EX-4.3



 







    Exhibit 4.3



 




    CORNING
    NATURAL GAS CORPORATION

    



 




    and

    



 




    Registrar
    and Transfer Company, as Warrant Agent



 




 




    WARRANT
    AGREEMENT

    Dated as of
    [          ],
    2007



 



    WARRANT AGREEMENT (the “Agreement”) dated as of
    [          ],
    2007 between CORNING NATURAL GAS CORPORATION, a New York
    corporation (the “Corporation”), and REGISTRAR AND
    TRANSFER COMPANY, a New Jersey corporation, as Warrant Agent
    (the “Warrant Agent”).



 



    WHEREAS, the Corporation proposes to issue up to 506,918 common
    stock purchase Warrants, as hereinafter described (the
    “Warrants”), which in the aggregate initially entitle
    the holders thereof (the words “holders” or
    “holder” meaning the registered holders or registered
    holder of the Warrants) to purchase up to 506,918 shares of
    common stock of the Corporation (the “Common Stock”)
    which constitute 32% of the Common Stock outstanding (on a fully
    diluted basis) on the date hereof (the Common Stock issuable on
    exercise of the Warrants being referred to herein as the
    “Warrant Shares”).



 



    WHEREAS, the Corporation desires the Warrant Agent to act on
    behalf of the Corporation, and the Warrant Agent is willing so
    to act, in connection with the issuance, transfer, exchange and
    exercise of Warrants and other matters as provided herein;



 



    NOW, THEREFORE, in consideration of the premises and the mutual
    agreements herein set forth, the parties hereto agree as follows:



 



    Section 1.  Appointment
    of Warrant Agent.  The Corporation hereby
    appoints the Warrant Agent to act as agent for the Corporation
    in accordance with the instructions set forth hereinafter in
    this Agreement, and the Warrant Agent hereby accepts such
    appointment. The Corporation may from time to time appoint such
    Co-Warrant Agents as it may deem necessary or desirable upon ten
    (10) days prior written notice to the Warrant Agent. The
    Warrant Agent shall have no duty to supervise, and shall in no
    event be liable for, the acts or omissions of any such
    Co-Warrant Agent.



 



    Section 2.  Warrant
    Certificates.  The certificates evidencing the
    Warrants (the “Warrant Certificates”) to be delivered
    pursuant to this Agreement shall be in registered form only and
    shall be substantially in the form set forth in Exhibit A
    attached hereto.



 



    Section 3.  Execution
    of Warrant Certificates.  The Warrant
    Certificates shall be signed on behalf of the Corporation by its
    Chairman of the Board or its President and by its Secretary or
    an Assistant Secretary. Each such signature upon the Warrant
    Certificates may be in the form of a facsimile signature of the
    present or any future Chairman of the Board, President,
    Secretary or Assistant Secretary and may be imprinted or
    otherwise reproduced on the Warrant Certificates and for that
    purpose the Corporation may adopt and use the facsimile
    signature of any person who shall have been Chairman of the
    Board, President, Secretary or Assistant Secretary,
    notwithstanding the fact that at the time the Warrant
    Certificates shall be countersigned and delivered or disposed of
    he or she shall have ceased to hold such office.



 



    In case any officer of the Corporation who shall have signed any
    of the Warrant Certificates shall cease to be such officer
    before the Warrant Certificates so signed shall have been
    countersigned by the Warrant Agent, or disposed of by the
    Corporation, such Warrant Certificates nevertheless may be
    countersigned and delivered or disposed of as though such person
    had not ceased to be such officer of the Corporation; and any
    Warrant Certificate may be signed on behalf of the Corporation
    by any person who, at the actual date of the execution of such
    Warrant Certificate, shall be a proper officer of the
    Corporation to sign such Warrant Certificate, although at the
    date of the execution of this Agreement any such person was not
    such officer.



 



    Warrant Certificates shall be dated the date of countersignature
    by the Warrant Agent.













 





 



    Section 4.  Registration
    and Countersignature.  The Warrant Agent, on
    behalf of the Corporation, shall hold the Warrant Certificates
    unnumbered and unregistered.



 



    The Warrant Certificates shall be manually countersigned by the
    Warrant Agent and shall not be valid for any purpose unless so
    countersigned. The Warrant Agent shall, upon written
    instructions of the Chairman of the Board or the President of
    the Corporation, initially countersign, issue and deliver
    Warrants collectively for all Warrants outstanding entitling the
    holders thereof to purchase not more than the number of Warrant
    Shares referred to above in the first recital hereof and shall
    countersign and deliver Warrants as otherwise provided in this
    Agreement.



 



    The Corporation and the Warrant Agent may deem and treat the
    registered holder(s) of the Warrant Certificates as the absolute
    owner(s) thereof (notwithstanding any notation of ownership or
    other writing thereon made by anyone), for all purposes, and
    neither the Corporation nor the Warrant Agent shall be affected
    by any notice to the contrary.



 



    Section 5.  Registration
    of Transfers and Exchanges.  The Warrant Agent
    shall from time to time, subject to the limitations of
    Section 6 hereof, register the transfer of any outstanding
    Warrant Certificates upon the records to be maintained by it for
    that purpose, upon surrender thereof duly endorsed or
    accompanied (if so required by the Warrant Agent) by a written
    instrument or instruments of transfer in form satisfactory to
    the Warrant Agent, duly executed by the registered holder or
    holders thereof or by the duly appointed legal representative
    thereof or by a duly authorized attorney. Upon any such
    registration of transfer, a new Warrant Certificate shall be
    issued to the transferee(s) and the surrendered Warrant
    Certificate shall be cancelled by the Warrant Agent. Cancelled
    Warrant Certificates shall thereafter be disposed of by the
    Warrant Agent in its customary manner.



