Document:

exv10w23

EXHIBIT 10.23

SECURITY AGREEMENT

     This Security Agreement (the “Agreement”) is made effective as of July 3, 2008, by NORTHEAST
OHIO NATURAL GAS CORP., an Ohio corporation, whose address is 8500 Station Street, Mentor, Ohio
44060 (the “Debtor”), and CITIZENS BANK, with an address at 328 S. Saginaw Street, Flint, Michigan
48502, for itself and as agent for any affilitate of Citizens Republic Bancorp (the “Secured
Party”). Debtor and Secured Party hereby agree as follows:

WITNESSETH:

     WHEREAS, Debtor is indebted to Secured Party pursuant to, among other things, (i) that certain
Credit Agreement dated of even date herewith by and between Debtor and Secured Party (the “Credit
Agreement”), (ii) that certain Revolving Note dated of even date herewith executed by Debtor and
made payable to the order of Secured Party, in the principal amount of Two Million One Hundred
Thousand and no/100 Dollars ($2,100,000.00) (said Revolving Note, as increased, decreased, amended,
modified, revised, supplemented, substituted, renewed, extended or restated from time to time, is
hereinafter collectively referred to as the “Revolving Note”), (iii) that certain Term Note dated
of even date herewith executed by Debtor and made payable to the order of Secured Party, in the
principal amount of Seven Million Seven Hundred Eighty Thousand Twelve and no/100 Dollars
($7,780,012.00) (said Term Note, as increased, decreased, amended, modified, revised, supplemented,
substituted, renewed, extended or restated from time to time, is hereinafter collectively referred
to as the “Term Note”) (the Revolving Note and the Term Note are hereinafter collectively referred
to as the “Notes”), and (iv) such other agreements, instruments and documents executed or delivered
by Debtor in connection with the Credit Agreement or the Notes, or as security therefor or
otherwise related thereto (the Credit Agreement, the Notes and all other aforesaid agreements,
instruments and documents, as amended, modified, revised, supplemented, substituted, renewed,
extended or restated from time to time, are hereinafter collectively referred to as the “Loan
Documents”).

	1.	 	SECURITY INTEREST; OBLIGATIONS: In consideration of and as security for the full and
complete payment, performance and observance of all Obligations (as hereinafter defined)
Debtor hereby assigns as collateral and grants to Secured Party a security interest in and to
all items of property described in Paragraph 2 of this Agreement. This assignment of
collateral and grant of security interest shall secure all loans, advances, indebtedness and
each and every other obligation or liability of Debtor owed to Secured Party or any affiliate
of Citizens Republic Bancorp, however created, of every kind and description, whether now
existing or hereafter arising and whether direct or indirect, joint or several, primary or as
guarantor or surety, absolute or contingent, due or to become due, liquidated or unliquidated,
matured or unmatured, secured or unsecured, participated in whole or in part, created by trust
agreement, lease, overdraft, agreement, promissory note, guaranty, indemnification, letter of
credit, rate management obligations and/or agreements, credit accommodations or otherwise,
whether or not secured by additional collateral, whether originated with Secured Party or owed
to others and acquired by Secured Party by purchase, assignment or otherwise, and including,
without limitation, all loans, advances,
indebtedness and each and every other obligation or liability arising under the Credit

 

 

	 	 	Agreement, the Notes and/or the other Loan Documents, letters of credit, rate management
agreements, ISDA Master Agreements and related schedules and confirmations, and any other
indebtedness or obligations, whether now existing or hereafter arising and issued by Secured
Party or any affiliate of Citizens Republic Bancorp for the benefit of or at the request of
Debtor, all obligations to perform or forbear from performing acts, and all agreements,
instruments and documents evidencing, guarantying or securing or otherwise executed in
connection with any of the foregoing, together with any and all increases, decreases,
amendments, modifications, revisions, supplements, substitutions, renewals, extensions or
restatements thereof, and all expenses and attorneys’ fees incurred or other sums disbursed by
Secured Party under this Agreement or any other document, instrument or agreement related to
any of the foregoing (all of the foregoing obligations set forth in this Paragraph 1 are
hereinafter, collectively referred to as the “Obligations”).
	 
	2.	 	COLLATERAL: Debtor hereby grants to Secured Party a continuing security interest in
all right, title and interest of Debtor in the collateral now existing and hereafter arising
or acquired by Debtor, regardless of where it is located, and is defined as follows (together
with all proceeds and products thereof and all additions and accession thereto, replacements
thereof, supporting obligations therefor, guaranties thereof, insurance or condemnation
proceeds thereof, documents related thereto, all sales of accounts constituting a right to
payment therefrom, all tort or other claims against third parties arising out of damage
thereto or destruction thereof, all property received wholly or partly in trade or exchange
thereof, all fixtures attached or appurtenant thereto, all leases thereof, and all rents,
revenues, issues, profits and all proceeds arising from the sale, lease, license, encumbrance,
collection or any other temporary or permanent disposition thereof, or any other interest
therein, collectively, the “Collateral”):

	 	(a)	 	All Accounts, all Accounts Receivable, all Cash Security, all Inventory, all
Equipment, all General Intangibles, and all Investment Property, in each case whether now
owned or hereafter acquired or received by Debtor; and
	 
	 	(b)	 	All Instruments, Documents, chattel paper, electronic chattel paper, securities,
moneys, cash, letters of credit, letter of credit rights, promissory notes, warrants,
dividends, distributions, commercial tort claims, contracts, agreements, contract rights
or other property, owned by Debtor or in which Debtor has an interest, including but not
limited to, those which are now or hereafter in the possession or control of Secured
Party or in transit by mail or carrier to or in the possession of any third party acting
on behalf of Secured Party, without regard to whether Secured Party received the same in
pledge, for safekeeping, as agent for collection or transmission or otherwise or whether
Secured Party had conditionally released the same, and the proceeds thereof, all rights
to payment from, and all claims against Secured Party, and any deposit accounts of Debtor
with Secured Party, including all demand, time, savings, passbook or other accounts and
all deposits therein; and
	 
	 	(c)	 	All of the Proceeds, products, profits, and rents of Debtor’s Accounts, Accounts
Receivable, Inventory, Equipment, Cash Security, Investment Property and General
Intangibles and all books and records, including computer software, used in connection
with any of the Collateral.

