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(Date of earliest event reported) Corning Natural Gas Corporation New York of incorporation) 000-00643 File Number) 16-0397420 Identification No.)UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: October 2, 2009
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
(Commission
(I.R.S. Employer
330 West William Street, Corning, New York |
14830 |
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(607) 936-3755 (Registrant's telephone number, including area code) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 |
Other Events |
Item 9.01 |
Financial Statements and Exhibits. |
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(d) |
Exhibits |
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10.1 - Line of Credit Agreement dated September 30, 2009 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Corning Natural Gas Corporation By: /s/ Firouzeh Sarhangi Name: Firouzeh Sarhangi |
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Dated: September 30, 2009 |
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EXHIBIT INDEX
Exhibit Number Description
10.1 - Line of Credit Agreement dated September 30, 2009
COMMUNITY BANK, N.A.
LINE OF CREDIT AGREEMENT
September 30, 2009
This letter sets forth the governing terms of our agreement between Community Bank, N.A. (the "Bank") and Coming Natural Gas Corp. (the "Borrower") concerning a revolving line of credit (the "Revolving Line") in the aggregate maximum amount outstanding at any one time of $8,000,000.00, subject to the terms of this letter. This Revolving Line was committed by the provisions of a commitment letter from the Bank to the Borrower dated August 26, 2009 (the "Commitment Letter"), the contents of which are herein incorporated by reference.
General Terms of Revolving Line
Proceeds of the Revolving Line shall be used for Borrower's working capital purposes needs. So long as no Event of Default exists under this Agreement or under the terms of any other agreement or loan document between the Borrower or any Guarantor hereunder and the Bank, the Borrower may borrow, repay, and reborrow under the Revolving Line from time to time so long as the aggregate principal amount outstanding at any one time does not exceed
$8,000,000.00 and the Bank has not demanded payment in full. Notwithstanding the foregoing, beginning January 1, 2010, aggregate borrowings at any one time under the Revolving Line may not exceed the sum then available according to the following formula:
100% of all "eligible accounts receivable" of the Borrower;
Plus 100% of all gas inventory of the Borrower;
Plus 50% of all "miscellaneous eligible inventories" of the Borrower;
Plus 100% of the value of the "Rabbi Trust";
Minus the balance of term loan #4280406-9001.
Definitions:
"Eligible accounts receivable" shall be all trade accounts of the Borrower less than 90 days beyond the date of invoice (and originating in the ordinary course of business) minus all contra accounts receivable, affiliate company accounts receivable and employee accounts receivable.
"Miscellaneous eligible inventories" shall be all ordinary-course non-gas inventories of the Borrower valued at cost.
"Rabbi Trust" shall be the investment account of the Borrower numbered 89151111309 held by Community Bank, N.A.
The Borrower shall execute a Demand Grid Note (the "Revolving Line Note") evidencing obligations related to the Revolving Line in a form acceptable to the Bank.
All outstanding amounts under the Revolving Line shall bear interest until paid in full. The rate of interest payable hereunder shall be a fluctuating rate per annum (the "Stated Rate") equal to the greater of 4% or the 30-day Libor Rate plus 2.25%, with changes to occur automatically with changes in the 30-day Libor Rate from time to time in effect. Each change in the Stated Rate shall take effect simultaneously with the corresponding change in such Libor Rate. The "30-day Libor Rate" shall mean the 30-day Libor Rate as published by the Wall Street Journal from time to time during the period that any portion of the principal hereunder remains unpaid. Interest shall be calculated based on actual days elapsed divided by a year of 360 days. Changes in the rate of interest applicable to the Revolving Line Note shall become effective automatically and without notice at the time of changes in the 30-day Libor Rate. The Bank, shall, however, provide the Borrower with notice of changes which have occurred in the rate applicable to the Revolving Line during the preceding billing period in its regular billing statements.
Unless sooner demanded, payments of all accrued interest under the Revolving Line are due and payable on the first day of each month. All remaining outstanding principal and accrued interest under the Revolving Line shall be due and payable in full on the earlier of (i) March 31, 2010, or (ii) the date of a demand by the Bank, or (iii) the date of an Event of Default (collectively, the "Expiration Date") unless the Revolving Line is extended by the Bank in its sole discretion. The Revolving Line will terminate on, and the Bank shall have no further obligation to make credit available after, the Expiration Date.
Any amount due not fully paid within ten (10) days after the date due shall be subject to a late payment charge of the greater of $25.00 or five percent (5%) of the total payment due.
Fees and Expenses
The Borrower shall pay any fees, expenses and disbursements, including reasonable legal fees, of the Bank related to the Revolving Line and the transactions contemplated by this letter. Such payments shall be due from time to time upon the Bank giving the Borrower notice of the amount of such expenses.
