This Agreement
made and entered into this 30th day of November, 2006 by and
between MICHAEL GERMAN (the “Executive”) and
CORNING NATURAL GAS CORPORATION a New York corporation
having its principal place of business in Corning, New York (the
“Company”).
WHEREAS ,
the Company desires to employ the Executive for a period commencing
on December 18, 2006 (the “Effective Date”), and
ending three (3) years thereafter unless renewed per
Section 11 (the “Employment Period”), and the
Executive desires to work for the Company during the Employment
Period upon the terms and conditions hereinafter
provided:
NOW,
THEREFORE , in consideration of the mutual covenants and
agreements contained herein, the parties agree as
follows:
During the
Employment Period, the Executive shall serve as President and Chief
Executive Officer of the Company, with such duties, authorities and
responsibilities as are normally associated with and appropriate
for such positions. The Executive shall report directly to the
Board of Directors of the Company. The Executive shall devote his
full business time, effort, skill and attention (other than
absences due to illness or authorized vacation time) to the
performance of his duties for the Company, shall faithfully,
loyally and to the best of his ability perform his duties and shall
comply with the reasonable instructions of the Board of Directors
and the Chairman. Notwithstanding the foregoing, the Executive
shall be permitted, to the extent such activities do not
significantly interfere with his performance of his duties and
responsibilities hereunder, to (i) manage his personal
financial affairs, (ii) serve on civic or charitable boards or
committees with the prior approval of the Chairman, (iii) make
presentations and lectures. The Executive further agrees that
during the Employment Period, he will not engage in any other
occupation or employment without the prior approval of the Board
of
Directors. The
Company further agrees that for so long as Executive is the Chief
Executive Officer of the Company, he shall also serve as a member
of the Board of Directors, subject to receiving the requisite vote
of the Stockholders.
The Executive
additionally agrees that, subject to complying with his general
fiduciary duties, he will follow all policies and practices of the
Company as presently in effect or hereafter established by the
Company, and will not depart from such practices and policies or
commit or bind the Company in any manner contrary thereto, and
agrees that in all that he may do he will be governed by the will
and direction of the Chairman and the Board of Directors and agrees
to consult with and determine the will and direction of the
Chairman and the Board of Directors in all business matters, except
ordinary matters.
2.
COMPENSATION AND BENEFITS .
2.1 Salary
. As basic compensation for the services to be rendered by the
Executive to the Company during the Employment Period, the Company
shall pay the Executive during the Employment Period a salary in
the amount of One Hundred Fifty Thousand Dollars ($150,000.00)
annually, payable in twenty-six (26) equal biweekly
installments, less such deductions and amounts to be withheld as
may be required by applicable law and regulations.
2.2 Bonus .
Executive shall be entitled to a bonus in the event that the
Company’s net after tax income as calculated from its
consolidated statements of income (“Net Income”) for
any fiscal year commencing with the fiscal year October 1,
2006 equals or exceeds $1.00 per share of the Company’s then
outstanding shares of common stock, to-wit: If Company’s Net
Income equals or exceeds $1.00 per share but is less than $1.50 per
share, Executive shall be entitled to a bonus equal to twenty-five
percent (25%) of his salary; if Company’s Net Income equals
or exceed $1.50 per share but is less then $2.00 per share,
Executive shall be entitled to a bonus equal to fifty (50%) of his
salary; if Company’s Net Income equals or exceeds $2.00 per
share, Executive shall be entitled to a bonus equal to one hundred
percent (100%) of his salary. The Company’s Board of
Directors shall adjust the per share goals equitably for any stock
splits, combination, reorganization, reclassification or similar
event. The Company’s Net Income shall be determined in
accordance with the Company’s audited consolidated statements
of income
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prepared in
accordance with general accepted accounting principles used in the
United States, consistently applied unless changed from time to
time as approved by the Company’s audit committee, and said
Net Income shall be further reflected by the Company’s annual
report on Form 10-K commencing with the fiscal year beginning
October 1, 2006. The bonus due Executive, if any, pursuant to
this provision shall be paid not later than seventy five
(75) calendar days following the filing of the Company’s
10-K. It shall be a condition of Executive’s entitlement to
any such bonus with respect to any year of the Employment Period
that Executive shall be employed by the Company throughout the
entire year of the Employment Period; provided, however, that
Company agrees that there will be no reduction in any bonus due
Executive for the first (1 st )
year of the Employment Period notwithstanding the fact that
Executive shall not have worked for the entire year. It is further
agreed by Company and Executive that unless the Employment Period
is extended for the entire fiscal year beginning October 1,
2009, Executive shall not be entitled to any bonus for the months
of his Employment Period that extended into the fiscal year
commencing October 1, 2009, and as such, no proration shall
occur.
2.3 Relocation
Expenses . In further consideration of Executive’s
agreement to be employed by Company pursuant to the terms and
provisions hereof, Company agrees to pay Executive his moving
expenses for him and his family from Burlington, Connecticut not to
exceed Fifteen Thousand Dollars ($15,000.00), plus six months of
lodging expenses incurred in Corning, New York not to exceed Twelve
Thousand Dollars ($12,000).
