CONSULTING, CONFIDENTIALITY, AND NON-COMPETITION AGREEMENT
Exhibit 10.1
CONSULTING, CONFIDENTIALITY, AND
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT
THIS CONSULTING, CONFIDENTIALITY, AND NON-COMPETITION AGREEMENT (the “Agreement”) is made this
30th day of November, 2006, between CORNING NATURAL GAS CORPORATION (the “Corporation”), a New York
corporation with its principal place of business at 000 X. Xxxxxxx Xxxxxx, X.X. Xxx 00, Xxxxxxx,
Xxx Xxxx 00000, and XXXXXX X. XXXXX (“Consultant”), with a home address of 00000 X. Xxxx Xxxx,
Xxxxxxxxxxxx, Xxx Xxxx 00000.
ARTICLE 1
TERM OF CONTRACT
TERM OF CONTRACT
1.01. Term Of Contract. This Agreement will become effective on January 3, 2007, and
will continue in effect for four (4) years, until December 31, 2010, or until terminated as
provided in this Agreement.
ARTICLE 2
SERVICES TO BE PERFORMED BY CONSULTANT
SERVICES TO BE PERFORMED BY CONSULTANT
2.01. Services To Be Performed By Consultant. Consultant agrees to provide those
services requested by the Corporation’s CEO to assist in the transition to a new management team at
the Corporation.
2.02. Method of Performing Services. Consultant and the Corporation’s CEO will jointly
determine the method, details, and means of performing the services described in Section 2.01.
ARTICLE 3
PAYMENT FOR SERVICES
PAYMENT FOR SERVICES
3.01. Payment to Consultant. Corporation agrees to pay to Consultant the amount of
$150,000 per year for his services rendered under this Agreement. Corporation will make payments
in equal installments on Corporation’s regular payroll dates.
3.02. Deduction in Payment for First Year of Services. Notwithstanding the annual
payment set forth in section 3.01, Consultant’s annual payment for the first year of this Agreement
will be reduced by the aggregate of the salary Corporation pays to Consultant and the Corporation’s
share of FICA taxes related to Consultant’s employment with Corporation from the date of
Consultant’s resignation from Corporation’s Board of Directors through May 1, 2007.
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Therefore, the Corporation will pay the Consultant no more than $600,000 in the aggregate in
salary and consulting fees under Section 3.01 of this Agreement from the date of this Agreement
through its term.
3.03. Expenses. With the Corporation’s prior approval, Corporation shall reimburse or
pay Consultant for any and all of his direct and commercially reasonable costs and expenses
incurred by him on behalf of the Corporation in connection with the performance of the Services.
3.04. Benefits and Deferred Compensation. Consultant understands that the sole
compensation for the consulting services provided by this Agreement is set forth in section 3.01.
Consultant is not entitled to receive any supplemental or other deferred compensation benefits.
However, nothing herein affects Consultant’s right to receive payments under Corporation’s pension
plan for non-union employees, or any supplemental plan or under his deferred compensation
agreement, to which he is otherwise entitled as a former employee of Corporation.
ARTICLE 4
OBLIGATIONS OF CONSULTANT
OBLIGATIONS OF CONSULTANT
4.01. Best Efforts. Consultant agrees to devote his best efforts to the performance
of the Services described in this Agreement.
4.02 Hours During Which Services May Be Performed. Consultant agrees that any
services described in this Agreement that must be performed on Corporation’s premises will be
performed during Corporation’s regular business hours.
4.03 Instrumentalities. Consultant is responsible for supplying all means necessary
for performing under this Agreement.
4.04. Liability Insurance. Consultant agrees to maintain a policy of insurance to
cover any negligent acts committed by Consultant or Consultant’s employees or agents during the
performance of any duties under this Agreement. Consultant further agrees to hold Corporation free
and harmless from any and all claims arising from any negligent act or omission.
4.05. Assignment by Consultant. Neither this Agreement nor any duties or obligations
under this Agreement may be assigned by Consultant without the prior written consent of
Corporation.