At the request of the Bank, the Borrower shall promptly pay any expenses, reasonable attorney's fees, costs, or disbursements in connection with collection of any of the obligations related to the Revolving Line or enforcement of any of the Bank's rights hereunder or under any note, guaranty, or other agreement related hereto. This obligation shall survive the payment of the Revolving Line Note. The Bank may apply any payments of any nature received by it first to the payment of obligations under this paragraph, notwithstanding any conflicting provision contained in this letter or any other agreement with the Borrower.
Upon the occurrence of an Event of Default and acceleration by the Bank of the Revolving Line Note such that it becomes immediately due and payable in full, the rate of interest on each of the obligations related thereto shall be increased to a rate at all times equal to two percent (2%) above the rate of interest which would be in effect absent such Event of Default, such increased rate to remain in effect through and including payment in full of all of the Obligations, or written waiver of such Event of Default by the Bank.
Collateral and Guarantees
The Revolving Line obligation shall be secured by the following:
No Guaranty of the Revolving Line obligation is required to be furnished by the Borrower.
Affirmative Covenants
So long as this agreement remains in effect or there exists any indebtedness owing to the Bank by the Borrower hereunder, it is agreed that the Borrower shall:
E. Promptly inform the Bank of the commencement of any material action, suit, proceeding or investigation against the Borrower, or the making of any counterclaim against it in any action, suit or proceeding, and of all liens against any property of either. An action, suit,
proceeding, investigation, or lien shall be deemed material when in the aggregate the face amount of all such pending claims, reduced by the amounts (excluding deductibles and retained limit self-insurances) of indemnity insurance coverages acknowledged by the insurers as applicable thereto, exceeds $100,000.00.
H. Borrower is to maintain a debt service coverage ratio of 1.10 to 1 as determined by reference to the audited financial statements of the Borrower commencing with those for the fiscal year ending September 30, 2010. Debt service coverage ratio is defined as:
(net income + depreciation and amortization + interest - dividends and distributions
(current maturity loan term debt from the prior period financial statement + interest)
Negative Covenants
So long as this agreement remains in effect or there exists any indebtedness owing to the Bank by the Borrower hereunder, it is agreed that the Borrower shall not:
C. make or incur any liability to make any distributions until and while its actual regulated capital structure has an equity to debt ratio of less than 30% equity to 70% debt, or make any distributions which would reduce the equity percentage below 30%.
Events of Default
All of obligations of the Bank hereunder to the Borrower may be immediately terminated and the entire unpaid balance of all indebtedness hereunder owing to the Bank may be declared to be immediately due and payable at the sole election of the Bank upon the happening of any one of the following specific events of default:
A. Nonpayment of any principal of or interest on any indebtedness created hereunder within fifteen (15) days after its due date, or default by the Borrower in the performance of any
of other material terms or conditions of this agreement or of any other agreement of the Borrower with the Bank, which default remains uncured fifteen (15) days after written notice thereof has been furnished by the Bank to the Borrower;
Miscellaneous Terms
The Bank shall have a right of set-off, in the full amount of all of Borrower's obligations to the Bank, against any deposits, assets held by, or other amounts owed by the Bank to or held by the Bank for, the Borrower as well as a lien on any and all property of the Borrower which is or may be in the Bank's possession.
No delay or omission by the Bank in exercising any right or remedy hereunder or with respect to any indebtedness created hereunder shall operate as a waiver thereof or of any of other right or remedy, and no single or partial exercise thereof shall preclude any other or further exercise thereof of any other right or remedy.
The parties hereto expressly waive all rights to trial by jury on any cause of action directly or indirectly involving the terms or conditions of this Agreement, the Revolving Line Note, or any matters whatsoever arising out of or in connection with this Agreement, the Revolving Line Note, or any document executed or delivered in connection with this Agreement or the Revolving Line Note. The foregoing waiver shall survive the termination or expiration of this Agreement.
This Agreement and the documents referred to herein embody the entire agreement and understanding among the parties and supersede all prior agreements and understandings relating
to the subject matter hereof. This Agreement shall not be changed or amended without the written agreement of all parties hereto.
All the terms and provisions of this Agreement shall inure to the benefit of and be
binding upon and be enforceable by the parties and their successors and assigns and shall inure to the benefit of and be enforceable by any holder of notes, executed hereunder. No assignment of the rights of the Borrower under this Agreement may be made without the prior written consent of the Bank.
This letter and the notes and agreements related hereto, together with all of the rights and obligations of the parties hereto, shall be construed, governed and enforced in accordance with the laws of the State of New York. It represents the joint agreement of the parties following negotiation resulting in the issuance of the Commitment Letter, and accordingly shall not be strictly construed against any particular party.
Please sign the enclosed duplicate original of this letter to evidence your agreement to the terms contained herein. We appreciate the opportunity to do business with you.
COMMUNITY BANK, N.A.
/S/ Thomas F. Beers, Vice President
CORNING NATURAL GAS CORP.
/S/ Michael German, President