Exhibit 10.1
(M&T BANK LOGO) [l34323al3432301.gif]
DEMAND NOTE
October 27, 2008
$1,000,000.00
     For value received, the undersigned CORNING NATURAL GAS CORPORATION, a New
York corporation, with an address of 330 West William Street, Corning, New York
14830 (the “Borrower”), promises to pay to the order of Manufacturers and
Traders Trust Company, a New York banking corporation with an address of One M&T
Plaza (Attn: Office of General Counsel), Buffalo, New York 14203 (together with
its successors and assigns, the “Bank”), ON DEMAND, the principal amount of One
Million Dollars and Zero Cents ($1,000,000.00) or, if less, such amount as may
be the aggregate unpaid principal amount of all loans or advances made by the
Bank to the Borrower pursuant hereto, together with interest from the date
hereof on the unpaid principal balance from time to time outstanding until paid
in full. The aggregate principal balance outstanding shall bear interest thereon
at a per annum rate equal to One Percent (1%) above the Prime Rate (as
hereinafter defined). All accrued and unpaid interest shall be payable monthly
in arrears on the 1st of each month, commencing on November 1, 2008.
     Prime Rate means the rate per annum from time to time established by the
Bank as the Prime Rate and made available by the Bank at its main office or, in
the discretion of the Bank, the base, reference or other rate then designated by
the Bank for general commercial loan reference purposes, it being understood
that such rate is a reference rate, not necessarily the lowest, established from
time to time, which serves as the basis upon which effective interest rates are
calculated for loans making reference thereto.
     The effective interest rate applicable to the Borrower’s loans evidenced
hereby shall change on the date of each change in the Prime Rate.
     Principal and interest shall be payable at the Bank’s main office or at
such other place as the Bank may designate in writing in immediately available
funds in lawful money of the United States of America without set-off, deduction
or counterclaim. Interest shall be calculated on the basis of actual number of
days elapsed and a 360-day year.
     The Borrower, if a corporation, partnership, trust or other entity,
represents that: (i) it is duly organized and in good standing or duly
constituted in the state of its organization and is duly authorized to do
business in all jurisdictions material to the conduct of its business; (ii) that
the execution, delivery and performance of this Note have been duly authorized
by all necessary regulatory and corporate or partnership action or by its
governing instrument; (iii) that this Note has been duly executed by an
authorized officer, partner or trustee and constitutes a binding obligation
enforceable against Borrower and not in violation of any law, court order or
agreement by which Borrower is bound; (iv) that Borrower’s performance is not
threatened by any pending or threatened litigation; and (v) that Borrower’s name
and chief executive office is correctly stated in the first paragraph of this
Note and that Borrower shall not change its name or its chief executive office
without giving the Bank at least thirty (30) days prior written notice.
     Payments may be applied in any order in the sole discretion of the Bank
but, prior to default, shall be applied first to past due interest, expenses
(which shall include all fees and costs, as well as all disbursements incurred
by the Bank to preserve or enforce its rights under this Note or any other
document executed in connection herewith), late charges and principal; then to
current interest, expenses, late charges and principal, and last to remaining
principal. Notwithstanding the foregoing, any payments received after demand for
payment shall be applied in such manner as the Bank may determine. The Borrower
hereby authorizes the Bank to charge any deposit account which the Borrower may
maintain with the Bank for any payment required hereunder without prior notice
to the Borrower.
     If pursuant to the terms of this Note, the Borrower is at any time
obligated to pay interest on the principal balance at a rate in excess of the
maximum interest rate permitted by applicable law for the loan evidenced by this
Note, the applicable interest rate shall be immediately reduced to such maximum
rate and all previous payments in excess of the maximum rate shall be deemed to
have been payments in reduction of principal and not on account of the interest
due hereunder.
     The Borrower represents to the Bank that the proceeds of this Note will not
be used for personal, family or household purposes or for the purpose of
purchasing or carrying margin stock or margin securities within the meaning of
Regulations U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. Parts 221 and 224.
     The Borrower and each endorser and guarantor hereof grant to the Bank a
continuing lien on and security interest in any and all deposits or other sums
at any time credited by or due from the Bank or any Bank Affiliate (as
hereinafter defined) to the Borrower and/or

 