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	3.	 	DEFINITIONS: Capitalized terms not otherwise defined in this Agreement shall have the
meanings attributed thereto in the applicable version of the Uniform Commercial Code adopted
in the jurisdiction in the state in which Debtor is organized, or where appropriate, the
jurisdiction in which the collateral is located, as such definitions may be enlarged or
expanded from time to time by legislative amendment thereto or judicial decision (the “Uniform
Commercial Code”). As used herein the following capitalized terms will have the following
meanings:

	 	(a)	 	“Deposit Account”, “Document”, “Goods”, “Instrument”, and “Proceeds”, have the meanings
as set forth in Ohio Revised Code Sections 1309.102 from time to time, including any
amendments thereof and any substitutions therefor, which definitions are hereby incorporated
by reference as though fully rewritten herein.
	 
	 	(b)	 	“Accounts” means all accounts, accounts receivable, health-care-insurance
receivables, credit card receivables, contracts, contract rights, instruments, documents,
tax refunds from federal, state or local governments and all obligations in any form
including without limitation those arising out of the sale or lease of goods or the
retention of services by Debtor; all guaranties, letters of credit and other security and
supporting obligations for any of the above; all merchandise resumed to or reclaimed by
Debtor, and all books and records (including computer programs, tapes and data processing
software) evidencing an interest in or relating to the above; all winnings in a lottery
or other game of chance operated by a governmental unit or person licensed to operate
such game by a governmental unit and all rights to payment therefrom; and any “Account”
as the same is now or hereafter defined in the Uniform Commercial Code.
	 
	 	(c)	 	“Accounts Receivable” means:

(i) any account receivable, Account, Document, or Instrument owned, acquired, or
received by a Person,

(ii) any other indebtedness owed to or receivable owned, acquired, or received by a
Person of whatever kind and however evidenced, and

(iii) any right, title, and interest in a Person’s Goods which were sold, leased, or
furnished by that Person and gave rise to either (i) or (ii) above, or both of them.
This includes, without limitation,

(A) any rights of stoppage in transit of a Person’s sold, leased, or
furnished Goods,

(B) any rights to reclaim a Person’s sold, leased, or furnished Goods, and

(C) any rights a Person has in such sold, leased, or furnished Goods that
have been returned to or repossessed by that Person.

	 	(d)	 	“Cash Security” means all cash, Instruments, Deposit Accounts, and other cash
equivalents, whether matured or unmatured, whether collected or in the process of

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	 	 	 	collection, upon which Debtor presently has or may hereafter have any claim, that are
presently or may hereafter be existing or maintained with, issued by, drawn upon, or in
the possession of a bank or is subject to a Deposit Account Control Agreement or Account
Control Agreement as defined herein.

	 	(e)	 	“Deposit Account Control Agreement” means any authenticated record from a bank or
other financial institution providing that the bank or other financial institution will
comply with instructions originated by a secured party directing disposition of the funds
in the Deposit Account without further consent of the Debtor.
	 
	 	(f)	 	“Equipment” means all goods (excluding inventory, farm products or consumer goods),
machinery, machine tools, equipment, fixtures, office equipment, furniture, furnishings,
motors, motor vehicles, tools, dies, parts, jigs, goods (including, without limitation,
each of the items of equipment set forth on any schedule which is either now or in the
future attached to Secured Party’s copy of this Agreement), and all attachments,
accessories, accessions, replacements, substitutions, additions and improvements thereto,
and all supplies used or useful in connection therewith, and all “Equipment” as same is
now or hereafter defined in the Uniform Commercial Code.
	 
	 	(g)	 	“General Intangibles” means all general intangibles, choses in action, causes of
action, obligations or indebtedness owed to Debtor from any source whatsoever, payment
intangibles, software and all other intangible personal property of every kind and nature
(other than Accounts) including without limitation patents, trademarks, trade names,
service marks, copyrights and applications for any of the above, and goodwill, trade
secrets, permits, licenses, certifications, franchises, rights under agreements,
operating rights, distributorship and distribution agreements, tax refund claims, and all
books and records including all computer programs, disks, tapes, printouts, customer
lists, credit files and other business and financial records, and the equipment
containing any such information, and all “General Intangibles” as same is now or
hereafter defined in the Uniform Commercial Code.
	 
	 	(h)	 	“Inventory” means all goods, supplies, wares, merchandises and other tangible
personal property including raw materials, work in process, supplies and components, and
finished goods, whether held for sale or lease, or furnished or to be furnished under any
contract for service, or used or consumed in business, and also including products of and
accessions to inventory, packing and shipping materials, and all documents of title,
whether negotiable or non-negotiable, representing any of the foregoing, and all
“Inventory” as same is now or hereafter defined in the Uniform Commercial Code.
	 
	 	(i)	 	“Investment Property” means a security, whether certificated or uncertificated,
security entitlement, securities account, commodity contract or commodity account and all
“Investment Property” as same is now or hereafter defined in the Uniform Commercial Code.

