UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment
No. )
Filed by the Registrant
x
Filed by a Party other than the Registrant
o
Check the appropriate box:
x
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Preliminary Proxy Statement
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o
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Rule 14a-12
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CORNING NATURAL GAS HOLDING CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x
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No fee required.
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o
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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o
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Fee paid previously with preliminary materials.
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o
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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March 22, 2018
Dear Fellow Shareholders:
You are cordially invited to attend the
2018 Annual Meeting of Shareholders of Corning Natural Gas Holding Corporation (the “Holding Company”) on April 24,
2018, starting at 10:00
a.m.
local time at our offices, 330 West William Street,
Corning, New York 14830. As more fully described in the attached notice of annual meeting and the accompanying proxy statement,
the principal business to be addressed at the meeting is: (1) the election of directors, (2) approving an amendment to the certificate
of incorporation of the Holding Company to increase the authorized number of shares of common stock to 4,500,000 shares and preferred
stock available for designation by the board of directors to 750,000 shares, (3) adopting the 2018 Stock Plan of the Holding Company,
(4) a non-binding advisory vote to approve our executive compensation, and (5) the ratification of the appointment of Freed Maxick
CPAs, P.C. as our independent registered public accounting firm for the fiscal year ending September 30, 2018. Our management team
will also discuss our business and will be available to respond to your questions.
Your vote is important to us. Whether
or not you plan to attend the annual meeting, please return the enclosed proxy card as soon as possible to ensure your representation
at the meeting. You may choose to vote in person at the annual meeting even if you have returned a proxy card.
On behalf of the directors and management
of Corning Natural Gas Holding Corporation, I would like to thank you for your support and confidence and look forward to seeing
you at the meeting.
Sincerely,
Michael I. German
President and Chief Executive Officer
1
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 2018
To the Shareholders
of Corning Natural Gas Holding Corporation:
The 2018 Annual Meeting of Shareholders
of Corning Natural Gas Holding Corporation, a New York corporation (the “Holding Company”), will be held on April 24,
2018, at 10:00
a.m.
local time at 330 West William Street, Corning, New York 14830,
for the following purposes:
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1.
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to elect eight directors to serve for a one-year term until the next annual meeting or until
their successors are duly elected and qualified;
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2.
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to approve an amendment to the certificate of incorporation of the Holding Company to increase
the authorized number of shares of common stock to 4,500,000 shares and the number of preferred stock available for designation
by the board of directors to 750,000 shares;
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3.
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to adopt the 2018 Stock Plan of the Holding Company;
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4.
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to hold a non-binding advisory vote to approve our executive compensation;
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5.
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to ratify the appointment of Freed Maxick CPAs, P.C. as our independent registered public accounting
firm for the fiscal year ending September 30, 2018; and
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6.
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to transact such other business as may properly come before the meeting or any adjournment thereof.
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These items of business are more fully
described in the Proxy Statement accompanying this notice.
Only shareholders of record at the close
of business on March 12, 2018, are entitled to vote at the annual meeting.
All shareholders are cordially invited
to attend the meeting in person. However, to ensure your representation at the meeting, please sign and return the enclosed proxy
card as promptly as possible in the postage prepaid envelope enclosed for your convenience. Any shareholder attending the meeting
may vote in person even if he or she has returned a proxy card.
On Behalf of the Board of Directors,
Firouzeh Sarhangi
Chief Financial Officer, Treasurer and Corporate Secretary
2
CORNING NATURAL GAS HOLDING CORPORATION
PROXY STATEMENT
Important Notice Regarding the Availability
of Proxy Materials for the Annual Meeting of Shareholders to be held on April 24, 2018
This Proxy Statement and our Annual Report
to Shareholders for the fiscal year ending September 30, 2017, are available on our website at www.corninggas.com.
GENERAL INFORMATION
This Proxy Statement is furnished in
connection with the solicitation of proxies by the board of directors of Corning Natural Gas Holding Corporation (the “Holding
Company”) to be used at our 2018 Annual Meeting of Shareholders to be held on April 24, 2018, and any postponements or adjournments
of the meeting.