 



    Subject to the terms of this Agreement, Warrant Certificates may
    be exchanged at the option of the holder(s) thereof, when
    surrendered to the Warrant Agent at its principal corporate
    trust office, which is currently located at the address listed
    in Section 19 hereof, for another Warrant Certificate or
    other Warrant Certificates of like tenor and representing in the
    aggregate a like number of Warrants. Any holder desiring to
    exchange a Warrant Certificate shall deliver a written request
    to the Warrant Agent, and shall surrender, duly endorsed or
    accompanied (if so required by the Warrant Agent) by a written
    instrument or instruments of transfer in form satisfactory to
    the Warrant Agent, the Warrant Certificate or Certificates to be
    so exchanged. Warrant Certificates surrendered for exchange
    shall be cancelled by the Warrant Agent. Such cancelled Warrant
    Certificates shall then be disposed of by such Warrant Agent in
    its customary manner.



 



    The Warrant Agent is hereby authorized to countersign, in
    accordance with the provisions of this Section 5 and of
    Section 4 hereof, the new Warrant Certificates required
    pursuant to the provisions of this Section 5.



 



    Section 6.  Terms
    of Warrants.  The initial exercise price per
    share at which Warrant Shares shall be purchasable upon the
    exercise of Warrants (the “Exercise Price”) shall be
    $20.00 per share. The Warrants shall be initially
    exercisable in the aggregate for that number of shares of Common
    Stock equal to 32% of the fully diluted Common Stock outstanding
    on the date hereof (calculated after giving effect to the
    exercise of such Warrants and all options, warrants and rights
    to acquire Common Stock and the conversion of all convertible
    securities for the maximum number of shares of Common Stock
    obtainable whether or not such options, warrants or rights are
    then exercisable or vested and whether or not such convertible
    securities are then convertible).



 



    Subject to the terms of this Agreement, each Warrant holder
    shall have the right, which may be exercised until
    5:00 p.m., New York City time on <expiration date>,
    2011, to receive from the Corporation the number of fully paid
    and nonassessable Warrant Shares which the holder may at the
    time be entitled to receive on exercise of such Warrants and
    payment of the Exercise Price then in effect for such Warrant
    Shares. Each Warrant not exercised prior to 5:00 p.m., New
    York City time, on <expiration date>, 2011, shall become
    void and all rights thereunder and all rights in respect thereof
    under this Agreement shall cease as of such time. No adjustments
    as to dividends will be made upon exercise of the Warrants.



 



    A Warrant may be exercised upon surrender to the Corporation at
    the principal stock transfer office of the Warrant Agent, which
    is currently located at the address listed in Section 19
    hereof, of the certificate or certificates evidencing the
    Warrants to be exercised with the form of election to purchase
    filled in and signed and such other documentation as the Warrant
    Agent may reasonably request, and upon payment to the Warrant
    Agent for the account of the Corporation of the Exercise Price
    which is set forth in the form of Warrant Certificate attached
    hereto




    

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    as Exhibit A as adjusted as herein provided, for the number
    of Warrant Shares in respect of which such Warrants are then
    exercised. Payment of the aggregate Exercise Price shall be made
    (i) in cash or by certified or official bank check payable
    to the order of Registrar and Transfer Company, or the
    equivalent thereof or (ii) in the manner provided in this
    Section 6.



 



    Subject to the provisions of Section 7 hereof, upon such
    surrender of Warrants and payment of the Exercise Price, the
    Corporation shall issue and cause to be delivered with all
    reasonable dispatch to and in such name or names as the Warrant
    holder may designate, a certificate or certificates for the
    number of full Warrant Shares issuable upon the exercise of such
    Warrants. Such certificate or certificates shall be deemed to
    have been issued and any person so designated to be named
    therein shall be deemed to have become a holder of record of
    such Warrant Shares as of the date of the surrender of such
    Warrants and payment of the Exercise Price.



 



    The Warrants shall be exercisable, at the election of the
    holders thereof, either in full or from time to time in part
    and, in the event that a certificate evidencing Warrants is
    exercised in respect of fewer than all of the Warrant Shares
    issuable on such exercise at any time prior to the date of
    expiration of the Warrants, a new certificate evidencing the
    remaining Warrant or Warrants will be issued, and the Warrant
    Agent is hereby irrevocably authorized to countersign and to
    deliver the required new Warrant Certificate or Certificates
    pursuant to the provisions of this Section 6 and of
    Section 4 hereof, and the Corporation, whenever required by
    the Warrant Agent, shall supply the Warrant Agent with Warrant
    Certificates duly executed on behalf of the Corporation for such
    purpose. The Warrant Agent may assume that any Warrant presented
    for exercise is permitted to be so exercised under applicable
    law and shall have no liability for acting in reliance on such
    assumption.



 



    All Warrant Certificates surrendered upon exercise of Warrants
    shall be canceled by the Warrant Agent. Such canceled Warrant
    Certificates shall then be disposed of by the Warrant Agent in
    its customary manner. The Warrant Agent shall account promptly
    to the Corporation with respect to Warrants exercised and
    concurrently pay to the Corporation all monies received by the
    Warrant Agent for the purchase of the Warrant Shares through the
    exercise of such Warrants.



 



    The Warrant Agent shall keep copies of this Agreement and any
    notices given or received hereunder available for inspection by
    the holders with reasonable prior written notice during normal
    business hours at its office. The Corporation shall supply the
    Warrant Agent from time to time with such numbers of copies of
    this Agreement as the Warrant Agent may request.