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	 	(j)	 	“Person” has the meaning as set forth in Ohio Revised Code Section 1301.01 from
time to time, including any amendments thereof and any substitutions therefor, which
definitions are hereby incorporated by reference as though fully rewritten herein.

	4.	 	WARRANTIES AS TO DEBTOR: Debtor hereby represents and warrants to Secured Party as follows:

	 	(a)	 	It is a corporation with its principal place of business located at the address
otherwise set forth herein, and is duly organized, validly existing and in good standing
under the laws of the State of Ohio.
	 
	 	(b)	 	Debtor further warrants that its exact legal name is set forth in the initial
paragraph of this Agreement, and its Taxpayer I.D. No. is  ______________, and its
Charter No. is 809172.
	 
	 	(c)	 	Exhibit A attached to this Agreement and incorporated herein by reference
lists the locations of any and all of the Collateral of Debtor.

	5.	 	WARRANTIES AS TO COLLATERAL: Debtor hereby represents and warrants to Secured Party
that:

	 	(a)	 	Except for the security interest hereby granted, Debtor is, and as to any property
which at any time forms a part of the Collateral, shall be, the sole owner of, with good
and marketable title in, each and every item of the Collateral, or otherwise shall have
the full right and power to grant a security interest in the Collateral, free from any
lien, security interest or encumbrance whatsoever.
	 
	 	(b)	 	Each item described as Collateral is, and shall be, valid, and all information
furnished to Secured Party with regard thereto is, and shall be, accurate and correct in
all respects when furnished;
	 
	 	(c)	 	None of the Collateral shall be sold (except for Inventory sold in the ordinary
course of business), assigned, transferred, discounted, hypothecated, or otherwise
subjected to any lien, encumbrance or security interest (except as otherwise provided in
Paragraph 5(a) above), and that Debtor shall defend such Collateral and each and every
part thereof against claims of all persons at any time claiming such Collateral or
claiming any interest therein adverse to Secured Party except as aforesaid;
	 
	 	(d)	 	The provisions of this Agreement are sufficient to create in favor of Secured Party
a valid and continuing first lien on, and valid first security interest in, the types of Collateral in which a security interest may be perfected by the filing of UCC Financing
Statements, and when such UCC Financing Statements are filed in the requisite filing
offices, and the requisite filing fees are paid, such filings shall be sufficient to
perfect such security interest (other than Equipment affixed to real property so as to
become fixtures);

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	 	(e)	 	If any of the Collateral is or will be attached to real estate in such a manner as
to become a fixture under applicable state law, that said real estate is not encumbered
in any way except in favor of Secured Party, or if said real estate is encumbered, Debtor
will secure from the lien holder or the party in whose favor it is or will become so
encumbered a written acknowledgment and subordination to the security interest hereby
granted or a written disclaimer of any interest in the Collateral, in such form as is
acceptable to Secured Party; and
	 
	 	(f)	 	The financial statements of Debtor submitted to the Secured Party are true and
correct and there are no material adverse changes in the conditions, financial or
otherwise, of Debtor since the date of said financial statements.

	6.	 	DEBTOR’S RESPONSIBILITIES: Debtor covenants with, and represents and warrants to
Secured Party, that Debtor shall:

	 	(a)	 	Upon Secured Party’s request, furnish to Secured Party, in writing, a current list
of all Collateral for the purpose of identifying the Collateral and, further, execute and
deliver such supplemental instruments, documents, agreements and chattel paper, in the
form of assignments or otherwise, as Secured Party shall reasonably require for the
purpose of confirming and perfecting, and continuing the perfection of, Secured Party’s
security interest in any or all of such Collateral, or as is necessary to provide Secured
Party with control over the Collateral or any portion thereof;
	 
	 	(b)	 	At its expense and upon request of Secured Party, furnish copies of invoices issued
by Debtor in connection with the Collateral, furnish certificates of insurance evidencing
insurance on Collateral, furnish proof of payment of taxes and assessments on Collateral,
make available to Secured Party, any and all of Debtor’s books, records, written
memoranda, correspondence, purchase orders, invoices and other instruments or writings
that in any way evidence or relate to the Collateral;
	 
	 	(c)	 	Keep the Collateral insured at all times against risks of loss or damage by fire
(including so-called extended coverage), theft and such other casualties including
collision in the case of any motor vehicle, all in such amounts, under such forms of
policies, upon such terms, for such periods and written by such companies or underwriters
as is satisfactory to Secured Party. In all cases losses shall be payable to Secured
Party and any surplusage shall be paid to Debtor. All policies of insurance shall
provide for at least thirty (30) days prior written notice of cancellation to Secured
Party. Should Debtor at any time fail to purchase or maintain insurance, pay taxes, or
pay for any expense, incident or such insurance, Secured Party may, but is not obligated to, pay such taxes, order and pay for such necessary items of preservation, maintenance or
protection of the Collateral, and Debtor agrees to reimburse Secured Party for all
expenses incurred under this paragraph;
	 
	 	(d)	 	Pay all taxes or assessments imposed on or with respect to the Collateral;

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	 	(e)	 	Keep all of the Collateral in good condition and repair and working order, ordinary
wear and tear excepted, protecting it from weather and other contingencies which might
adversely affect it as secured hereunder, and not permit any waste or damage with respect
thereto;
	 
	 	(f)	 	Notify Secured Party immediately in writing of any information which Debtor has or
may receive which might in any way adversely affect the value of the Collateral or the
rights of Secured Party with respect thereto;
	 
	 	(g)	 	Notify Secured Party promptly, in writing, of any change in the location of the
Collateral or of any place of business or mailing addresses or the establishment of any
new place of business or mailing address;
	 