This Proxy Statement and the accompanying
President’s letter, notice and proxy card, together with our Annual Report to Shareholders for the fiscal year ended September
30, 2017, are being sent to our shareholders beginning on or about March 22, 2018. The Holding Company is paying all costs of the
solicitation of proxies.
QUESTIONS AND ANSWERS
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Q:
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When and where is the annual meeting?
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A:
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Our
2018 Annual Meeting of Shareholders will be held on April 24, 2018, at 10:00
a.m.
local time at our offices at 330 West William Street, Corning New York, 14830.
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Q:
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What are shareholders voting on?
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Five proposals: (1) the election of eight directors: Henry B. Cook, Jr., Michael I. German, Ted W. Gibson,
Robert B. Johnston, Joseph P. Mirabito, William Mirabito, George J. Welch and John B. Williamson III;
(2)
the approval of an amendment to the certificate of incorporation of the Holding Company to increase the authorized number of shares
of common stock to 4,500,000 shares and the number of shares of preferred stock available for designation by the board of directors
to 750,000 shares, (3) the adoption of the 2018 Stock Plan of the Holding Company, (4) a non-binding advisory vote to
approve our executive compensation, and (5) the ratification of the appointment of Freed Maxick CPAs, P.C. as our independent registered
public accounting firm for the fiscal year ending September 30, 2018.
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If a permissible
proposal other than the five noted above is presented at the Annual Meeting, your signed
proxy card gives authority to each of Michael I. German, our President, and Firouzeh
Sarhangi, our Chief Financial Officer, Treasurer and Corporate Secretary, acting alone
or together, to vote on any such additional proposal. We are not aware of any additional
proposals to be voted on at the meeting.
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3
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Q:
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Who
is entitled to vote?
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A:
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The
record date for the 2018 Annual Meeting of Shareholders is March 12, 2018. Therefore,
only holders of our common stock as of the close of business on March 12, 2018, are entitled
to vote. Each share of common stock is entitled to one vote at the meeting.
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Q:
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How
do shareholders vote?
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A:
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Sign
and date each proxy card you receive and return it in the prepaid envelope. If you do
not mark any selections, your proxy card will be voted as described below. You have the
right to revoke your proxy at any time before the meeting by:
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•
notifying
our corporate secretary,
•
voting
in person, or
•
returning
a later-dated proxy.
If
you return your signed proxy card, but do not indicate your voting preferences, Michael I. German and/or Firouzeh Sarhangi will
vote, on your behalf: (1)
FOR
the nominated directors, (2)
FOR
the proposal to approve an amendment to the
certificate of incorporation of the Holding Company to increase the authorized number of shares of common stock to 4,500,000 shares
and preferred stock available for designation by the board of directors to 750,000 shares, (3)
FOR
the proposal to adopt
the 2018 Stock Plan of the Holding Company, (4)
FOR
the proposal to approve, on a non-binding and advisory basis, the compensation
of our named executive officers as disclosed in this Proxy Statement, and (5)
FOR
the ratification of the appointment of
our independent registered public accounting firm.
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Q:
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Who
will count the vote?
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A:
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Representatives
of our transfer agent, Computershare, will tabulate the votes. Marie Husted and Julie
Lewis, employees of our subsidiary, are the Holding Company’s election inspectors
and will be responsible for reviewing the vote count.
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Q:
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What shares are included on the
proxy card and what does it mean if a shareholder gets more than one proxy card?
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A:
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The
number of shares printed on your proxy card(s) represents all your shares. Receipt of
more than one proxy card means that your shares are registered differently and are in
more than one account. Sign and return all proxy cards to ensure that all your shares
are voted.
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Q:
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What constitutes a quorum?
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A:
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As
of the record date, March 12, 2018, [3,018.451] shares of our common stock were outstanding.