 



    Section 7.  Payment
    of Taxes.  The Corporation covenants and
    agrees that it shall pay when due and payable any and all
    federal and state documentary or stamp taxes (other than federal
    or state income taxes or similar laws) or other costs which may
    be payable in respect of the issue of the Warrants or any Common
    Stock or certificates therefor issuable upon the exercise of the
    Warrants (provided, however, the Corporation’s obligations
    to any holder in this regard will in all events be conditioned
    upon such holder cooperating with the Corporation in any
    reasonable arrangement designed to minimize or eliminate any
    such taxes), except that, if Warrant Shares or new Warrants
    shall be registered in a name or names other than the name of
    any holder, funds sufficient to pay all transfer taxes payable
    as a result of such transfer shall be paid by such holder at the
    time of delivery of the election to purchase.



 



    Section 8.  Mutilated
    or Missing Warrant Certificates.  In case any
    of the Warrant Certificates shall be mutilated, lost, stolen or
    destroyed, the Corporation shall issue and the Warrant Agent
    shall countersign, in exchange and substitution for and upon
    cancellation of the mutilated Warrant Certificate, or in lieu of
    and substitution for the Warrant Certificate lost, stolen or
    destroyed, a new Warrant Certificate of like tenor and
    representing an equivalent number of Warrants, but only upon
    receipt of evidence satisfactory to the Corporation and the
    Warrant Agent of such loss, theft or destruction of such Warrant
    Certificate and indemnity, also satisfactory to the Corporation
    and the Warrant Agent. Except as otherwise provided herein, in
    the case of the loss, theft, or destruction of a Warrant
    Certificate, Corporation shall pay all expenses, taxes and other
    charges payable in connection with any replacement of such
    Warrant Certificate.



 



    Section 9.  Reservation
    of Warrant Shares.  The Corporation shall at
    all times reserve and keep available out of its authorized but
    unissued Common Stock (or out of shares of Common Stock held in
    its treasury) solely for the purpose of issuance upon the
    exercise of the Warrants, the maximum number of Warrant Shares
    issuable upon




    

    3








 






    the exercise of the Warrants. The Warrant Agent shall have no
    duty to verify availability of such shares set aside by the
    Corporation.



 



    The Corporation or, if appointed, the transfer agent for the
    Common Stock (the “Transfer Agent”) and every
    subsequent transfer agent for any shares of the
    Corporation’s Common Stock issuable upon the exercise of
    any of the Warrants will be irrevocably authorized and directed
    at all times to reserve such number of authorized stock
    certificates as shall be required for such purpose. The
    Corporation will keep a copy of this Agreement on file with the
    Transfer Agent and with every subsequent transfer agent for any
    shares of the Company’s Common Stock issuable upon the
    exercise of the Warrants. The Company will supply such Transfer
    Agent with duly executed certificates for such purposes. The
    Company will furnish such Transfer Agent a copy of all notices
    of adjustments and certificates transmitted to each holder
    pursuant to Section 11 hereof.



 



    The Corporation covenants and agrees that all shares of Common
    Stock that may be issued upon the exercise of the rights
    represented by the Warrants shall, upon issuance, be validly
    issued, fully paid and nonassessable, and free from all taxes,
    liens, preemptive rights and charges with respect to the issue
    thereof. The Corporation shall take all such actions as may be
    necessary to ensure that all such Warrant Shares may be so
    issued without violation by the Corporation of any applicable
    law or governmental regulation or any requirements of any
    domestic securities exchange or quotation system upon which
    shares of Common Stock or other securities constituting Warrant
    Shares may be listed or quoted (except for official notice of
    issuance which shall be immediately delivered by the Corporation
    upon each such issuance).



 



    Section 10.  Adjustment
    of Number of Warrant Shares and Exercise Price.



 



    (a) Adjustment of Number of Shares.  Upon
    each adjustment of the Warrant Price as provided in
    subsection (b) of this Section 10, each holder
    shall thereafter be entitled to purchase, at the Warrant Price
    resulting from such adjustment, only the number of shares
    (calculated to the nearest whole share) obtained by multiplying
    the Warrant Price in effect immediately prior to such adjustment
    by the number of shares purchasable by such holder pursuant
    hereto immediately prior to such adjustment and dividing the
    product thereof by the Warrant Price resulting from such
    adjustment.



 



    (b) Adjustment in Exercise Price.  The
    Warrant Price shall be subject to adjustment from time to time
    as follows:



 



    (i) If, at any time during the Term of this Agreement, the
    number of shares of Common Stock outstanding is increased by a
    stock dividend payable in shares of Common Stock or by a
    subdivision or
    split-up of
    shares of Common Stock, then, following the record date fixed
    for the determination of holders of Common Stock entitled to
    receive such stock dividend, subdivision or
    split-up,
    the Warrant Price shall be appropriately decreased so that the
    number of shares of Common Stock issuable upon the exercise
    hereof shall be increased in proportion to such increase in
    outstanding shares.



 



    (ii) If, at any time during the Term of this Warrant, the
    number of shares of Common Stock outstanding is decreased by a
    combination of the outstanding shares of Common Stock, then,
    following the record date for such combination, the Warrant
    Price shall be appropriately increased so that the number of
    shares of Common Stock issuable upon the exercise hereof shall
    be decreased in proportion to such decrease in outstanding
    shares.