	 	(h)	 	Pay all costs of filing any financing, continuation or termination statements with
respect to the security interest created hereby;
	 
	 	(i)	 	Upon the occurrence of an Event of Default or breach of any provision of this
Security Agreement, pay all expenses and reasonable attorneys’ fees of Secured Party; and
Debtor agrees that said expenses and fees shall be secured under this Agreement;
	 
	 	(j)	 	Maintain possession of all Collateral at the location disclosed to Secured Party
and not to remove the Collateral from that location;
	 
	 	(k)	 	Not sell, contract to sell, lease, encumber, or otherwise transfer the Collateral
(other than inventory sold in the ordinary course of business) until the Obligations have
been paid and performed, Debtor acknowledging nonetheless that Secured Party has a
security interest in the proceeds of such Collateral; and
	 
	 	(l)	 	Take any other and further action necessary or desirable as requested by Secured
Party to grant Secured Party control over the Collateral, as “control” is defined in the
applicable version of the Uniform Commercial Code, including without limitation (i)
executing and/or authenticating any assignments, third party agreements, Deposit Account
Control Agreement or any other account control agreement (“Account Control Agreement”),
in a form acceptable to Secured Party; (ii) delivering, or causing the delivery of, any
of the Collateral to the possession of Secured Party; and (iii) obtaining written
acknowledgments of the lien of Secured Party and agreements of subordination to such lien
from third parties in possession of the Collateral in a form acceptable to Secured Party.
Debtor consents to and hereby authorizes any third party in an authenticated record or
agreement between Debtor, Secured Party, and the third party,
including but not limited to depository institutions, securities intermediaries, and
issuers of letters of credit or other support obligations, to accept direction from
Secured Party regarding the maintenance and disposition of the Collateral and the products
and proceeds thereof, and to enter into agreements with Secured Party regarding same,
without further consent of the Debtor.

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	 	(m)	 	By signing below, Debtor authenticates this Security Agreement and authorizes
Secured Party, as a secured party, to complete and file with the appropriate filing
office(s): (i) one or more Uniform Commercial Code Financing Statement(s) (UCC-1),
describing the Collateral against which Secured Party has been granted a security
interest by Debtor, pursuant to the terms of this Security Agreement and/or any
Collateral described on any schedules or exhibits attached hereto and incorporated herein
by reference; and (ii) one or more Uniform Commercial Code Financing Statement(s) (UCC-3)
to terminate, continue, assign and/or ammend any previously filed financing statement
relating to this Security Agreement and/or the Colateral described herein.

	7.	 	ACCOUNTS RECEIVABLE: Debtor hereby agrees that notwithstanding the fact that all or
any part of the Obligations is not matured and Debtor is current in payment according to the
terms of the Obligations, Secured Party shall have the absolute right to take any one or more
of the following actions, upon the occurrence of an Event of Default (as hereinafter defined):

	 	(a)	 	Secured Party may serve written notice on Debtor instructing Debtor to deliver to
Secured Party all subsequent payments on Accounts Receivable which Debtor shall do until
notified otherwise;
	 
	 	(b)	 	Secured Party may notify the account debtor(s) of its security interest and
instruct such account debtor(s) to make further payments on such accounts to Secured
Party instead of to Debtor; and
	 
	 	(c)	 	Secured Party may serve written notice upon Debtor that all subsequent billings or
statements of account rendered to any account debtor shall bear a notation directing the
account debtor(s) to make payment directly to Secured Party. Any payment received by
Secured Party pursuant to this paragraph shall be retained in a separate non-interest
bearing account as security for the payment and performance of all Obligations of Debtor.

	8.	 	POWER OF ATTORNEY: Debtor hereby makes, constitutes and appoints Secured Party its
true and lawful attorney-in-fact to act, with full power of substitution, with respect to the
Collateral in any transaction, legal proceeding, or other matter in which Secured Party is
acting pursuant to this Agreement, including, but not limited to, executing, authentication
and/or filing on its behalf: (i) UCC Financing Statements reflecting the lien of Secured Party
upon the Collateral and any other documents necessary or desirable to perfect or otherwise
continue the security interest granted herein; and (ii) any third party agreements or
assignments to grant Secured Party control over the Collateral, including but not limited
to, third party agreements between Debtor, Secured Party, and depository institutions,
securities intermediaries, and issuers of letters of credit or other support obligations,
which third party agreements direct the third party to accept direction from Secured Party
regarding the maintenance and disposition of the Collateral and the products and proceeds
thereof.

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	9.	 	EVENTS OF DEFAULT: Any of the following events shall be an “Event of Default”
hereunder:

	 	(a)	 	An event of default occurs (after any applicable grace period has expired) under any
agreement, instrument or document evidencing, guarantying, securing or otherwise executed or
delivered in connection with any of the Obligations, as “Event of Default” shall be defined
therein, including, but not limited to, the Credit Agreement or the Notes.
	 
	 	(b)	 	Any representation or warranty of Debtor set forth in this Agreement or in any
agreement, instrument, document, certificate or financial statement evidencing, guarantying,
securing or otherwise related to, this Agreement or any other Obligation shall be materially
inaccurate or misleading.
	 
	 	(c)	 	Debtor shall fail to maintain in force the insurance required in this Agreement or in
any agreement, instrument, document, certificate or financial statement evidencing,
guarantying, securing or otherwise related to, this Agreement or any other Obligation, or
Debtor shall otherwise default in the observance or performance of any covenant or agreement
set forth in any of the foregoing for a period of thirty (30) days.