A majority of the outstanding shares, present in person or represented by proxy, constitutes
a quorum for adopting a proposal at the annual meeting. If you attend the Annual Meeting
in person or submit a properly executed proxy card, then you will be considered part
of the quorum.
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4
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Q:
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What
Vote is Required to Approve Each Proposal?
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A:
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Proposal
1
: The affirmative vote of the holders of a plurality of the shares of common stock
present in person or represented by proxy at the Annual Meeting is needed to elect directors.
For this proposal, “broker non-votes” will not be part of the voting power
present, but will be counted to determine whether or not a quorum is present. A “broker
non-vote” refers to a share represented at the Annual Meeting which is held by
a broker or other nominee who has not received instructions from the beneficial owner
or person entitled to vote such share and with respect to which such broker or nominee
does not have discretionary voting power to vote such share on one or more but not all
proposals.
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Proposal
2
: The affirmative vote of the holders of a majority of the shares of common stock
outstanding as of the record date for the Annual Meeting is required to approve the proposal
for an amendment to the certificate of incorporation of the Holding Company to increase
the authorized number of shares of common stock to 4,500,000 shares and preferred stock
available for designation by the board of directors to 750,000 shares. If you are present
or represented by a proxy at the Annual Meeting and you abstain, your abstention will
have the same effect as a vote against this proposal. For this proposal, “broker
non-votes” will have the same effect as a vote against this proposal.
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Proposal
3
: The affirmative vote of the holders of a majority of the shares of common stock
present in person or represented by proxy at the Annual Meeting is required to approve
the proposal to adopt the 2018 Stock Plan of the Holding Company. If you are present
or represented by a proxy at the Annual Meeting and you abstain, your abstention will
have the same effect as a vote against this proposal. For this proposal, “broker
non-votes” will not be part of the voting power present, but will be counted to
determine whether or not a quorum is present.
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Proposal
4
: The affirmative vote of the holders of a majority of the shares of common stock
present in person or represented by proxy at the Annual Meeting is required to approve
the proposal for an advisory vote to approve our executive compensation. If you are present
or represented by a proxy at the Annual Meeting and you abstain, your abstention will
have the same effect as a vote against this proposal. For this proposal, “broker
non-votes” will not be part of the voting power present, but will be counted to
determine whether or not a quorum is present.
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Proposal
5:
Although the approval of the appointment of the Holding Company’s auditors
is not required under applicable law, it is the Holding Company’s practice to seek
such approval. The affirmative vote of the holders of a majority of the shares of common
stock present in person or represented by proxy at the Annual Meeting and voting with
respect to the proposal is required for ratification of the appointment of Freed Maxick
CPAs, P.C. as the Holding Company’s independent registered public accounting firm
for the fiscal year ending September 30, 2018. If you are present or represented by a
proxy at the Annual Meeting and you abstain, your abstention will have the same effect
as a vote against this proposal. For this proposal, “broker non-votes” will
be part of the voting power present and will be counted to determine whether or not a
quorum is present. In the event this proposal is not approved by shareholders, the board
of directors will reconsider its appointment.
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Q:
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Who can attend the annual meeting?
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A:
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All
shareholders as of the record date, March 12, 2018, may attend the Annual Meeting.
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Q:
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What
percentage of stock are the directors and executive officers entitled to vote at the
annual meeting?
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A:
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Together,
they beneficially own 918,525 shares of our common stock, or approximately 30.55% of
our common stock entitled to vote at the annual meeting. Please see the “Securities
Ownership of Certain Beneficial Owners and Management” table on page [18] of this
Proxy Statement for more information.
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Q:
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Who are our largest principal shareholders?
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A:
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The
Gabelli Group beneficially owned 527,746 shares of our common stock, or 17.48% of the
stock entitled to vote at the annual meeting, based on their most recent filing with
the SEC. As of the record date, Michael I. German, President and Chief Executive Officer,
owned 543,347 shares of our common stock, or 18.00% of the stock entitled to vote at
the annual meeting. Please see the “Securities Ownership of Certain Beneficial
Owners and Management” table on page [18] of this Proxy Statement for more information.