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each endorser or guarantor hereof and any cash, securities, instruments or other
property of the Borrower and each endorser and guarantor hereof in the
possession of the Bank or any Bank Affiliate, whether for safekeeping or
otherwise, or in transit to or from the Bank or any Bank Affiliate (regardless
of the reason the Bank or Bank Affiliate had received the same or whether the
Bank or Bank Affiliate has conditionally released the same) as security for the
full and punctual payment and performance of all of the liabilities and
obligations of the Borrower and/or any endorser or guarantor hereof to the Bank
or any Bank Affiliate and such deposits and other sums may be applied or set off
against such liabilities and obligations of the Borrower or any endorser or
guarantor hereof to the Bank or any Bank Affiliate at any time, whether or not
such are then due, whether or not demand has been made and whether or not other
collateral is then available to the Bank or any Bank Affiliate.
     No delay or omission on the part of the Bank in exercising any right
hereunder shall operate as a waiver of such right or of any other right of the
Bank, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Borrower and every endorser or guarantor of this Note, regardless of the time,
order or place of signing, waives presentment, demand, protest, notice of intent
to accelerate, notice of acceleration and all other notices of every kind in
connection with the delivery, acceptance, performance or enforcement of this
Note and assents to any extension or postponement of the time of payment or any
other indulgence, to any substitution, exchange or release of collateral, and to
the addition or release of any other party or person primarily or secondarily
liable and waives all recourse to suretyship and guarantor defenses generally,
including any defense based on impairment of collateral. To the maximum extent
permitted by law, the Borrower and each endorser and guarantor of this Note
waive and terminate any homestead rights and/or exemptions respecting any
premises under the provisions of any applicable homestead laws, including
without limitation, Section 5206 of the Civil Practice Law and Rules of New
York.
     The Borrower and each endorser and guarantor of this Note shall indemnify,
defend and hold the Bank and the Bank Affiliates and their directors, officers,
employees, agents and attorneys (each an “Indemnitee”) harmless against any
claim brought or threatened against any Indemnitee by the Borrower, by any
endorser or guarantor, or by any other person (as well as from attorneys’
reasonable fees and expenses in connection therewith) on account of the Bank’s
relationship with the Borrower or any endorser or guarantor hereof (each of
which may be defended, compromised, settled or pursued by the Bank with counsel
of the Bank’s selection, but at the expense of the Borrower and any endorser
and/or guarantor), except for any claim arising out of the gross negligence or
willful misconduct of the Bank.
     The Borrower and each endorser and guarantor of this Note agree to pay,
upon demand, costs of collection of all amounts under this Note including,
without limitation, principal and interest, or in connection with the
enforcement of, or realization on, any security for this Note, including,
without limitation, to the extent permitted by applicable law, reasonable
attorneys’ fees and expenses. Upon demand for payment of any amounts hereunder,
interest shall accrue at a rate per annum equal to the aggregate of 4.0% plus
the rate provided for herein. If any payment due under this Note is unpaid for
5 days or more, the Borrower shall pay, in addition to any other sums due under
this Note (and without limiting the Bank’s other remedies on account thereof), a
late charge equal to the greater of $50 or 5.0% of such unpaid amount (which
amount shall be subject to and limited so as to not be in violation of the
provisions of Section 254-b of New York Real Property Law, if applicable).
     This Note shall be binding upon the Borrower and each endorser and
guarantor hereof and upon their respective heirs, successors, assigns and legal
representatives, and shall inure to the benefit of the Bank and its successors,
endorsees and assigns.
     The liabilities of the Borrower and any endorser or guarantor of this Note
are joint and several; provided, however, the release by the Bank of the
Borrower or any one or more endorsers or guarantors shall not release any other
person obligated on account of this Note. Any and all present and future debts
of the Borrower to any endorser or guarantor of this Note are subordinated to
the full payment and performance of all present and future debts and obligations
of the Borrower to the Bank. Each reference in this Note to the Borrower, any
endorser, and any guarantor, is to such person individually and also to all such
persons jointly. No person obligated on account of this Note may seek
contribution from any other person also obligated, unless and until all
liabilities, obligations and indebtedness to the Bank of the person from whom
contribution is sought have been irrevocably satisfied in full. The release or
compromise by the Bank of any collateral shall not release any person obligated
on account of this Note.
     The Borrower and each endorser and guarantor hereof each authorizes the
Bank to complete this Note if delivered incomplete in any respect. A
photographic or other reproduction of this Note may be made by the Bank, 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.
     This Note is delivered to the Bank at one of its offices in New York and
shall be governed by the laws of the State of New York without giving effect to
the conflicts of laws principles thereof.
     Any demand or notice hereunder or under any applicable law pertaining
hereto shall be in writing and duly given if delivered to any party hereto at
the address for such party as set forth herein, or at such other address as any
party may from time to time designate in written notice received by the other
parties hereto; provided, however, that in order for any notice to the Bank to
be deemed effective, a duplicate notice shall be separately delivered to the
Bank at the current office address of the Bank officer primarily responsible for
the customer account to which this document relates. Any such demand or notice
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. Notice by e-mail is not valid