	10.	 	REMEDIES. Upon the occurrence of an Event of Default, Secured Party may, without
further notice to Debtor, at Secured Party’s option, declare the Notes and all of the
Obligations to become due and payable in its aggregate amount; provided that the Obligations
shall be accelerated automatically and immediately if the Event of Default is a filing under
the Bankruptcy Code. Secured Party may resort to the rights and remedies of a secured party
under the Uniform Commercial Code, including but not limited to the right of a secured party
to (a) enter any premises of Debtor, with or without legal process and take possession of the
Collateral and remove it and any records pertaining thereto and/or remain on such premises and
use it for the purpose of collecting, preparing and disposing of the Collateral; (b) ship,
reclaim, recover, store, finish, maintain and repair the Collateral; and (c) sell the
Collateral at public or private sale. Debtor will be credited with the net proceeds of such
sale only when they are actually received by Secured Party, and any requirement of reasonable
notice of any disposition of the Collateral will be satisfied if such notice is sent to Debtor
ten (10) days prior to such disposition. Debtor will, upon request, assemble the Collateral
and any records pertaining thereto and make them available at a place designated by Secured
Party. Secured Party may use, in connection with any assembly or disposition of the
Collateral, any trademark, trade name, trade style, copyright, patent right, trade secret or
technical process used or utilized by Debtor. No remedy set forth herein is exclusive of any
other available remedy or remedies, but each is cumulative and in addition to every other
remedy given under this Agreement, and of the Obligations, or now or hereafter existing at law or in equity or by statute. Secured Party may proceed to protect and enforce its rights by
an action at law, in equity or by any other appropriate proceedings. No failure on the part of
Secured Party to enforce any of the rights hereunder shall be deemed a waiver of such rights
or of any Event of Default and no waiver of any Event of Default shall be deemed to be a
waiver of any subsequent Event of Default.

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	11.	 	MISCELLANEOUS PROVISIONS:

	 	(a)	 	All rights of Secured Party shall inure to the benefit of its successors and
assigns and all obligations of Debtor shall bind the successors and assigns of Debtor.
	 
	 	(b)	 	Debtor acknowledges and agrees that, in addition to the security interests granted
herein, Secured Party has a banker’s lien and common law right of set-off in and to
Debtor’s deposits, accounts and credits held by Secured Party and Secured Party may apply
or set-off such deposits or other sums against the Obligations upon the occurrence of an
Event Default as set forth in this Agreement.
	 
	 	(c)	 	This Agreement contains the entire agreement of the parties with respect to the
subject matter hereof and no oral agreement whatsoever, whether made contemporaneously
herewith or hereafter shall amend, modify or otherwise affect the terms of this
Agreement.
	 
	 	(d)	 	DEBTOR HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY OF ANY MATTERS ARISING OUT OF
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
	 
	 	(e)	 	All rights and liabilities hereunder shall be governed by and construed in
accordance with the laws of the State of Ohio.
	 
	 	(f)	 	Any provision herein which may prove limited or unenforceable under any law or
judicial ruling shall not affect the validity or enforceability of the remainder of this
Agreement.
	 
	 	(g)	 	Debtor hereby further authorizes Secured Party to file UCC Financing Statements on
behalf of Debtor and Secured Party with respect to the Collateral.

Remainder of this page intentionally left blank

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	 	(h)	 	Secured Party is hereby authorized to fill in all blank spaces herein, to correct
patent errors herein, to complete or correct the description of the Collateral, and to
date this Agreement.

	 	 	 
	SECURED PARTY:

	 	DEBTOR:
	 
	 	 
	CITIZENS BANK

	 	NORTHEAST OHIO NATURAL GAS CORP., an Ohio
corporation
	 
	 	 
	By:/s/ David Tholt

	 	By: /s/ Thomas J. Smith
	 

	 	 

	Name: David Tholt

	 	Thomas J. Smith,

	Title: Vice President

	 	President and Chief Operating Officer

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EXHIBIT “A”

Location(s) of Debtor

8500 Station Street, Mentor, Ohio 44060

12exv10w24xay

EXHIBIT 10.24(a)

GUARANTY

     THIS GUARANTY (this “Guaranty”) is executed and delivered effective as of July 3, 2008, by
GREAT PLAINS NATURAL GAS COMPANY, an Ohio corporation, whose address is 8500 Station Street,
Mentor, Ohio 44060 (“Guarantor”), in favor of CITIZENS BANK, having an address at 328 S. Saginaw
Street, Flint, Michigan 48502 (“Bank”).

W I T N E S S E T H:

     WHEREAS, Bank has agreed to lend to Northeast Ohio Natural Gas Corp., an Ohio corporation
(“Borrower”), a revolving line of credit loan in the principal amount of Two Million One Hundred
Thousand and no/100 Dollars ($2,100,000.00) (the “Revolving Loan”), and a term loan in the
principal amount of Seven Million Seven Hundred Eighty Thousand Twelve and no/100 Dollars
($7,780,012.00) (the “Term Loan”) (the Revolving Loan and the Term Loan are hereinafter
collectively referred to as the “Loans”), pursuant to and in accordance with the Credit Agreement
dated of even date herewith by and between Borrower and Bank (the “Credit Agreement”); and

     WHEREAS, Borrower has executed and delivered to Bank, among other things, a Revolving Note
dated of even date herewith, in the principal amount of Two Million One Hundred Thousand and no/100
Dollars ($2,100,000.00) (the “Revolving Note”), and a Term Note dated of even date herewith, in the
principal amount of Seven Million Seven Hundred Eighty Thousand Twelve and no/100 Dollars
($7,780,012.00) (the “Term Note”), to evidence its obligation to repay the Loans to be made to it
by Bank and to perform all of its obligations under the Loan Documents (the Revolving Note and the
Term Note, as the same may from time to time be increased, decreased, amended, modified, revised,
supplemented, renewed, extended or restated, are hereinafter collectively referred to as the
“Notes”); and