 



    (iii) Whenever the Warrant Price shall be adjusted as
    provided in this Section 10, the Corporation shall promptly
    prepare a statement showing the facts requiring such adjustment
    and the Warrant Price that shall be in effect after such
    adjustment, setting forth in reasonable detail and certifying
    the calculation of such adjustment. The Corporation shall cause
    a copy of such statement (i) to be filed with the Warrant
    Agent and (ii) cause a copy of such statement to be sent by
    mail, first class postage prepaid, to each holder at its, his or
    her address appearing on the Warrant register. Where
    appropriate, such copy may be given in advance and may be
    included as part of the notice required to be mailed under the
    provisions of clause (v) of this Section 10(b). The
    Warrant Agent shall be fully protected in relying on any such
    statement and on any adjustment therein contained and shall not
    be deemed to have knowledge of such adjustment unless and until
    it shall have received such statement.




    

    4








 





 



    (iv) Adjustments made pursuant to this Section 10
    shall be made on the date such dividend, subdivision,
    split-up,
    combination or distribution, as the case may be, is made, and
    shall become effective at the opening of business on the
    business day next following the record date for the
    determination of stockholders entitled to such dividend,
    subdivision,
    split-up,
    combination or distribution.



 



    (v) In the event the Corporation shall propose to take any
    action of the types described in this Section 10, the
    Corporation shall forward, at the same time and in the same
    manner, to holder such notice, if any, which the Corporation
    shall give to the holders of capital stock of the Corporation.



 



    (vi) In any case in which the provisions of this
    Section 10 shall require that an adjustment shall become
    effective immediately after a record date for an event, the
    Corporation may defer until the occurrence of such event,
    issuing to any holder of all or any part of any Warrant that
    exercised all or part of such Warrant after such record date,
    and before the occurrence of such event, the additional shares
    of capital stock issuable upon such exercise by reason of the
    adjustment required by such event over and above the shares of
    capital stock issuable upon such exercise before giving effect
    to such adjustment exercise; provided, however, that the
    Corporation shall deliver to such holder a due bill or other
    appropriate instrument evidencing such holder’s right to
    receive such additional shares upon the occurrence of the event
    requiring such adjustment.



 



    (c) Mergers, Consolidation, Sales.  In the
    case of any proposed consolidation or merger of the Corporation
    with another entity, or the proposed sale of all or
    substantially all of its assets to another person or entity, or
    any proposed reorganization, recapitalization, reclassification
    of the capital stock of the Corporation or other transaction,
    then, as a condition of such consolidation, merger, sale,
    reorganization, recapitalization, reclassification or other
    transaction, the Corporation shall give 30 days’ prior
    written notice thereof to Warrant holders and lawful and
    adequate provision shall be made whereby holders shall
    thereafter have the right to receive upon the basis and upon the
    terms and conditions specified herein, in lieu of the shares of
    the Common Stock of the Corporation immediately theretofore
    purchasable hereunder, such shares of stock, securities or
    assets as may (by virtue of such consolidation, merger, sale,
    reorganization, recapitalization, reclassification or other
    transaction) be issued or payable with respect to or in exchange
    for the number of shares of such Common Stock purchasable
    hereunder immediately before such consolidation, merger, sale,
    reorganization, recapitalization, reclassification or other
    transaction. In any such case appropriate provision shall be
    made with respect to the rights and interests of the holders to
    the end that the provisions hereof shall thereafter be
    applicable as nearly as may be practicable, in relation to any
    shares of stock, securities or assets thereafter deliverable
    upon the exercise of the Warrants. The Corporation shall not
    effect any such consolidation, merger, sale, reorganization,
    recapitalization, reclassification or other transaction unless,
    prior to the consummation thereof, the successor entity (if
    other than the Corporation) resulting from such consolidation,
    merger, sale, reorganization, recapitalization, reclassification
    or other transaction (including a purchaser of all or
    substantially all the Corporation’s assets) assumes by
    written instrument the obligation to deliver to each holder of
    Warrants such shares of stock, securities or assets as, in
    accordance with the foregoing provisions, such holder may be
    entitled to acquire upon exercise of Warrants.



 



    (d) Warrant Agent’s Disclaimer.  The
    Warrant Agent has no duty to determine when an adjustment under
    this Section 10 should be made, how it should be made or
    what it should be. The Warrant Agent makes no representation as
    to the validity or value of any securities or assets issued upon
    exercise of Warrants. The Warrant Agent shall not be responsible
    for the Corporation’s failure to comply with this section.



 



    (e) Form of Warrants.  Irrespective of any
    adjustments in the number or kind of shares issuable upon the
    exercise of the Warrants or the Exercise Price, Warrants
    theretofore or thereafter issued may continue to express the
    same number and kind of shares and Exercise Price as are stated
    in the Warrants initially issuable pursuant to this Agreement.



 



    Section 11.  Special
    Arrangements of the Corporation.  The
    Corporation covenants and agrees with each holder of a Warrant
    that during the Term of such Warrant, unless otherwise approved
    by such holder:



 



    (a) Certain Actions.  The Corporation
    shall not amend its certificate of incorporation to eliminate as
    an authorized class of capital stock that class denominated as
    “Common Stock” on the date hereof. The Corporation
    shall not, and shall not permit its subsidiaries to, directly or
    indirectly, by any action (including, without limitation,
    reincorporation in a jurisdiction other than New York, amending
    its Certificate of




    

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    Incorporation (as may be amended
    and/or
    restated from time to time) or through any merger, sale,
    consolidation, reorganization, reclassification, issuance or
    sale of securities or any other action) avoid or seek to avoid
    the observance or performance of any terms of this Agreement or
    the Warrants or impair or diminish the value of the Warrants,
    but shall at all times in good faith assist in the carrying out
    of all such terms of this Agreement and the Warrants. Without
    limiting the generality of the foregoing, the Corporation shall
    (a) obtain all such authorizations, exemptions or consents
    from any public regulatory body having jurisdiction thereof as
    may be necessary to enable the Corporation to perform its
    obligations under this Agreement and the Warrants and
    (b) not undertake any reverse stock split, combination,
    reorganization or other reclassification of its capital stock
    which would have the effect of making the Warrants exercisable
    for less than one share of Common Stock (except as permitted
    under Section 10 hereof).