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notice under this or any other agreement between the undersigned parties.
     The term “Bank Affiliate” as used in this Note shall mean any banking or
lending affiliates of the Bank, any party acting as a participant lender in the
credit arrangements contemplated herein, or any third party acting on the Bank’s
behalf.
     Except as set forth below, no change in this Note or waiver of any right or
remedy hereunder can be made except in a writing signed by the Bank. No course
of dealing or other conduct, no oral agreement or representation made by the
Bank, and no usage of trade, shall operate as a waiver of any right or remedy of
the Bank. No waiver of any right or remedy of the Bank shall be effective unless
made specifically in writing by the Bank.
     This Note, together with any related loan and security agreements and
guaranties, contains the entire agreement between the Borrower and the Bank with
respect to the Note, and supersedes every course of dealing, other conduct, oral
agreement and representation previously made by the Bank.
     If there is more than one obligor to the Bank named herein and signing
below, each such obligor shall be jointly and severally liable for the payment
of all amounts and performance of all obligations required hereunder.
     Preauthorized Transfers from Deposit Account. If a deposit account number
is provided, Borrower hereby authorizes the Bank to debit Borrower’s deposit
account #                     with the Bank automatically for any amount which
becomes due under this Note.
     The Borrower and each endorser and guarantor of this Note each irrevocably
submits to the nonexclusive jurisdiction of any Federal or state court sitting
in New York, over any suit, action or proceeding arising out of or relating to
this Note. Each of the Borrower and each endorser and guarantor irrevocably
waives, to the fullest extent it may effectively do so under applicable law, any
objection it may now or hereafter have to the laying of the venue of any such
suit, action or proceeding brought in any such court and any claim that the same
has been brought in an inconvenient forum. Each of the Borrower and each
endorser and guarantor hereby consents to any and all process which may be
served in any such suit, action or proceeding, (i) by mailing a copy thereof by
registered and certified mail, postage prepaid, return receipt requested, to the
Borrower’s, endorser’s or guarantor’s address shown below or as notified to the
Bank and (ii) by serving the same upon the Borrower(s), endorser(s) or
guarantor(s) in any other manner otherwise permitted by law, and agrees that
such service shall in every respect be deemed effective service upon the
Borrower or such endorser or guarantor.
     THE BORROWER AND EACH ENDORSER AND GUARANTOR ACKNOWLEDGE THAT THIS NOTE IS
A DEMAND NOTE AND THE RIGHT OF THE BANK TO DEMAND PAYMENT OF THIS NOTE IN WHOLE
OR IN PART AT ANY TIME SHALL BE ABSOLUTE, UNCONDITIONAL AND IN THE SOLE
DISCRETION OF THE BANK. THE INCLUSION OF EVENTS OF DEFAULT AND COVENANTS IN ANY
LOAN DOCUMENTS BETWEEN THE BANK AND THE BORROWER OR ANY ENDORSER OR GUARANTOR OR
OTHER PARTY DELIVERED IN CONNECTION WITH THIS NOTE OR OTHERWISE SHALL NOT IN ANY
WAY LIMIT THE DEMAND NATURE OF THIS NOTE AND THE BANK MAY MAKE DEMAND FOR
PAYMENT AT ANY TIME FOR ANY OR NO REASON, WHETHER OR NOT AN EVENT OF DEFAULT HAS
OCCURRED UNDER ANY SUCH LOAN DOCUMENTS.
     THE BORROWER, EACH ENDORSER AND GUARANTOR AND THE BANK EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT
WITH LEGAL COUNSEL, (A) WAIVES ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING IN CONNECTION WITH THIS NOTE, ANY OF THE OBLIGATIONS OF THE
BORROWER, EACH ENDORSER AND GUARANTOR TO THE BANK, AND ALL MATTERS CONTEMPLATED
HEREBY AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND (B) AGREES NOT TO SEEK
TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CAN
NOT BE, OR HAS NOT BEEN, WAIVED. THE BORROWER, EACH ENDORSER AND GUARANTOR AND
THE BANK EACH CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES,
AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD
NOT IN THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO
TRIAL BY JURY.

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     Executed as of October 27, 2008.

                  Witness:       Borrower:    
 
                        CORNING NATURAL GAS CORPORATION    
 
               
 
      By:   /s/ Michael I. German    
 
         
 
Michael I. German, President    
 
                        330 West William Street             Corning, New York  
          14830    

             
STATE OF NEW YORK
          :
 
           SS.
COUNTY OF
 
      :
 
         

On the                      day of                      in the year 20      ,
before me, the undersigned, a Notary Public in and for said State, personally
appeared, Michael I. German, personally known to me or proved to me on the basis
of satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

         
 
 
 
NOTARY PUBLIC    
 
       
 
 
 
TYPE OR PRINT NAME    

FOR BANK USE ONLY

         
Authorization Confirmed:
       
Signature per C.P. 4.15.10
 
 
             
 
          Promissory Notes   © 2008 Medici, a division of Wolters Kluwer
Financial Services

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