Document:

EX-10.1

 

Exhibit 10.1

CONSULTING, CONFIDENTIALITY, AND

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 330 W. William Street, P.O. Box 58, Corning,
New York 14830, and THOMAS K. BARRY (“Consultant”), with a home address of 10958 E. Lake Road,
Hammondsport, New York 14840.

ARTICLE 1

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

     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

     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

     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

     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

     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

     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

     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

     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

     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:	 	Thomas K. Barry:	 	 
	 
	 	 	 	 	 	 
	By: /s/ Fi Sarhangi
	 	/s/ Thomas K. Barry	 	 
	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

	 	Fi Sarhangi	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	Chief Financial Officer	 	 	 	 

Page 10 of 10EX-10.2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

     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”).

WITNESSETH:

     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:

1. EMPLOYMENT.

     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 (1st) 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. TERMINATION.

     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. STOCK OPTIONS.

     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 “Restricted Territory,” which is a competitor of Company with respect to
existing lines of business in which the Company is then actually engaged. For purposes of this
Section 5.2, the “Restricted Territory” shall be the State of New York.

     5.3 No Solicitation of Employees or Customers. The Executive further agrees that
during the term of his employment with the Company and for a period of one (1) year from the
termination of such employment he will not:

     (a) In any manner induce, attempt to induce, or assist others to induce or attempt to induce
any employee, agent, representative, or other person employed by or associated with the Company, to
terminate such employment or association, nor in any manner, directly or indirectly interfere with
the relationship between the Company and any of such person; or

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     (b) In any manner induce or attempt to induce any customer of the Company terminate his, her
or its association with the Company or do anything, directly or indirectly, to interfere with the
business relationship between the Company and any customers of the Company.

     5.4 Remedies. If the Executive commits a breach, or threatens to commit a breach, of
any of the provisions of Section 5.1, 5.2, or 5.3 hereof, the Company shall have the right and
remedy, without posting bond or other security, to have the provisions of this Agreement
specifically enforced by an court having equity jurisdiction, it being acknowledged and agreed by
the parties that any such breach or threatened breach will cause irreparable injury to the Company
for which money damages will not provide an adequate remedy. The rights and remedies enumerated
above shall be in addition to, and not in lieu of, any other rights and remedies available to the
Company at law or in equity.

     5.5 Reformation of Agreement. In the event that any of the covenants contained in
Sections 5.1, 5.2 or 5.3 of any portion thereof, shall be found by a court of competent
jurisdiction to be invalid or unenforceable as against public policy, such court shall exercise its
discretion in reforming such covenant to the end that the Executive shall be subject to
nondisclosure, non-solicitation and non-competition covenants that are reasonable under the
circumstances and enforceable by the Company.

     5.6 Expenses and Enforcement of Covenants. In the event that any action, suit or other
proceeding at law or in equity is brought to enforce any of the covenants in Sections 5.1, 5.2 or
5.3 or to obtain money damages for the breach thereof, the party prevailing in any such action,
suit or other proceeding shall be entitled upon demand to reimbursement from the other party for
all expenses (including, without limitation, reasonable attorneys’ fees and disbursements) incurred
in connection therewith.

6. GOOD REASON. For purposes of this Agreement, “Good Reason” shall mean the occurrence of
any of the following events:

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     6.1 Change in Status, Etc. A change in the Executive’s status, title, position or
responsibilities (including reporting responsibility), which, in the Executive’s reasonable
judgment, represents a demotion from his status, title, position or responsibilities as in effect
immediately prior thereto; the assignment to the Executive of any duties or responsibilities,
which, in the Executive’s reasonable judgment, are inconsistent with such status, title, position,
or responsibilities or any removal of the Executive from or failure to re-appoint Executive to any
such positions, except in connection with the termination of Executive’s employment pursuant to
Section 3.1, 3.2, 3.3, or 3.4 hereof.

     6.2 Reduction in Compensation. A reduction by Company in the Executive’s salary or
bonus compensation.

     6.3 Reduction in Benefits. The failure by the Company to continue to provide the
Executive with benefits substantially similar to those provided to Executive during the Employment
Period except where Executive’s benefits are reduced as part of a Company-wide revision of employee
benefits.

7. CHANGE IN CONTROL.

     7.1 Compensation to Executive. If there is a Change in Control of the Company during
the term of this Agreement, the Executive shall be entitled to termination payments as described in
Section 8.6 hereof in the event that Executive’s employment by Company is involuntarily terminated
in anticipation of, in connection with, or within one (1) year after the Change in Control, unless
such termination is pursuant to the provisions of Sections 3.1, 3.2, 3.3, or 3.4 hereof.