2.4
Benefits . The Executive shall be entitled to participate in
or receive compensation and/or benefits, as applicable, under all
employee benefit plans, and all employee benefit arrangements and
vacation policies made available by Company now or during the
Employment Period to its executives and key management employees,
subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements; provided,
however, that there shall be no duplication of the compensation and
benefits created by this Agreement. The Executive’s
participation in such plans and arrangements shall be on an
appropriate level for the positions of President and Chief
Executive Officer, as determined by the Board of
Directors.
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2.5 Expense
Reimbursement . Company shall reimburse on behalf of Executive
such reasonable expenses as Executive may incur in connection with
the performance of Executive’s duties hereunder, provided
that Executive shall provide Company with supporting documentation
including receipts with respect to any expense for which
reimbursement is sought by Executive.
3.1 Death .
This Agreement and the respective rights and obligations of the
parties hereunder shall terminate upon the death of the Executive
during the Employment Period.
3.2
Disability . In the event that Executive shall become
physically or mentally disabled during the Employment Period, and
in the event that such disability persists continuously for a
period in excess of one hundred twenty (120) days, this
Agreement shall thereupon terminate. During the first 120 days
of any such disability, Company shall pay to Executive his salary,
and benefits until Executive’s employment is terminated;
provided, however, Executive’s salary payments shall be
reduced by the sum of the amounts, if any, payable to Executive
under any disability benefit plans of the Company or under the
Social Security disability insurance program.
3.3 Termination
for Cause by the Company . The Company may at any time during
the Employment Period by written notice to the Executive, terminate
this Agreement and discharge the Executive for cause, whereupon the
respective rights and obligations of the parties hereunder shall
likewise terminate. As used herein, the term “for
cause” shall be deemed to include, without limitation,
conviction of any crime (other than a traffic offense) involving
dishonesty or moral turpitude, misappropriation of any money or
other assets or properties of the Company, or other acts of
dishonestly, material failure by Executive, in the judgment of the
Chairman as ratified by a resolution by Company’s Board of
Directors, to perform his duties after written notice thereof and a
thirty (30) day period in which to cure such failure, or
breach by the Executive of any of the terms and provisions of this
Agreement and failure to cure such breach within thirty
(30) days after written notice thereof.
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3.4 Termination
by Executive for Convenience . This Agreement may be terminated
by the written resignation of Executive effective on the date
specified in such resignation notice by Executive, which shall not
be sooner than ninety (90) days after the date of such notice
of resignation. In the event that Executive elects to terminate
this Agreement by resignation in accordance with this provision,
Company may elect notwithstanding the effective date of such
termination contained in Executive’s resignation notice to
make Executive’s resignation effective on such earlier date,
if any, as Company determines in its sole discretion, provided that
notwithstanding such election and determination by Company, Company
shall be obligated to pay Executive’s salary and other
benefits due hereunder through a date not earlier than ninety (90)
days after the date of Executive’s resignation
notice.
3.5 Termination
by Executive for Good Reason . This Agreement may be terminated
by Executive for “Good Reason” as hereafter defined by
written notice to the Company, which shall not be sooner than
ninety (90) days after written notice of such an event has
been given to the Company by Executive.
4.1 Options
Granted to Executive . Company hereby agrees to permit the
Executive to participate in a yet to be proposed stock option plan
whereby Executive will be issued an option to acquire seventy-five
thousand (75,000) shares of Company’s voting common stock for
$15 a share and upon such other terms and conditions as are set
forth in a stock option agreement and plan proposed to and
subsequently adopted by the Board of Directors and approved by the
shareholders of the Company, if necessary. The stock options shall
be subject to the review of the New York Public Service Commission
and the inapplicability of the stockholders’ preemptive
rights. The Company intends to submit to the stockholders for
approval at the 2007 annual meeting an amendment to the
Company’s certificate of incorporation eliminating the
preemptive rights.
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5. PROTECTION OF CONFIDENTIAL INFORMATION,
NON-SOLICITATION, NON-COMPETITION, NON-INDUCEMENT; REMEDIES; AND
EXPENSES .
5.1
Confidential Information . The Executive agrees that at all
times hereinafter (including times during and after his term of
employment) he will not, either directly or indirectly, disseminate
or make use of any of the confidential business and technical
information of the Company or its customers, regardless of how such
information may have been acquired. Such confidential information
shall be considered to include, without limitation, all Company
policies and procedures, financial information, the identity and
lists of actual and potential customers, and any pricing used by
the Company, all to the extent that such information is not
intended for dissemination in the industry. Furthermore, the
Executive agrees that upon termination of his employment with the
Company, he will promptly return to the Company all memoranda,
notes, records, reports, manuals and other documents (and all
copies hereof) relating to the Company’s business which he
may then possess or have under his control.
5.2
Non-Competition . For a twelve-month period immediately
following his Employment Period and/or date of employment
termination whatsoever occurs first, Executive shall not, except as
permitted by Company upon its prior written consent, enter,
directly or indirectly, into the employ of or render or engage in,
directly or indirectly, any services to any person, firm or
corporation within the “Restr
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