     WHEREAS, the Loans are secured by, among other things, a Security Agreement dated of even date
herewith, by and between Borrower and Bank (the “Security Agreement”) and such other documents
executed in connection with the Credit Agreement, the Notes or the Security Agreement (the Credit
Agreement, the Notes and the Security Agreement, together with such other documents executed in
connection with any of the foregoing, as the same may from time to time be amended, modified,
revised, supplemented, substituted, renewed, extended or restated, are hereinafter collectively
referred to as the “Loan Documents”); and

     WHEREAS, Guarantor has a direct economic interest in Borrower, and the Loans to Borrower are
given in consideration of this Guaranty and such Loans will inure directly or indirectly to the
benefit of Guarantor, and such benefit is sufficient consideration for the execution and delivery
of this Guaranty in favor of Bank; and

     WHEREAS, Guarantor has agreed to execute and deliver this Guaranty to Bank at the request of
Borrower in order to induce Bank to make and close the Loans and to satisfy a condition precedent
to closing and funding the Loans.

Page 1 of 7

 

     NOW, THEREFORE, in consideration of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and to induce Bank to make the Loans
to Borrower, Guarantor does hereby agree with Bank as follows:

     1. Guarantor hereby irrevocably, absolutely and unconditionally, and jointly and severally
with all other guarantors of the Loans, guarantees to Bank, its successors and assigns, and all
subsequent holders of the Notes, the full and prompt payment and performance of the following
(hereinafter collectively referred to as the “Obligations”): all loans, advances, debts,
liabilities, indebtedness, obligations, covenants, undertakings, promises, agreements, and duties
now or hereafter owing to Bank or any affiliate of Citizens Republic Bancorp from Borrower of any
kind or nature whatsoever, present or future, whether arising by reason of an extension of credit,
opening of a letter of credit, loan, promissory note, guarantee, endorsement, indemnification,
agreement, undertaking, contract, rate management agreement, or in any manner whatsoever, whether
direct or indirect (including those acquired by assignment, participation, purchase, negotiation,
discount or otherwise), matured or unmatured, liquidated or unliquidated, primary or secondary,
absolute or contingent, joint or several, due or to become due, now existing or hereafter arising
and whether or not contemplated by Borrower or Bank on the date hereof, including, but not limited
to, the Notes or the other Loan Documents, and all amendments, modifications, revisions,
supplements, substitutions, renewals, extensions or restatements thereof, and all principal,
interest, charges, expenses, costs, fees (including reasonable attorneys’ fees), indemnification
obligations and other sums of any kind thereunder or relating thereto whatsoever. Upon failure of
Borrower to pay or perform any of the Obligations when and as the same becomes due and payable and
the same is not made by Borrower within any applicable grace period, if any, Bank may, at its sole
option, accelerate the payment of the Obligations, all accrued interest and other charges payable
thereunder, in which event Guarantor shall pay to Bank, on demand, the entire amount of the
Obligations. Bank shall not be obligated to proceed against, or exhaust any other remedies it may
have under the Loan Documents or any other documents, or resort to any other security held by Bank,
or proceeding against any other guarantor, and Bank may, at its option, proceed directly and at
once, without notice, against Guarantor, to collect and recover the full amount of the liability
hereunder or any portion thereof. Any and all payments due hereunder shall be made in lawful money
of the United States of America at 328 S. Saginaw Street, Flint, Michigan 48502, or such other
address as Bank may from time to time designate.

     2. Guarantor agrees to furnish to Bank (a) within sixty (60) days after the end of each
fiscal quarter and fiscal year, a copy of Borrower’s internally prepared financial statements for
such quarter, on a consolidated and consolidating basis, with break-out of Northeast Ohio Natural
Gas Corp. and Great Plains Land Development Company, Ltd., which statements shall be in reasonable
detail, prepared and certified as complete and correct, subject to changes resulting from year-end
adjustments, by the principal financial officer of Borrower, and shall be in such form and
substance as Bank may require; and (b) to promptly notify Bank of any pending or threatened
litigation, the outcome of which could have a material adverse effect on the assets, properties,
finances or prospects of Guarantor. Failure to comply with the requirements of this paragraph shall
constitute a default hereunder and under the Loan Documents.

     3. Guarantor acknowledges that: Guarantor has a direct economic investment or interest in
Borrower, as a partner, shareholder, member, trust beneficiary, or otherwise; that
Guarantor is making this Guaranty in Guarantor’s corporate capacity; that Guarantor shall
remain

Page 2 of 7

 

liable hereunder whether or not Guarantor retains any financial interest in Borrower; and
that Guarantor has received sufficient consideration for the execution and delivery of this
Guaranty in favor of Bank.

     4. The obligations of Guarantor under this Guaranty shall be irrevocable, absolute and
unconditional, and joint and several with all other guarantors of the Loans and shall remain in
full force and effect until the principal balance of the Notes, all accrued but unpaid interest on
the Notes, and all other Obligations referred to above in Section 1, shall have been irrevocably
and indefeasibly paid in full and Bank has no further obligation to make advances under the Notes.