4.06. Obligations upon Termination of Services. Consultant agrees to comply with
Corporation’s exit procedures following termination or expiration of this Agreement as a condition
of Corporation’s final payment to Consultant. Such procedures may include, but are not limited
to, notification to proper Corporation’s officials, returning all Corporation’s equipment and
security badges, and execution of appropriate documents.
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ARTICLE 5
EXISTING AGREEMENTS WITH CONSULTANT
EXISTING AGREEMENTS WITH CONSULTANT
5.01. Existing Agreements with Consultant. The Corporation and Consultant are parties
to (i) the Amended and Restated Employment Agreement dated as of December 14, 2000 (as amended as
of January 1, 2005, the “Employment Agreement”); (ii) the Amended and Restated Severance Agreement
dated as of December 14, 2000 (as amended as of January 1, 2005, the “Severance Agreement”); (iii)
the Amended and Restated Survivor Benefit Deferred Compensation Agreement dated as of December 14,
2000 (as amended as of January 1, 2005, the “Deferred Compensation Agreement”); and (iv) the
Assignment Agreement dated as of July 10, 2001 (the “Assignment Agreement”).
5.02. Modification of the Employment Agreement.
(A) Consultant hereby resigns as Chairman of the Board, Chief Executive Officer and
President of the Corporation effective as of the date of this Agreement, and the Corporation
hereby accepts such resignation.
(B) Effective on the date of this Agreement and through January 3, 2007, Consultant
shall be employed by the Corporation as the Special Assistant to the Chief Executive Officer
at (i) an annual salary as of the date of this Agreement of $227,286 and (ii) Consultant’s
current health benefits as further described in Section 7(a) of the Employment Agreement.
Notwithstanding the foregoing, Consultant may resign as Special Assistant to the Chief
Executive Officer at any time prior to January 3, 2007.
(C) The Chief Executive Officer of the Corporation shall determine the method, details
and means of performing Consultant’s duties as Special Assistant to the Chief Executive
Officer.
(D) The Corporation hereby agrees that Sections 7(a), 7(e) and 7(g) of the Employment
Agreement shall remain in full force and effect.
(E) Except for Sections 7(a), 7(e) and 7(g) of the Employment Agreement, the Employment
Agreement shall terminate and be of no further force and effect as of the date of this
Agreement. Section 7(a) of the Employment Agreement shall terminate and be of no further
force and effect on January 3, 2007.
5.03. Termination of the Severance Agreement. As of the date of this Agreement, the
Severance Agreement shall terminate and be of no further force and effect.
5.04. Continuation of the Deferred Compensation Agreement. The Deferred Compensation
Agreement shall remain in full force and effect, provided, however, that any payments that
Consultant may be entitled to under the Deferred Compensation Agreement shall be funded only from
assets that are segregated and identified on the Corporation’s balance sheet as of the date of this
Agreement.
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5.05. Transfer of the Assignment Agreement. As of the date of this Agreement, the
Corporation shall transfer, assign and set over to Consultant, at no cost to Consultant, the Key
Man Policy (as such term is defined in the Assignment Agreement) and the Assignment Agreement shall
terminate and be of no further force and effect.
5.06. Pension Benefits. Consultant shall be entitled to receive payments under the
Retirement Plan for Salaried and Non-Union Employees of Corning Natural Gas Corporation pursuant to
its terms (the “Pension Plan”).
5.07. No Other Obligations. Consultant represents and acknowledges that he has no
severance, pension or other compensatory arrangements with the Corporation other than the Pension
Plan, Employment Agreement, the Severance Agreement, the Deferred Compensation Agreement and the
Assignment Agreement. Other than as specifically provided for in this Article 5, the Corporation
shall have no other obligations or liabilities to Consultant under the terms of the Employment
Agreement, the Severance Agreement, the Deferred Compensation Agreement and the Assignment
Agreement.
ARTICLE 6
TERMINATION OF AGREEMENT
TERMINATION OF AGREEMENT
6.01. Expiration of Agreement. Unless otherwise terminated as provided in this
Agreement, this Agreement shall continue in force until December 31, 2010.
6.02. Termination of Consultant’s Consulting Obligations. Consultant’s obligations to
provide consulting services under this Agreement shall terminate automatically on the occurrence of
any of the following events:
(A) Bankruptcy or insolvency of either party.
