Pike County Light & Power Company (collectively known as the "Borrower")

1.       Up to $12,000,000 Term loan.

2.       $2,000,000 in Line of Credit for short term working capital purposes.

1.       The Term Loan will mature Five (5) years from the date of closing. Billed interest only for 6 months, then commence monthly payments of principal and interest based on an amortization not to exceed 10 years.

2.       The Line of Credit will be a Demand facility billed Interest only monthly.

Pricing:

Facility 1 will price on a variable interest based on 1 Month LIBOR plus 300 basis points.

Facility 2 will price on a variable interest based on 1 Month LIBOR plus 275 basis points.

A 50 basis point fee on the term loan amount. The $60,000 fee is considered earned and is due upon issuance of the Commitment.

Customary and normal for this type of transaction to include, at a minimum, debt service coverage, liquidity, and leverage. Covenants shall be set at levels mutually acceptable to Borrower and M&T Bank.

Customary reporting including, but not limited to the following:

1.       Borrower’s and Guarantor’s annual audited financial statements within 120 days of fiscal year end.

2.       Operating and capital budget for the following fiscal year to be delivered prior to 12/31 of the current year.

3.       Quarterly submission of management prepared financial statements, and covenant compliance certificate.

Existing Mortgage Bond in approximate amount of $3,200,000 to be paid off at closing. M&T Bank agrees to work with Corning and Woodmen to seek a waiver of the notice provision so that closing, redemption and our new loan could occur concurrently. If this proved unsuccessful, we would accept a second security position on all of Pike’s assets as well as a guarantee of the debt by Corning Natural Gas Holding Corporation (“CNGHC”). We would loan Pike County Light and Power Company $8.8 million to close the transaction with Orange & Rockland and approximately 30 days later an additional $3.2 million to retire the first mortgage bonds. At that time we would have a first priority security interest in all of Pike’s assets.

Any existing debt, including Intercompany short and long term payables, to be paid off at closing.

Borrower shall have delivered to M&T, sufficiently in advance of closing, all information and documentation required by M&T to evidence or facilitate both the Borrower’s and M&T’s compliance with all applicable laws and regulations, including, without limitation, all “know your customer” rules in effect from time to time pursuant to the Bank Secrecy Act, USA PATRIOT Act and other applicable laws. Any failure by Borrower or any necessary third party to deliver to M&T, in a timely manner, any material information or documentation requested, or any misrepresentation or inaccuracy with respect to such information or documentation, or if M&T reasonably determines that opening any account contemplated herein would potentially violate M&T’s regulatory compliance policies or applicable law, shall permit M&T to withdraw or cancel this financing offer, without liability.

Representations

and Warranties, Permits
and Licenses:

Customary, including, but not limited to, corporate existence, due authorization, execution, delivery, validity and enforceability of documentation, no violation of law or any agreement or instrument, financial information, solvency, litigation and compliance with law, agreements and instruments.