     5. The obligations of Guarantor under this Guaranty shall not be affected, modified or
impaired upon the happening of any event, including, without limitation, any of the following,
whether or not with notice to or the consent of Guarantor:

     (a) The amendment, modification, revision, supplement, substitution, renewal, extension or
restatement of any security given by Borrower to Bank to secure repayment of the indebtedness
hereby being guaranteed;

     (b) The waiver, release or termination of any of the covenants, agreements or obligations of
Borrower under the Notes or Borrower and/or any other guarantor or under any of the other Loan
Documents or the Obligations;

     (c) The amendment, modification, revision, supplement, substitution, renewal, extension or
restatement (whether material or otherwise) of the Notes, any other Loan Documents, the Obligations
or any obligation, covenant or agreement as set forth in the Notes, in any of the other Loan
Documents or the Obligations;

     (d) Any failure, omission, delay or lack on the part of Bank to enforce, assert or exercise
any right, power or remedy conferred upon it in this Guaranty, in the Notes, in any of the other
Loan Documents or the Obligations, or any other acts or omissions on the part of Bank;

     (e) The voluntary or involuntary liquidation, dissolution, sale or other disposition of all or
substantially all of the assets of Borrower or Guarantor, however effected, or receivership,
insolvency, bankruptcy, assignment for the benefit of creditors, reorganizations, arrangement,
composition with creditors or readjustment or other similar proceedings affecting Borrower,
Guarantor, any other guarantor, or any of the assets of Guarantor, or any allegation or contest of
the validity of this Guaranty, the Notes, any of the other Loan Documents or the Obligations, or
the disaffirmance of the Notes, any of the other Loan Documents or the Obligations in any such
proceeding;

     (f) The invalidity, illegality or unenforceability of the Notes, any of the other Loan
Documents or the Obligations; or of any provision of the Notes, any of the other Loan Documents or
the Obligations;

     (g) The existence, value or condition of any other security or guaranty, or failure by Bank to
perfect any lien against, or obtain any security for the Obligations or obtain any other
guaranty of the Obligations, or any action or the absence of any action by Bank in respect of
such security or guaranty (including, without limitation, the release of any such security or
guaranty); or

Page 3 of 7

 

     (h) Any other event or action that would, in the absence of this clause, result in the release
or discharge by operation of law of Guarantor from the performance or observance of any obligation,
covenant or agreement contained in this Guaranty.

     6. If after receipt of any payment of all or any part of the Obligations, Bank is for any
reason compelled to surrender such payment to any person or entity, because such payment is
determined to be void or voidable as a preference, impermissible setoff, diversion of trust funds
or for any other reason (including, without limitation, insolvency, bankruptcy, liquidation or
reorganization of Borrower or any other guarantor) then to the extent of that payment, the
Obligations shall be revived and the obligations of Guarantor under this Guaranty shall be
continued in effect without reduction or discharge for that payment, and this Guaranty shall
continue in full force notwithstanding any contrary action which may have been taken by Bank in
reliance upon such payment, and any such contrary action so taken shall be without prejudice to any
Bank’s rights under this Guaranty and shall be deemed to have been conditioned upon such payment
having become final, irrevocable and indefeasible.

     7. No setoff, counterclaim or reduction, no diminution of an obligation, and no defense of any
kind or nature that Guarantor has or may have against Borrower, Bank or any other guarantor shall
affect, modify or impair the obligations hereunder of Guarantor.

     8. For so long as this Guaranty remains in effect, Guarantor shall not have, and Guarantor
hereby expressly waives, releases and discharges during such time, any and every right of
exoneration, subrogation, contribution, reimbursement and indemnity whatsoever, and any and every
right of recourse to security for the debts and Obligations guaranteed hereby, whether against
Borrower, any other guarantor or otherwise, until the Obligations have been irrevocably and
indefeasibly paid in full. Guarantor hereby indemnifies Bank and agrees to defend and hold
harmless Bank from and against the loss, mitigation, subordination or other consequences adverse to
Bank by reason of this Guaranty being challenged as a preference or suffering any other subjugation
under any bankruptcy or other law, whether state or federal, affecting debtors, creditors and/or
the relationship between and among them. Without limiting the generality of the foregoing, for so
long as this Guaranty remains in effect, any and all debts and obligations of Borrower to Guarantor
(or any other guarantor) whether past, present or future are hereby waived, satisfied and
discharged until the Obligations have been irrevocably and indefeasibly paid in full and Bank has
no further obligations to make advances under the Notes.

     9. Guarantor hereby expressly waives notice in writing or otherwise from Bank of Bank’s
acceptance of and reliance on this Guaranty. Guarantor agrees to pay and shall be liable for all
costs, expenses and fees, including all reasonable attorneys’ fees, which may be incurred by Bank
in enforcing or attempting to enforce this Guaranty against Guarantor, whether the same shall be
enforced by suit or otherwise and except as may be limited by law or judicial order or decision
entered in an action to seek recovery of such costs, expenses and fees. Guarantor hereby waives
presentment, demand, protest, notice of non-payment, notice of dishonor and all suretyship
defenses.

     10. This Guaranty shall bind Guarantor and Guarantor’s successors and assigns, and shall inure
to the benefit of Bank and its successors and assigns.

     11. If any clause or provision of this Guaranty is held illegal, invalid or unenforceable by
any court, this Guaranty shall be construed and enforced as if such illegal, invalid or
unenforceable clause or provision had not been contained herein.

Page 4 of 7

 

     12. No remedy herein conferred upon or reserved to the Bank is intended to be exclusive of
any other available remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under this Guaranty or now or hereafter existing
at law or in equity or by statute. No delay or omission to exercise any right or power accruing
upon any default, omission or failure of performance hereunder shall impair any such right or power
or shall be construed to be a waiver thereof, but any such right and power may be exercised from
time to time and as often as may be deemed expedient by the Bank. In order to entitle the Bank to
exercise any remedy reserved to it in this Guaranty, it shall not be necessary to give any notice,
other than such notice as may be herein expressly required. If any provision contained in this
Guaranty should be breached by any party and thereafter duly waived by the other party, such waiver
shall be limited to the particular breach so waived and shall not be deemed to waive any other
breach hereunder. No waiver, amendment, release or modification of this Guaranty shall be
established by conduct, custom or course of dealing, but solely by an instrument in writing duly
executed by the parties hereto. This Guaranty may be amended only by a written agreement signed by
the parties hereto and accepted by the Bank.