(B) Sale of the business of the Corporation.
(C) Death or dissolution of either party.
(D) Upon the Corporation’s breach of its payment obligations under this Agreement.
6.03. Termination of Corporation’s Payment Obligations. The Corporation’s obligation
to make payments to Consultant under this Agreement shall terminate automatically upon Consultant’s
material breach of any provision of this Agreement.
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ARTICLE 7
COVENANTS, WARRANTIES AND REPRESENTATIONS OF CONSULTANT
COVENANTS, WARRANTIES AND REPRESENTATIONS OF CONSULTANT
7.01. Warranties and Representations of Consultant. Consultant warrants and
represents to Corporation:
(A) that he shall perform his duties under this Agreement personally and shall not
delegate the performance of those duties to any other person without first obtaining
Corporation’s written consent.
(B) that the Services will be performed in a timely, diligent, professional and
workmanlike manner in accordance with the highest applicable industry standards, in
accordance with this Agreement.
(C) that he will diligently devote such time and best efforts as is reasonably required
to Corporation’s business in the performance of the Services and will perform the Services
conscientiously, efficiently and to the best of their ability.
(D) that he shall not to remove any property of Corporation, including any proprietary
or confidential information, from Corporation’s premises without prior written consent of
Corporation.
7.02. Work Product. Consultant hereby acknowledges and covenants that any and all
documentation, materials and tangible items embodying any of its Services, in whatever medium
created or stored, including electronically created and/or stored items (collectively referred to
as “Work Product”), is the sole and exclusive property of Corporation and hereby assigns, and
agrees to assign, to Corporation any and all of Consultant’s right, title and interest in, to and
under any and all Work Product and all proprietary rights relating thereto. Upon Corporation’s
request and without further compensation therefore, and whether during the term of this Agreement
or thereafter, Consultant will do all lawful acts, including, but not limited to, the execution of
such papers, the making of such lawful oaths and the giving of such testimony as, in the reasonable
opinion of Corporation, may be necessary or desirable to obtain, sustain, reissue, extend and
enforce any proprietary rights related to any Work Product and to perfect, affirm and record
Corporation’s complete ownership and title thereto and Consultant will otherwise cooperate in all
proceedings and matters relating thereto.
ARTICLE 8
RELATIONSHIP AND INDEMNITY
RELATIONSHIP AND INDEMNITY
8.01. Independent Consultant. Consultant is and shall be an independent contractor.
Consultant shall not be deemed to be an employee of Corporation. Nothing herein contained in this
Agreement shall be construed so as to create a partnership or joint venture; and neither party
hereto shall be liable for the debts or obligations of the other. Corporation shall not have the
power to hire or fire Consultant’s employees and Corporation may not in any other way exercise
dominion or control over Consultant’s business.
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Neither party is intended to have, nor shall neither of them represent to any other person
that it has, any power, right or authority to bind the other, or to assume, or create, any
obligation or responsibility, express or implied, on behalf of the other, except as expressly
required by this Agreement or as otherwise permitted in writing.
Consultant will treat all payments under this Agreement as ordinary income for income tax
purposes. With respect to any payments to Consultant hereunder, the Corporation shall not (a)
withhold or pay FICA or other federal, state or local income or other taxes or (b) comply with or
contribute to state workers’ compensation, unemployment or other funds or programs.
8.02. Indemnity. Consultant shall indemnify Corporation and hold Corporation harmless
from and against, and shall defend against, any and all claims and damages of every kind, arising
out of or attributed, directly or indirectly, to the conduct, operations, or performance of
Consultant hereunder.
ARTICLE 9
NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY
NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY
9.01. Definitions.
The following terms, as used in this Article, shall have the following meanings:
(A) “The Corporation’s Business” means the provision of natural gas,
transportation, storage, and other unbundled energy services within Chemung County and
Steuben County, New York.
(B) “Confidential Information” means any information which is proprietary or
unique to the Corporation’s Business, including but not limited to trade secret information,
devices, techniques, data and formulas, research subjects and results, marketing methods,
plans and strategies, operations, products, revenues, expenses, profits, sales, key
personnel, customers, suppliers, pricing policies, any information concerning the marketing
and other business affairs and methods of the Corporation’s Business which is not readily
available to the public.