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Q:
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When
is a shareholder proposal due for the next annual meeting?
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A:
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In
order to be considered for inclusion in next year’s proxy statement, shareholder
proposals must be submitted in writing by November 22, 2018, to Firouzeh Sarhangi, Chief
Financial Officer, Treasurer and Corporate Secretary, Corning Natural Gas Holding Corporation,
330 West William Street, Corning, New York 14830, and must be in accordance with the
requirements of Rule 14a-8 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). Please see the “Shareholder Proposals”
section on page [22] of this Proxy Statement for more information.
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[Remainder
of this page left blank intentionally]
5
PROPOSAL
1
ELECTION
OF DIRECTORS
At
the annual meeting, eight directors are to be elected to hold office until the next annual meeting of shareholders or until their
respective successors are elected and qualified.
Nominees
for election this year are Henry B. Cook, Jr., Michael I. German, Ted W. Gibson, Robert B. Johnston, Joseph P. Mirabito, William
Mirabito, George J. Welch, and John B. Williamson III. Each nominee has consented to be named in this Proxy Statement and to serve
if elected until the next annual meeting, or until his successor is duly elected and qualified. Information about the directors
is included under “Board of Directors” below.
If
any director to be elected by you is unable to stand for re-election, the Board may, by resolution, provide for a
fewer
number of directors, or designate a substitute. In the latter event, shares represented by proxies
may be voted for a substitute director.
The
affirmative vote of the holders of a plurality of the shares of common stock present in person or represented by proxy at the
Annual Meeting is needed to elect directors.
The
board of directors recommends that you vote
FOR
Mr. Cook, Mr. German, Mr. Gibson, Mr. Johnston, Mr. Joseph Mirabito,
Mr. William Mirabito, Mr. Welch, and Mr. Williamson III.
BOARD
OF DIRECTORS
The
nomination of each of the nominees listed below to serve for a one-year term was approved by the board. The names, ages, positions,
business experience and principal occupations and employment of each director nominee is provided below, including service as
directors of our wholly owned subsidiary, Corning Natural Gas Corporation (“Corning Gas”).
Name
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Age
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Position
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Director
of Holding Company Since
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Director
of
Corning
Gas Since
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Henry
B. Cook, Jr.
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70
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Chairman
and Director
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2013
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2007
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Michael
I. German
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67
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Chief
Executive Officer, President and Director
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2013
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2006
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Ted
W. Gibson
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75
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Director
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2013
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2006
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Robert
B. Johnston
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53
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Director
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2014
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-
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Joseph
P. Mirabito
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59
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Director
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2013
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2010
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William
Mirabito
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57
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Director
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2013
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2010
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George
J. Welch
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72
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Director
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2013
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2007
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John
B. Williamson III
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63
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Director
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2013
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2010
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Henry
B. Cook, Jr.
is our chairman of the board of directors and has served as a director of the Holding Company since its organization
in 2013. He has been a director of Corning Gas since May 2007. Mr. Cook is also a director of the Corning Natural Gas Appliance
Corporation (“Corning Appliance”). He has served as the president of Triple Cities Acquisition, LLC, a heavy truck
parts and vehicle dealer, and Roadwolf Transportation Products, LLC, an importer of heavy duty truck parts, since 2001. (He is
not related to Matthew J. Cook, our vice president – operations.) Mr. Henry B. Cook has exhibited his expertise in the development
and management of the business of these two companies. His business experience, together with the expertise about our business
and operations derived from his years of service on the board of Corning Gas, and leadership as chairman of the board led the
board of directors to conclude that Mr. Cook has the judgment and skills desired for continued service on the board.