 



    (b) Shall Bind Successors.  This
    Agreement, the Warrants and the rights evidenced hereby and
    thereby shall be binding upon the successors of the Corporation.



 



    (c) No Exercise Interference; Par
    Value.  The Corporation shall not close its books
    against the transfer of any Warrant or of any Warrant Shares
    issued or issuable upon the exercise of any Warrant in any
    manner which interferes with the timely exercise of any Warrant.
    The Corporation shall from time to time take all such action as
    may be necessary to assure that the par value per share of the
    unissued Warrant Shares acquirable upon exercise of the Warrants
    is at all times equal to or less than the Warrant Price then in
    effect.



 



    (d) Governmental Filings.  The Corporation
    shall assist and cooperate with any reasonable request by any
    holder of any Warrant which is required to make any governmental
    filings or obtain any governmental approvals prior to or in
    connection with any exercise of any Warrant.



 



    (e) Notices of Certain Actions.  The
    Corporation shall give written notice to the holders at least
    30 days prior to the date on which the Corporation closes
    its books or takes a record (A) with respect to any
    dividend or distribution upon the Common Stock, (B) with
    respect to any pro rata subscription offer to holders of Common
    Stock, or (C) for determining rights to vote with respect
    to any recapitalization, reorganization, reclassification,
    consolidation, merger, dissolution, liquidation or sale of all
    or substantially all of the Corporation’s assets or other
    transaction which is effected in such a way that holders of
    Common Stock are entitled to receive (either directly or upon
    subsequent liquidation) stock, securities or assets with respect
    to or in exchange for Common Stock.



 



    Section 12.  Maintenance
    of Registration and Qualification of Common
    Stock.  The Corporation shall use its best
    efforts to maintain the effectiveness of the Corporation’s
    Registration Statement (No.
    [          ])
    on
    Form S-3
    filed with the Securities and Exchange Commission for the
    registration of the Warrant Shares, and keep current a
    prospectus in those states in which the Warrants were initially
    offered by the Corporation, for so long as the holders are
    entitled to exercise any Warrants. However, that upon the
    occurrence of any event that would cause the Registration
    Statement not to be effective and usable for the issuance of the
    Warrant Shares upon the exercise of any Warrant, the Corporation
    may refuse to allow any Warrant to be exercised until the
    Corporation has cured such defect.



 



    Section 13.  Notices
    to Warrant holders.  Any notice or other
    document required or permitted to be given or delivered to
    holders shall be delivered at, or sent by certified or
    registered mail to, each holder at its, his or her address
    appearing on the Warrant register. Any notice so addressed and
    mailed by registered or certified mail shall be deemed to be
    given when so mailed. Any notice so addressed and otherwise
    delivered shall be deemed to be given when actually received by
    the addressee.



 



    Nothing contained in this Agreement or in any of the Warrant
    Certificates shall be construed as conferring upon the holders
    thereof the right to vote or to consent or to receive notice as
    shareholders in respect of the meetings of shareholders or the
    election of directors of the Corporation or any other matter, or
    any rights whatsoever as shareholders of the Corporation.



 



    Section 14.  Public
    Offering; Sale of
    Corporation.  Notwithstanding any other
    provision hereof, if an exercise of any portion of any Warrant
    is to be made in connection with a public offering or a sale of
    the Corporation (pursuant to a merger, sale of stock or
    otherwise), such exercise may at the election of the holder of
    such Warrant be




    

    6








 






    conditioned upon the consummation of such transaction, in which
    case such exercise shall not be deemed to be effective until
    immediately prior to consummation of such transaction.



 



    Section 15.  Representations
    of the Corporation.  The Corporation has all
    requisite corporate power and authority to enter into and
    perform its obligations under this Agreement and the Warrants,
    to deliver the Agreement to the Warrant Agent and to issue and
    deliver the Warrants to the holders. The execution, delivery,
    and performance by the Corporation of its obligations under this
    Agreement and the Warrants, including the issuance and delivery
    of the Warrants to the purchaser, have been duly authorized by
    all necessary corporate action on the part of the Corporation.
    This Agreement has been duly executed and delivered by the
    Corporation and is a legal, valid, and binding obligation of the
    Corporation and is enforceable against the Corporation in
    accordance with its terms.



 



    Section 16.  Merger,
    Consolidation or Change of Name of Warrant
    Agent.  Any corporation into which the Warrant
    Agent may be merged or with which it may be consolidated, or any
    corporation resulting from any merger or consolidation to which
    the Warrant Agent shall be a party, or any corporation
    succeeding to all or substantially all the corporate trust or
    agency business of the Warrant Agent, shall be the successor to
    the Warrant Agent hereunder without the execution or filing of
    any paper or any further act on the part of any of the parties
    hereto, provided that such corporation would be eligible for
    appointment as a successor warrant agent under the provisions of
    Section 18. In case at the time such successor to the
    Warrant Agent shall succeed to the agency created by this
    Agreement, and in case at that time any of the Warrant
    Certificates shall have been countersigned but not delivered,
    any such successor to the Warrant Agent may adopt the
    countersignature of the original Warrant Agent; and in case at
    that time any of the Warrant Certificates shall not have been
    countersigned, any successor to the Warrant Agent may
    countersign such Warrant Certificates either in the name of the
    predecessor Warrant Agent or in the name of the successor to the
    Warrant Agent; and in all such cases such Warrant Certificates
    shall have the full force and effect provided in the Warrant
    Certificates and in this Agreement.