(C) “Restricted Business” means any business activity relating to the
Corporation’s Business.
(D) “Person” means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department, agency, or
political subdivision thereof).
(E) “Restricted Period” means the date of this Agreement through December 31,
2010..
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9.02. Confidential Information.
(A) Consultant acknowledges that the Corporation and its employees and shareholders
have over many years devoted substantial time, effort, and resources to developing the
Corporation’s trade secrets and its other confidential and proprietary information, in
addition to the Corporation’s relationships with customers, suppliers, employees, and others
doing business with the Corporation; that such relationships, trade secrets and other
information are vital to the successful conduct of the Corporation’s business in the future;
that the Corporation, in the furtherance of its business, has in the past provided
Consultant with the opportunity and support necessary to allow him to establish personal and
professional relationships with customers, suppliers, employees, and others having business
relationships with the Corporation and has afforded Consultant unlimited access to the
Corporation’s trade secrets and other confidential and proprietary information; that because
of the opportunities and support so provided to Consultant and because of Consultant’s
access to the Corporation’s confidential information and trade secrets, Consultant would be
in a unique position to divert business from the Corporation and to commit irreparable
damage to the Corporation were Consultant to be allowed to compete with the Corporation or
to commit any of the other acts prohibited below; that the enforcement of the restrictive
covenants against Consultant would not impose any undue burden upon Consultant; that none of
the restrictive covenants is unreasonable as to period or geographic area; and that the
ability to enforce the restrictive covenants against Consultant is a material inducement to
the decision of the Corporation to enter into this Agreement.
(B) Consultant shall hold confidential all Confidential Information obtained during his
prior tenure as CEO of the Corporation, and during the conduct of the Services under this
Agreement, and shall not disclose such information without Corporation’s unless disclosure
is ordered by a court of competent jurisdiction.
9.03. Non-competition, Non-solicitation and Non-disparagement. Because of
Consultant’s opportunity to develop relationships with existing employees, customers, and other
business associates of the Corporation, which relationships constitute goodwill of the Corporation,
and because the Corporation would be irreparably damaged if Consultant were to take actions that
would damage or misappropriate such goodwill, Consultant accordingly covenants and agrees as
follows:
(A) During the Restricted Period, Consultant shall not, directly or indirectly, enter
into, engage in, assist, give or lend funds to or otherwise finance, be employed by or
consult with, have an ownership or equity interest in, or have a financial or other interest
in, any business which engages in any aspect of the Restricted Business within the State of
New York, whether for or by himself or as an independent contractor, agent, stockholder,
partner or joint venturer for any other Person, provided that the aggregate ownership by
Consultant of no more than two percent (2%) of the outstanding equity shall not be deemed to
be giving or lending funds to, otherwise financing or having a financial interest in a
competitor. In the event that any Person in which Consultant has
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any financial or other interest directly or indirectly enters into the Restricted
Business during the Restricted Period, Consultant shall divest all of his or her interest
(other than any amount permitted under this paragraph) in such Person within thirty (30)
days after such Person enters into any aspect of the Restricted Business.
(B) Consultant covenants and agrees that, during the Restricted Period, Consultant will
not, directly or indirectly, either for himself or for any other Person:
(i) solicit any employee of the Corporation to terminate his or her employment
with the Corporation or employ any such individual during his or her employment with
the Corporation and for a period of twelve (12) months after such individual
terminates employment with the Corporation;
(ii) solicit any supplier to the Corporation to purchase or distribute
information, products or services of or on behalf of Consultant or such other Person
that are competitive with the information, products or services provided by the
Corporation;
(iii) request or advise any present or future customer of the Corporation to
withdraw, curtail or cancel its business dealings with the Corporation; or commit
any other act or assist others to commit any other act which might injure the
business of the Corporation.
