EX-10.1





Exhibit 10.1









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



 









 




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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