Michael
I. German
has served as our chief executive officer, president and director of the Holding Company since its organization
in 2013 and has been the chief executive officer, president and a director of Corning Gas since December 2006. Mr. German also
serves as president of Corning Appliance, Pike, and our joint venture investments, Leatherstocking Gas Company, LLC (“Leatherstocking
Gas”) and Leatherstocking Pipeline Company, LLC (“Leatherstocking Pipeline”) and serves on the boards of Leatherstocking
Gas, Leatherstocking Pipeline, and Pike. Prior to joining the Holding Company, he was senior vice president, utility operations
for Southern Union Company where he was responsible for gas utility operations in Missouri, Pennsylvania, Rhode Island, and Massachusetts.
From 1994 to 2005, Mr. German held several senior positions at Energy East Corporation, a publicly-held energy services and delivery
company, including president of several utilities. From 1978 to 1994, Mr. German worked at the American Gas Association,
finishing as senior vice president. From 1976 to 1978, Mr. German worked for US Energy Research and Development Administration.
Mr. German is a board member of the Northeast Gas Association, Ampco Pittsburgh Corporation, and several non-profit organizations.
Mr. German’s role as president and chief executive officer and responsibility for the day-to-day operations and significant
strategic initiatives, as well as his extensive experience in utility and public company operations, led the board to conclude
that Mr. German should continue to serve as a director.
6
Ted
W. Gibson
has been a director of the Holding Company since its organization in 2013 and has been a director of Corning Gas
since November 2006. Mr. Gibson is also a director of Corning Appliance. He has served as the chief executive officer of Classic
City Mechanical, an underground utility business, since 1979. Mr. Gibson is also a corrosion specialist in the National Association
of Corrosion Engineers and a graduate of the Georgia Institute of Technology – Mechanical Engineer. Mr. Gibson previously
served as a United States Marine Corps captain, and is a Vietnam veteran. He is also an inspector for the Nevada State Boxing
Commission. Mr. Gibson’s professional background and extensive experience with pipelines and other underground utilities,
his business and management expertise in his service as chief executive officer of Classic City Mechanical, his knowledge of our
business and contributions during his years of service on the board of directors, led the board of directors to conclude that
Mr. Gibson has the skills desired for continued service on the board.
Robert
B. Johnston
has been a director of the Holding Company since July 15, 2014. He has served as the executive vice president
and chief strategy officer for The InterTech Group, Inc. (“InterTech”) since 2008. In this capacity, he is responsible
for merger and acquisition activities, investments and communications at InterTech, as well as oversight of a number of InterTech
operating companies. He previously served as the president, chief executive officer and deputy governor of The Hudson’s
Bay Company. He currently serves on several public company boards including Supremex Inc. where he is the chairman of the board
of directors, Colabor Inc., Produce Investments PLC, FIH Group PLC and Circa Enterprises. Additionally, he serves on the board
of directors of the South Carolina Community Loan Fund and is a member of the advisory board of the McGill University Executive
Institute. Mr. Johnston previously served on the boards of Gas Natural Inc., Pacific Northern Gas, Central Vermont Public Service
Corporation, Fyffes PLC, Galvanic Applied Sciences, The Hudson’s Bay Company, Experiences Canada, Carolina Youth Development
Center, and Canada’s National History Society. Mr. Johnston completed the University of Oxford Advanced Management and Leadership
Program and received an MBA from the John Molson School of Business, an MA in Public Policy & Public Administration and a
BA in Political Science from Concordia University. Additionally, he holds the ICD.D Designation from the Institute of Corporate
Directors (Canada). Mr. Johnston’s extensive financial and operational experience coupled with his corporate governance
and regulated utility experience led the board to conclude that he should continue to serve as a director.
Joseph
P. Mirabito
has been a director of the Holding Company since its organization in 2013 and has been a director of Corning Gas
since November 2010. He and William Mirabito are cousins. He was president of Mirabito Fuel Group from 1986 to 1998. He has also
served as president of Granite Capital Holdings, Inc. from 1998 to 2009. He is currently president and chief executive officer
of Mirabito Holdings, Inc. and Mirabito Regulated Industries, LLC. He serves as a director on several professional and civic boards
in the central New York region. Mr. Mirabito also serves as a director on the boards of Corning Appliance, Leatherstocking Gas,
and Leatherstocking Pipeline. Mr. Mirabito’s business and corporate management experience as the president and chief executive
officer of energy delivery businesses, his knowledge of the local communities in Central New York served by those businesses,
his commitment to the growth of our business as a significant shareholder, as well as his prior experience in advising and serving
on the board and committees of Wilber Bank, led the board of directors to conclude that Mr. Mirabito has the skills, connections,
and experience desired for continued service on the board.