 



    In case at any time the name of the Warrant Agent shall be
    changed and at such time any of the Warrant Certificates shall
    have been countersigned but not delivered, the Warrant Agent
    whose name has been changed may adopt the countersignature under
    its prior name, and in case at that time any of the Warrant
    Certificates shall not have been countersigned, the Warrant
    Agent may countersign such Warrant Certificates either in its
    prior name or in its changed name, and in all such cases such
    Warrant Certificates shall have the full force and effect
    provided in the Warrant Certificates and in this Agreement.



 



    Section 17.  Warrant
    Agent.  The Warrant Agent undertakes the
    duties and obligations imposed by this Agreement (and no implied
    duties or obligations shall be read into this Agreement against
    the Warrant Agent) upon the following terms and conditions, by
    all of which the Corporation and the holders of Warrants, by
    their acceptance thereof, shall be bound:



 



    (a) The statements contained herein and in the Warrant
    Certificates shall be taken as statements of the Corporation and
    the Warrant Agent assumes no responsibility for the correctness
    of any of the same except such as describe the Warrant Agent or
    action taken or to be taken by it. The Warrant Agent assumes no
    responsibility with respect to the distribution of the Warrant
    Certificates except as herein otherwise provided.



 



    (b) The Warrant Agent shall not be responsible for any
    failure of the Corporation to comply with any of the covenants
    contained in this Agreement or in the Warrant Certificates to be
    complied with by the Corporation.



 



    (c) The Warrant Agent may consult at any time with counsel
    of its own selection (who may be counsel for the
    Corporation), which counsel shall be generally recognized as
    having competence in the subject matter under consideration, and
    the Warrant Agent shall incur no liability or responsibility to
    the Corporation or to any holder of any Warrant Certificate in
    respect of any action taken, suffered or omitted by it hereunder
    in good faith and in accordance with the opinion or the advice
    of such counsel. The Warrant Agent may execute any of the trusts
    or powers hereunder or perform any duties hereunder either
    directly or by or through agents or attorneys and the Warrant
    Agent shall not be responsible for any misconduct or negligence
    on the part of any agent or attorney appointed with due care by
    it hereunder.



 



    (d) The Warrant Agent may conclusively rely, as to the
    truth of the statements and the correctness of the opinions
    expressed therein, upon certificates or opinions furnished to
    the Warrant Agent and conforming to the




    

    7








 






    requirements of this Agreement. The Warrant Agent shall incur no
    liability or responsibility to the Corporation or to any holder
    of any Warrant Certificate for any action taken in reliance on
    any Warrant Certificate, certificate of shares, notice,
    resolution, waiver, consent, order, certificate, or other paper,
    document or instrument (whether in its original or facsimile
    form) believed by it to be genuine and to have been signed, sent
    or presented by the proper party or parties.



 



    (e) The Corporation agrees to pay to the Warrant Agent such
    compensation for all services rendered by the Warrant Agent in
    the administration and execution of this Agreement as the
    Corporation and the Warrant Agent shall agree in writing to
    reimburse the Warrant Agent for all expenses, taxes and
    governmental charges and other charges of any kind and nature
    incurred by the Warrant Agent in the execution of this Agreement
    (including fees and expenses of its counsel) and to indemnify
    the Warrant Agent (and any predecessor Warrant Agent) and save
    it harmless against any and all claims (whether asserted by the
    Corporation, a holder or any other person), damages, losses,
    expenses (including taxes other than taxes based on the income
    of the Warrant Agent), liabilities, including judgments, costs
    and counsel fees and expenses, for anything done or omitted by
    the Warrant Agent in the execution of this Agreement except as a
    result of its gross negligence or willful misconduct. The
    provisions of this Section 17(e) shall survive the
    expiration of the Warrants and the termination of this Agreement.



 



    (f) The Warrant Agent shall be under no obligation to
    institute any action, suit or legal proceeding or to take any
    other action likely to involve expense unless the Corporation or
    one or more registered holders of Warrant Certificates shall
    furnish the Warrant Agent with security and indemnity
    satisfactory to it for any costs and expenses which may be
    incurred, but this provision shall not affect the power of the
    Warrant Agent to take such action as it may consider proper,
    whether with or without any such security or indemnity. All
    rights of action under this Agreement or under any of the
    Warrants may be enforced by the Warrant Agent without the
    possession of any of the Warrant Certificates or the production
    thereof at any trial or other proceeding relative thereto, and
    any such action, suit or proceeding instituted by the Warrant
    Agent shall be brought in its name as Warrant Agent and any
    recovery of judgment shall be for the ratable benefit of the
    registered holders of the Warrants, as their respective rights
    or interests may appear.



 



    (g) The Warrant Agent, and any shareholder, director,
    officer or employee of it, may buy, sell or deal in any of the
    Warrants or other securities of the Corporation or become
    pecuniarily interested in any transaction in which the
    Corporation may be interested, or contract with or lend money to
    the Corporation or otherwise act as fully and freely as though
    it were not Warrant Agent under this Agreement. Nothing herein
    shall preclude the Warrant Agent from acting in any other
    capacity for the Corporation or for any other legal entity.