     7.2 Definition of Change of Control. A “Change-in-Control” shall be deemed to have
occurred if the conditions set forth in any one of the following paragraph (i), (ii), and (iii) has
occurred during the Employment Period:

     (i) an acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities and Exchange Act of 1934 as amended
(the “Exchange Act) (a “Person”) of beneficial ownership

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(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more
of either (1) the then outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (2) the combined voting securities of the
Company entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); excluding, however, the following: (1) any acquisition
directly from the Company, other than an acquisition by virtue of the exercise of a
conversion privilege unless the security being so converted was itself acquired
directly from the Company, (2) any acquisition by the Company, (3) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any entity controlled by the Company, (4) any acquisition by Executive,
an affiliate of Executive, Richard M. Osborne or the Richard M. Osborne Trust, or
(5) any acquisition pursuant to a transaction which complies with clauses (1), (2),
and (3) of subsection (iii) of this definition; or

     (ii) a change in the composition of the Company’s Board of Directors such that
the individuals who following the election of a full slate of directors at the next
annual shareholder meeting constitute the Company’s Board of Directors (such Company
Board of Directors shall be hereinafter referred to as the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Company’s Board of
Directors; provided, however, for purposes of this Section 7.2(ii), that any
individual who becomes a member of the Company’s Board of Directors subsequent to
said election, whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least two-thirds of those individuals who
are members of the Company’s Board of Directors and who were also members of the
Incumbent Board (or deemed to be such pursuant to this provision) shall be
considered as though such individual were a member of the Incumbent Board, but,
provided, further, that any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Company’s Board of Directors shall not be so considered as a
member of the Incumbent Board; or

     (iii) consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company
(“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant
to which (1) all or substantially all of the individuals and entities who are the
beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 60% of,
respectively, the outstanding shares of common stock, and the combined voting power
of the then outstanding voting of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the

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Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Corporation Transaction, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may be,
(2) no Person (other than the Company, any employee benefit plan (or related trust)
of the Company or any entity controlled by the company or such corporation resulting
from such Corporate Transaction) will beneficially own, directly or indirectly, 25%
or more of, respectively, the outstanding shares of common stock of the company
resulting from such Corporate Transaction or the combined voting power of the
outstanding voting securities of such corporation entitled to vote generally in the
election of directors except to the extend that such ownership existed prior to the
Corporate Transaction, and (3) individuals who were members of the Incumbent Board
will constitute at least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction.

8. PAYMENTS UPON TERMINATION.

     8.1 Termination Pursuant to Section 3.1 Hereof. In the event of the termination of
this Agreement pursuant to the provisions of Section 3.1 hereof, Executive’s entitlement to all
compensation and benefits (including any right to participate in any bonus per Section 2.2)
hereunder shall terminate as of the date of Executive’s death.

     8.2 Termination Pursuant to Section 3.2 Hereof. In the event of the termination of
this Agreement pursuant to the provisions of the Section 3.2 hereof, Executive’s entitlement to all
compensation and benefits (including any right to participate in any bonus per Section 2.2)
hereunder shall termination as of the 120th day following the commencement of
Executive’s physical or mental disability.

     8.3 Termination Pursuant to Section 3.3 Hereof. In the event of the termination of
this Agreement, pursuant to the provisions of Section 3.3 hereof, Executive’s entitlement to all
compensation and benefits (including any right to participate in any bonus per Section 2.2)
hereunder shall cease and terminate as of the date on which Executive’s employment is terminated by
Company pursuant to such provision.

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     8.4 Termination Pursuant to Section 3.4 Hereof. In the event of the termination of
this Agreement, pursuant to the provisions of Section 3.4 hereof, Executive’s entitlement to all
compensation and benefits hereunder (including any right to participate in any bonus per Section
2.2) shall cease and terminate as of the effective date of the termination of Executive’s
employment.

     8.5 Termination Pursuant to Section 3.5 Hereof. In the event of the termination of
this Agreement pursuant to the provisions of Section 3.5 hereof, Executive’s entitlement to all
compensation and benefits (including any right to participate in any bonus per Section 2.2)
hereunder shall terminate as of the effective date of such termination, provided, however, that
Executive shall further received a severance package equal to one (1) times Executive’s then
current annual salary.

     8.6 Termination After a Change in Control. In the event of the involuntary
termination of Executive’s employment by Company or its successor in anticipation of, in connection
with, or within one (1) year after the Change in Control, unless such termination is pursuant to
the provisions of Section 3.1, 3.2, 3.3, or 3.4 hereof; then Executive shall be entitled to receive
from Company all compensation and benefits (including any right to participate in any bonus per
Section 2.2) through the effective date of such termination, plus a severance package equal to
three (3) times Executive’s then current annual salary.

     8.7 Termination of Employment Without Cause. Subject to Section 8.6, in the event of
the termination of employment by the Company without cause, Executive shall be entitled to receive
all compensation and benefits (including any right to participate in any bonus per Section 2.2)
through the effective date of such termination, plus a severance package equal to one (1) times
Executive’s then current annual salary.

     8.8 No Mitigation. Company agrees that the Executive shall not be required to seek
other employment in order to reduce any amounts payable to the Executive under this Agreement.