William
Mirabito
has served as a director of the Holding Company since its organization in 2013 and has been a director of Corning
Gas since November 2010. He and Joseph Mirabito are cousins. He was president of Mang Insurance Agency from 2008 to 2015, and
has served as senior vice president of Mirabito Holdings, Inc. and Mirabito Regulated Industries, LLC since 2014. He is also the
chairperson of the audit committee for Mirabito Holdings, Inc. In addition to serving as a board member of Fox Hospital in Oneonta,
NY, he also serves on its finance committee. He is also a board member of Springbrook and serves on its executive committee. Mr.
Mirabito also serves as a director on the boards of Corning Appliance, Leatherstocking Gas, and Leatherstocking Pipeline. Mr.
Mirabito’s business and management experience as president of Mang Insurance Agency and senior vice president of Mirabito
Holdings, Inc. and Mirabito Regulated Industries, LLC, his commitment to the growth of our business as a significant shareholder,
as well as his experience in advising and serving on the board and committees of Fox Hospital and Springbrook, led the board of
directors to conclude that Mr. Mirabito has the skills and experience desired for continued service on the board.
7
George
J. Welch
has served as a director of the Holding Company since its organization in 2013 and has been a director of Corning
Gas since May 2007. He is also a director of Corning Appliance. He is the senior partner in the law firm of Welch & Zink in
Corning, New York where his practice concentrates on business transactions and real estate. He has served as a director of many
regional organizations, including a regional economic development organization and PaneLogic, Inc., a provider of control system
integration services. Mr. Welch serves on the Alfred State College Council, an advisory group to the president of the College.
Mr. Welch's extensive experience in legal matters and economic development, and as a community leader, led the board to conclude
that he should continue to serve as a director.
John
B. Williamson, III
has served as a director of the Holding Company since its organization in 2013 and has been a director
of Corning Gas since November 2010. He is also a director of Corning Appliance. Since 2004, Mr. Williamson has served as chairman
of RGC Resources, Inc., a $180 million energy distribution and services holding company. He served as director, president, and
chief executive officer of RGC Resources from 1999 to 2013. In addition, he serves as a director of Bank of Botetourt, Optical
Cable Corporation, and Luna Innovations Corporation. Mr. Williamson received an MBA from the College of William and Mary, and
a BS from Virginia Commonwealth University. Mr. Williamson’s experience as the chairman, president, and chief executive
officer of an energy distribution and services company, as well as his experience in advising and serving on the board and committees
of other corporations, resulting in his broad understanding of the operational, financial, and strategic issues that businesses
and utilities generally face, led the board to conclude that he should continue to serve as a director.
Director
Independence
The
board of directors has determined and confirmed that each of Mr. Cook, Mr. Gibson, Mr. Welch, Mr. Johnston, Mr. Joseph Mirabito,
Mr. William Mirabito, and Mr. Williamson do not have a material relationship with Corning Gas or the Holding Company that would
interfere with the exercise of independent judgment and are, therefore, independent as defined by applicable laws and regulations
and the listing standards of the New York Stock Exchange. In making the independence determination, the board considered that
Mr. William Mirabito is a Senior Vice President of Mirabito Regulated Industries, LLC, which is a 50% owner of Leatherstocking
Gas Company, LLC and Leatherstocking Pipeline Company, LLC, both of which are joint ventures between the Holding Company, and
Mirabito Regulated Industries, LLC. In making the determination that each of the members of the nominating and compensation committee
is independent, the board of directors considered that Mr. William Mirabito is an officer, director and shareholder of Mirabito
Regulated Industries, LLC, a company that entered into two joint ventures with the Holding Company in November 2010, Leatherstocking
Gas Company, LLC and Leatherstocking Pipeline Company, LLC.