 



    (h) The Warrant Agent shall act hereunder solely as agent
    for the Corporation, and its duties shall be determined solely
    by the provisions hereof. The Warrant Agent shall not be liable
    for anything which it may do or refrain from doing in connection
    with this Agreement except for its own gross negligence or
    willful misconduct. The Warrant Agent shall not be liable for
    any error of judgment made in good faith by it, unless it shall
    be proved that the Warrant Agent was grossly negligent in
    ascertaining the pertinent facts. Notwithstanding anything in
    this Agreement to the contrary, in no event shall the Warrant
    Agent be liable for special, indirect, punitive or consequential
    loss or damage of any kind whatsoever (including but not limited
    to lost profits), even if the Warrant Agent has been advised of
    the likelihood of the loss or damage and regardless of the form
    of the action.



 



    (i) The Warrant Agent shall not at any time be under any
    duty or responsibility to any holder of any Warrant Certificate
    to make or cause to be made any adjustment of the Exercise Price
    or number of the Warrant Shares or other securities or property
    deliverable as provided in this Agreement, or to determine
    whether any facts exist which may require any of such
    adjustments, or with respect to the nature or extent of any such
    adjustments, when made, or with respect to the method employed
    in making the same. The Warrant Agent shall not be accountable
    with respect to the validity or value or the kind or amount of
    any Warrant Shares or of any securities or property which may at
    any time be issued or delivered upon the exercise of any Warrant
    or with respect to whether any such Warrant Shares or other
    securities will when issued be validly issued and fully paid and
    nonassessable, and makes no representation with respect thereto.




    

    8








 





 



    (j) Notwithstanding anything in this Agreement to the
    contrary, neither the Corporation nor the Warrant Agent shall
    have any liability to any holder of a Warrant Certificate or
    other Person as a result of its inability to perform any of its
    obligations under this Agreement by reason of any preliminary or
    permanent injunction or other order, decree or ruling issued by
    a court of competent jurisdiction or by a governmental,
    regulatory or administrative agency or commission, or any
    statute, rule, regulation or executive order promulgated or
    enacted by any governmental authority prohibiting or otherwise
    restraining performance of such obligation; provided that the
    Corporation must use its reasonable best efforts to have any
    such order, decree or ruling lifted or otherwise overturned as
    soon as possible.



 



    (k) Any application by the Warrant Agent for written
    instructions from the Corporation may, at the option of the
    Warrant Agent, set forth in writing any action proposed to be
    taken or omitted by the Warrant Agent under this Agreement and
    the date on
    and/or after
    which such action shall be taken or such omission shall be
    effective. The Warrant Agent shall not be liable for any action
    taken by, or omission of, the Warrant Agent in accordance with a
    proposal included in such application on or after the date
    specified in such application (which date shall not be less than
    three Business Days after the date any officer of the
    Corporation actually receives such application, unless any such
    officer shall have consented in writing to any earlier date)
    unless prior to taking any such action (or the effective date in
    the case of an omission), the Warrant Agent shall have received
    written instructions in response to such application specifying
    the action to be taken or omitted.



 



    (l) No provision of this Agreement shall require the
    Warrant Agent to expend or risk its own funds or otherwise incur
    any financial liability in the performance of any of its duties
    hereunder or in the exercise of its rights.



 



    (m) In addition to the foregoing, the Warrant Agent shall
    be protected and shall incur no liability for, or in respect of,
    any action taken or omitted by it in connection with its
    administration of this Agreement if such acts or omissions are
    in reliance upon the proper execution of the certification
    concerning beneficial ownership appended to the form of
    assignment and the form of the election attached hereto unless
    the Warrant Agent shall have actual knowledge that, as executed,
    such certification is untrue, or the non-execution of such
    certification including, without limitation, any refusal to
    honor any otherwise permissible assignment or election by reason
    of such non-execution.



 



    Section 18.  Change
    of Warrant Agent.  The Warrant Agent may at
    any time resign as Warrant Agent upon written notice to the
    Corporation. If the Warrant Agent shall become incapable of
    acting as Warrant Agent, the Corporation shall appoint a
    successor to such Warrant Agent. If the Corporation shall fail
    to make such appointment within a period of 30 days after
    it has been notified in writing of such resignation or of such
    incapacity by the Warrant Agent or by the registered holder of a
    Warrant Certificate, then the registered holder of any Warrant
    Certificate or the Warrant Agent may apply, at the expense of
    the Corporation, to any court of competent jurisdiction for the
    appointment of a successor to the Warrant Agent. Pending
    appointment of a successor to such Warrant Agent, either by the
    Corporation or by such a court, the duties of the Warrant Agent
    shall be carried out by the Corporation. The holders of a
    majority of the unexercised Warrants shall be entitled at any
    time to remove the Warrant Agent and appoint a successor to such
    Warrant Agent. If a Successor Warrant Agent shall not have been
    appointed within 30 days of such removal, the Warrant Agent
    may apply, at the expense of the Corporation, to any court of
    competent jurisdiction for the appointment of a successor to the
    Warrant Agent. Such successor to the Warrant Agent need not be
    approved by the Corporation or the former Warrant Agent. After
    appointment the successor to the Warrant Agent shall be vested
    with the same powers, rights, duties and responsibilities as if
    it had been originally named as Warrant Agent without further
    act or deed; but the former Warrant Agent upon payment of all
    fees and expenses due it and its agents and counsel shall
    deliver and transfer to the successor to the Warrant Agent any
    property at the time held by it hereunder and execute and
    deliver any further assurance, conveyance, act or deed necessary
    for the purpose. Failure to give any notice provided for in this
    Section 18, however, or any defect therein, shall not
    affect the legality or validity of the appointment of a
    successor to the Warrant Agent.