     13. Guarantor hereby authorizes any attorney at law to appear in any court of record in the
State of Ohio, or in any other state or territory of the United States after the obligations of
Guarantor become due, whether by lapse of time, acceleration of maturity or otherwise, waive the
issuance and service of process, admit the maturity of the obligations of Guarantor, confess
judgment against Guarantor in favor of any holder of this Guaranty for the amount then appearing
due, together with interest thereon and costs of suit, and thereupon to release all errors and
waive all rights of appeal and stay of execution. Guarantor expressly (a) waives a conflict of
interest as to any attorney retained by Bank to confess judgment against Guarantor upon this
Guaranty, and (b) consents to the attorney retained by Bank receiving a legal fee from Bank for
legal services rendered for confessing judgment against Guarantor, upon this Guaranty. A copy of
this Guaranty, certified by Bank, may be filed in each such proceeding in place of filing the
original as a warrant of attorney. The authority and power to appear for and enter judgment
against Guarantor, additional exercises thereof or any imperfect exercise thereof, shall not be
extinguished by any judgment entered pursuant thereto.

     14. This Guaranty is a continuing and unconditional guaranty of payment and performance and
not of collection and Guarantor’s obligations hereunder shall be primary and absolute. This
Guaranty shall be deemed to be a contract made under the laws of the State of Ohio and for all
purposes shall be governed by and construed in accordance with the laws of said State. Guarantor
represents and warrants that this Guaranty is being executed and delivered in the State of Ohio.

     15. Guarantor hereby represents and warrants to Bank that:

     (a) Guarantor is a corporation duly organized, validly existing and in full force and effect
under the laws of the State of Ohio; that Guarantor has the right, power and authority to execute,
deliver and perform this Guaranty; and that Guarantor has been authorized to enter into this
Guaranty by all necessary and proper corporate action;

     (b) this Guaranty constitutes the legal, valid and binding obligation of Guarantor
enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’
rights generally and by the availability of equitable remedies;

Page 5 of 7

 

     (c) the execution, delivery and performance of this Guaranty will not violate any provision
of any applicable law or material contractual obligation of Guarantor and will not result in the
creation or imposition of any lien upon or with respect to any property or revenues of Guarantor;
and that the execution, delivery and performance of this Guaranty will not violate any provision of
Guarantor’s Articles of Incorporation, Code of Regulations or By-laws, or any other organization or
governing documents of Guarantor;

     (d) no consent or authorization of, filing with, or other act by or in respect of, any
arbitrator or governmental authority and no consent of any other person (including, without
limitation, any shareholder, director, officer or creditor of Guarantor), is required in connection
with the execution, delivery, performance, validity or enforceability of this Guaranty;

     (e) no actions, suits or proceedings before any court, tribunal, arbitrator or governmental
authority are pending or, to the knowledge of Guarantor, threatened by or against Guarantor or
against any of its properties or with respect to this Guaranty or any of the transactions
contemplated hereby;

     (f) Guarantor shall preserve and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its organization or in any other jurisdiction required by law;
and

     (g) Guarantor shall not permit any capital or shareholder interest of Guarantor to be sold,
assigned, transferred, pledged or otherwise encumbered in any manner whatsoever.

     16. GUARANTOR HEREBY, AND BANK BY ITS ACCEPTANCE HEREOF, EACH WAIVES THE RIGHT OF A JURY TRIAL
IN EACH AND EVERY ACTION ON THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS, IT BEING ACKNOWLEDGED
AND AGREED THAT ANY ISSUES OF FACT IN ANY SUCH ACTION ARE MORE APPROPRIATELY DETERMINED BY THE
COURTS. FURTHER, GUARANTOR HEREBY CONSENTS AND SUBJECTS GUARANTOR TO THE JURISDICTION OF COURTS OF
THE STATE OF OHIO AND, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, TO THE VENUE OF SUCH
COURTS IN ANY COUNTY IN WHICH BANK IS LOCATED.

     17. Except for a notice required under applicable law to be given in another manner, any
notice or other communication required or permitted to be given by this Guaranty or the other Loan
Documents or by applicable law shall be in writing and shall be deemed received (a) on the date
delivered, if sent by hand delivery to the address set forth on the first page of this Guaranty,
(b) three (3) business days following the date deposited in U.S. mail, certified or registered,
with return receipt requested, or (c) one (1) business day following the date deposited with
Federal Express or other nationally recognized overnight carrier, and in each case delivered to the
address set forth on the first page of this Guaranty. Either party may change its address to
another single address by notice given as herein provided, except any change of address notice must
be actually received in
order to be effective. Notwithstanding the foregoing, routine communications such as
statements, invoices, copies of documents, and the like, may be sent by First Class U.S. Mail.

     18. If the Loans are guaranteed by more than one guarantor, whether in this instrument or by
other instruments, the obligations of Guarantor under this Guaranty shall be joint and several with
all other guarantors.

Page 6 of 7

 

     IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed and delivered to Bank in
the State of Ohio as of the date first above written.

WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU
DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE
POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE
CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.

	 	 	 	 	 
	 	GREAT PLAINS NATURAL GAS COMPANY,

an Ohio corporation

 	 
	 	By:  	/s/ Thomas J. Smith
 	 
	 	 	Name:  	Thomas J. Smith 	 
	 	 	Title:  	Treasurer and Secretary 	 
	 

Page 7 of 7

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