall be all trade accounts of the Borrower less than 90 days beyond the date of invoice (and originating in the ordinary course of business) minus all contra accounts receivable, affiliate company accounts receivable and employee accounts receivable.
"Miscellaneous eligible inventories" shall be all ordinary-course non-gas inventories of the Borrower valued at cost.
"Rabbi Trust" shall be the investment account of the Borrower numbered 89151111309 held by Community Bank, N.A.
The Borrower shall execute a Demand Grid Note (the "Revolving Line Note") evidencing obligations related to the Revolving Line in a form acceptable to the Bank.
All outstanding amounts under the Revolving Line shall bear interest until paid in full. The rate of interest payable hereunder shall be a fluctuating rate per annum (the "Stated Rate") equal to the greater of 3.50% or the 30-day Libor Rate plus 2.25%, with changes to occur automatically with changes in the 30-day Libor Rate from time to time in effect. Each change in the Stated Rate shall take effect simultaneously with the corresponding change in such Libor Rate. The "30-day Libor Rate" shall mean the 30-day Libor Rate as published by the Wall Street Journal from time to time during the period that any portion of the principal hereunder remains unpaid. Interest shall be calculated based on actual days elapsed divided by a year of 360 days. Changes in the rate of interest applicable to the Revolving Line Note shall become effective automatically and without notice at the time of changes in the 30-day Libor Rate. The Bank, shall, however, provide the Borrower with notice of changes which have occurred in the rate applicable to the Revolving Line during the preceding billing period in its regular billing statements.