 



    Section 19.  Notices
    to Corporation and Warrant Agent.  Any notice
    or demand authorized by this Agreement to be given or made by
    the Warrant Agent or by the registered holder of any Warrant
    Certificate to or on the Corporation shall be sufficiently given
    or made when and if delivered by hand or by courier, or
    deposited in




    

    9








 






    the mail, first class or registered, postage prepaid, or by
    telecopy confirmed in writing, and addressed (until another
    address is filed in writing by the Corporation with the Warrant
    Agent), as follows:



 



    Corning Natural Gas Corporation




    330 W. William St.




    Corning, New York 14830




    Attention: President



 



    In case the Corporation shall fail to maintain such office or
    agency or shall fail to give such notice of the location or of
    any change in the location thereof, presentations may be made
    and notices and demands may be served at the principal corporate
    trust office of the Warrant Agent.



 



    Any notice pursuant to this Agreement to be given by the
    Corporation or by the registered holder(s) of any Warrant
    Certificate to the Warrant Agent shall be sufficiently given
    when and if delivered by hand or by courier, or deposited in the
    mail, first-class or registered, postage prepaid, or by telecopy
    confirmed in writing, and addressed (until another address is
    filed in writing by the Warrant Agent with the Corporation) to
    the Warrant Agent as follows:



 



    Registrar and Transfer Company




    10 Commerce Drive




    Cranford, New Jersey 07016




    Attention:
    [          ]



 



    Section 20.  Supplements
    and Amendments.  The Corporation and the
    Warrant Agent may from time to time supplement or amend this
    Agreement without the approval of any holders of Warrant
    Certificates in order to cure any ambiguity or to correct or
    supplement any provision contained herein which may be defective
    or inconsistent with any other provision herein, or to make any
    other provisions in regard to matters or questions arising
    hereunder which the Corporation and the Warrant Agent may deem
    necessary or desirable and which shall not in any way adversely
    affect the interests of the holders of Warrant Certificates.
    Upon the delivery of a certificate from an appropriate officer
    of the Corporation which states that the proposed supplement or
    amendment is in compliance with the terms of this
    Section 20, the Warrant Agent shall execute such supplement
    or amendment. Notwithstanding anything in this Agreement to the
    contrary, the prior written consent of the Warrant Agent must be
    obtained in connection with any supplement or amendment which
    alters the rights or duties of the Warrant Agent. The
    Corporation and the Warrant Agent may amend any provision herein
    with the consent of the holders of Warrants exercisable for a
    majority of the Warrant Shares issuable on exercise of all
    outstanding Warrants.



 



    Section 21.  Successors.  All
    the covenants and provisions of this Agreement by or for the
    benefit of the Corporation or the Warrant Agent shall bind and
    inure to the benefit of their respective successors and assigns
    hereunder.



 



    Section 22.  Termination.  This
    Agreement will terminate on any earlier date if all Warrants
    have been exercised or expired without exercise. The provisions
    of Section 17 hereof shall survive such termination.



 



    Section 23.  Governing
    Law.  This Agreement and each Warrant
    Certificate issued hereunder shall be deemed to be a contract
    made under the laws of the State of New York, and the validity,
    interpretation, and enforcement of this Agreement and each
    Warrant Certificate shall be governed by and construed in
    accordance with the internal laws of said State without giving
    effect to the conflict of law principles thereof. The parties
    agree that, all actions and proceedings arising out of this
    Agreement or any of the transactions contemplated hereby, shall
    be brought in Steuben County, New York and that, in connection
    with any such action or proceeding, submit to the jurisdiction
    of, and venue in, such court. Each of the parties hereto also
    irrevocably waives all right to trial by jury in any action,
    proceeding or counterclaim arising out of this Agreement or the
    transactions contemplated hereby.




    

    10








 





 



    Section 24.  Benefits
    of This Agreement.  Nothing in this Agreement
    shall be construed to give to any person or corporation other
    than the Corporation, the Warrant Agent and the registered
    holders of the Warrant Certificates any legal or equitable
    right, remedy or claim under this Agreement, and this Agreement
    shall be for the sole and exclusive benefit of the Corporation,
    the Warrant Agent and the registered holders of the Warrant
    Certificates.



 



    
    SECTION 25.  Counterparts.  This
    Agreement may be executed in any number of counterparts and each
    of such counterparts shall for all purposes be deemed to be an
    original, and all such counterparts shall together constitute
    but one and the same instrument.



 



    Section 26.  Force
    Majeure.  In no event shall the Warrant Agent
    be responsible or liable for any failure or delay in the
    performance of its obligations under this Agreement arising out
    of or caused by, directly or indirectly, forces beyond its
    reasonable control, including without limitation strikes, work
    stoppages, accidents, acts of war or terrorism, civil or
    military disturbances, nuclear or natural catastrophes or acts
    of God, and interruptions, loss or malfunctions of utilities,
    communications or computer (software or hardware) services.



 




    <Signature
    page follows>




    

    11








 






    IN WITNESS WHEREOF, the parties hereto have caused this
    Agreement to be duly executed, as of the day and year first
    above written.



 



    CORNING NATURAL GAS CORPORATION



 






    By: Michael I. German




    Its: President and Chief Executive Officer



 






    By: Firouzeh Sarhangi




    Its: Chief Financial Officer



 



    REGISTRAR AND TRANSFER COMPANY,




    as Warrant Agent



 


			
	 	    By: 
	









    Authorized Signatory




    

    12