(iv) take any action, including without limitation the making of disparaging
statements concerning the Corporation, its members, managers, officers, directors or
employees, that is reasonably likely to cause injury to the relationships between
the Corporation or any of its employees and any lessor, lessee, vendor, supplier,
customer, distributor, employee, consultant or other business associate of the
Corporation, as such relationship relates to the Corporation’s conduct of the
Restricted Business.
(C) Consultant understands that the foregoing restrictions may limit his ability to
earn a livelihood in a business similar to the Restricted Business, but Consultant
nevertheless believes that he has received and will receive sufficient consideration and
other benefits as a result of his or her employment with the Corporation to clearly justify
such restrictions which, in any event (given the Consultant’s education, skills and
ability), Consultant does not believe would prevent him from otherwise earning a living.
9.04. Remedies. In the event of the violation or threatened violation by Consultant
of any of the covenants contained in this Agreement, in addition to any other remedy available in
law or in equity, the Corporation shall have (i) the right and remedy of specific enforcement,
including injunctive relief, it being acknowledged and agreed that any such violation or threatened
violation will cause irreparable injury to the Corporation and that monetary damages will not
provide an adequate remedy, and (ii) the right to any and all damages available as a matter of law,
and costs and expenses incurred by the Corporation in pursuing its rights under this Agreement,
including reasonable attorneys’ fees and other litigation expenses.
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9.05. Effect. This Article supersedes any and all prior agreements and understandings
between the Consultant and the Corporation to the extent that any such agreements or understandings
conflict with the terms of this Article.
ARTICLE 10
GENERAL PROVISIONS
GENERAL PROVISIONS
10.01. Notice. Any notices to be given under this Agreement by either party to the
other may be effected either by personal delivery in writing or by registered or certified mail,
with postage prepaid and with return receipt requested. Mailed notices shall be addressed to the
parties at the addresses appearing in the introductory paragraph of this Agreement. However, each
party may change the address for receipt of notice by giving written notice in accordance with this
paragraph. Notices delivered personally will be deemed communicated at the time of delivery.
Mailed notices will be deemed communicated one day after mailing.
10.02. Entire Agreement of the Parties. This Agreement supersedes any and all
agreements, both oral and written, between the parties with respect to the rendering of services by
Consultant for Corporation, and contains all of the covenants and agreements between the parties
with respect to the rendering of these services in any manner whatsoever. Each party acknowledges
that no representations, inducements, promises, or agreements, written or oral, have been made by
either party, or by anyone acting on behalf of either party, that are not embodied in this
Agreement. Any modification of this Agreement will be effective only if it is in a writing signed
by the party to be charged.
10.03. Partial Invalidity. If any provision in this Agreement is held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions will
nevertheless continue in full force without being impaired or invalidated in any way.
10.04. Applicable Law; Jurisdiction. This Agreement shall be construed, interpreted
and enforced according to the statutes, rules of law and court decisions of the State of New York
without regard to conflict of law provisions. Any suit to enforce this Agreement shall be brought
in the federal or State Courts of New York. The parties submit to personal jurisdiction and venue
in the State of New York, Steuben County.
10.05. Attorneys’ Fees. If any action at law or in equity, including an action for
declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the
prevailing party will be entitled to reasonable attorneys’ fees in addition to any other relief to
which that party may be entitled. The attorneys’ fees may be set by the court in the same action
or in a separate action brought for that purpose.
10.06. Parties Bound. This Agreement shall be binding on, and inure to the benefit
of, each party’s successors in interest, including successors, assignees, heirs, legatees,
assignees, and legal representatives.
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10.07. Captions. The captions appearing herein are for convenience of reference only
and shall not affect the meaning or interpretation of this Agreement or provision hereof.
10.08. Further Assurances. Each party to this Agreement represents, agrees and
warrants that it will perform all other acts and execute and deliver all other documents that may
be necessary or appropriate to carry out the intent and purposes of this Agreement.
10.09. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall be deemed to be one
and the same instrument.
Executed on the date first written above.
| Corning Natural Gas Corporation: | Xxxxxx X. Xxxxx: | |||||
By: /s/ Fi Sarhangi |
/s/ Xxxxxx X. Xxxxx | |||||
Name:
|
Fi Sarhangi | |||||
Title:
|
Chief Financial Officer | |||||
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