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9. INDEMNIFICATION.

     The Company shall indemnify and hold harmless, to the fullest extent permitted by applicable
law as it presently exists or may hereafter be amended, the Executive, if he is made, or is
threatened to be made, a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a “Proceeding”) by reason of the fact that
Executive is or was a director, officer, employee or agent of the Company, or any affiliate,
including any joint venture, partnership, limited liability company, trust, enterprise or
non-profit entity, including service with respect to employee benefit plans, against all liability
and losses suffered and expenses reasonably incurred by the Executive or his heirs or personal
representative. Executive’s right to indemnification under this paragraph shall not apply to (i)
conduct that has been judicially determined to have involved acts of willful misconduct, fraud, or
misappropriation of funds by Executive. Further, to the extent permitted by law, the Company shall
pay and/or periodically reimburse the Executive indemnified hereunder for all costs and expenses
incurred in defending any Proceeding in advance of its final disposition, subject to a required
return of said funds in the event of a judicial determination under 9 (i) above. The rights
provided to the Executive under this Section shall be in addition to any indemnification rights the
executive may have by statute, under any other indemnification rights provided to any other
employees or officers of Company, or any other affiliate, or under any provision in the Company’s
Bylaws or certificate of incorporation. Further, the Company shall at all times use commercially
reasonable efforts to maintain sufficient Directors and Officers insurance, or other available
liability insurance, to enable it to meet its obligations under this Section.

10. NOTICES.

     All notices and other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or sent by prepaid
telegram, or mailed postage prepaid, by certified mail (notices sent by telegram or mailed shall be
deemed to have been given and shall be effective on the date of dispatch or mailing, as the case
may be) to the parties at the following addresses or such other address for a party as such party
may from time-to-time designate by notice in writing to the other party in accordance therewith:

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(a) If to the Company, to:

Corning Natural Gas Corporation

330 W. William Street

Corning, New York 14830

(b) If to the Executive:

Michael German

114 Deer Run

Burlington, Connecticut 06013

11. RENEWAL.

     This Agreement shall automatically renew for successive one (1) year periods on the same terms
and conditions, unless either Company or Executive gives to the other written notice of its or his
election not to renew on or before 90 days prior to the expiration of the then current Employment
Period. In the event that any such notice of non-renewal is given by Company or Executive, this
Agreement shall expire and be of no further force or effect except as otherwise expressly provided
herein.

12. GENERAL.

     12.1 Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties hereto concerning the subject matter hereof. No representations,
promises, inducement or statement of intention has been made by or on behalf of either party hereto
concerning the subject matter hereof which is not set forth in this Agreement.

     12.2 Amendments; Waivers. This Agreement may be amended, superseded, cancelled,
renewed or extended, and the terms or covenants hereof may be waived, only be a written instrument
specifically referring to this Agreement and executed by both of the parties hereto, or, in the
case of a wavier, by the party waiving compliance. The failure of the Company at any time or from
time to time to require performance of any of the Executive’s obligations under this Agreement
shall in no manner affect the Company’s right to enforce any provision of this Agreement at a
subsequent time, and the waiver by the Company of any right arising out of any breach shall not be
construed as a waiver of any right arising out of any subsequent breach.

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     12.3 Binding Effect; Assignment. The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of the Executive, his heirs at law, legatees distributes,
executors, administrators, other legal representatives and permitted assigns, and shall be binding
upon and inure to the benefit of the Company and its successors and assigns. The Executive may not
assign, pledge or encumber in any way all or part of his interest under this Agreement without the
prior written consent of the Company.

     If the Company should merge or consolidate with, or sell all or substantially all of its
assets to, any other corporation or party, then the provisions of this Agreement shall be binding
upon and shall inure to the benefit of the corporation, or party to whom such assets are sold.

     12.4 Governing Law. This Agreement shall be governed by and construed in accordance
with the law of the State of New York as applies to contracts made and to be performed entirely
within such State.

     12.5 Headings. The section headings contained in this Agreement are intended solely
for convenience of reference and shall be given no effect in the construction or interpretation of
this Agreement.

     12.6 No Personal Liability. Executive agrees that in no event shall any officer,
director, shareholder, or employee of Company have any personal liability in contract or in tort to
Executive in connection with any breach or alleged breach of this Agreement, it being agreed by
Executive that Executive shall look solely to Company for any breach or alleged breach hereof.

     12.7 Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original, but all of which together will constitute one and the same
instrument.

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     IN WITNESS WHEREOF, the parties personally or by their duly authorized officers have executed
this Agreement as of the date first above written.

	 	 	 	 	 	 	 
	EXECUTIVE:	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	MICHAEL GERMAN	 	CORNING NATURAL GAS CORPORATION
	 
	 	 	 	 	 	 
	/s/ Michael German

	 	By:
	 	/s/ Fi Sarhangi	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	     Fi Sarhangi, Chief Financial Officer	 	 

15

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