Director
Compensation
For
fiscal years 2016 and 2017, the Holding Company paid its directors with restricted stock grants of 375 shares per quarter; however,
such restricted stock grants were increased to 450 shares starting with the quarter ending September 30, 2017. The shares awarded
become unrestricted upon a director leaving the board. Directors who also serve as officers are not compensated for their service
as directors.
On
February 12, 2016, shares were issued for the quarter ended December 31, 2015, on June 6, 2016, shares were issued for the
quarter ended March 31, 2016, on August 22, 2016, shares were issued for the quarter ended June 30, 2016, and on December 5, 2016,
shares were issued for the quarter ended September 30, 2016. On February 22, 2017, shares were issued for the quarter ended December
31, 2016,
on June 12, 2017, shares
were issued for the quarter ended March 31, 2017, on October 11, 2017, shares were issued for the quarter ended June 30, 2017,
and on November 9, 2017, shares were issued for the quarter ended September 30, 2017. Information regarding shares of restricted
stock awarded to directors in the fiscal year ended September 30, 2017, is summarized below, at the amount recognized for financial
statement reporting purposes in accordance with FASB ASC 718.
Name
|
|
Fee
Earned or paid in Cash ($)
|
|
Stock
Awards ($)
|
|
All
Other Compensation ($)
|
|
|
Total
($)
|
|
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|
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|
|
|
|
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Henry
B. Cook, Jr.
|
|
|
—
|
|
|
|
29,136
|
|
|
|
—
|
|
|
|
29,136
|
|
Ted
W. Gibson
|
|
|
—
|
|
|
|
29,136
|
|
|
|
—
|
|
|
|
29,136
|
|
Robert
B. Johnston
|
|
|
—
|
|
|
|
29,136
|
|
|
|
—
|
|
|
|
29,136
|
|
Joseph
P. Mirabito
|
|
|
—
|
|
|
|
29,136
|
|
|
|
—
|
|
|
|
29,136
|
|
William
Mirabito
|
|
|
—
|
|
|
|
29,136
|
|
|
|
—
|
|
|
|
29,136
|
|
George
J. Welch
|
|
|
—
|
|
|
|
29,136
|
|
|
|
—
|
|
|
|
29,136
|
|
John
B. Williamson III
|
|
|
—
|
|
|
|
29,136
|
|
|
|
—
|
|
|
|
29,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and persons who own more
than 10% of our common stock, to file with the Securities and Exchange Commission (the SEC) initial reports of ownership and reports
of changes in ownership of our common stock. Our officers, directors and greater than 10% shareholders are required by the SEC
to furnish us with copies of all Section 16(a) forms they file. Based solely on review of copies of reports furnished to us or
written representations that no reports were required, we believe that all Section 16(a) filing requirements were met in the last
fiscal year.
Attendance
of the Board of Directors at Meetings
The
board of directors met [seven (7)] times during our 2017 fiscal year. [All] members of the board of directors participated in
at least 75% of all board and applicable committee meetings in the last fiscal year.
The
Holding Company strongly encourages members of the board of directors to attend annual meetings of shareholders. All members of
the board of directors attended the 2017 Annual Meeting of Shareholders held on April 27, 2017.
Risk
Oversight
The
board is actively involved in oversight of risks that could affect the Holding Company and particularly focuses on operational
risks such as those identified in the Holding Company’s Annual Report on Form 10-K for the fiscal year ended September 30,
2017. The full board has overall responsibility for the general oversight of risks that could affect the Holding Company, but
some of this oversight is conducted by committees of the Board. The board satisfies this responsibility through regular reports
directly from officers responsible for oversight of particular risks within the Holding Company, as well as through reports by
each committee chair regarding the committee’s considerations and actions.
Board
Leadership Structure
The
roles of chief executive officer and chairman of the board are separated in recognition of the differences between the two roles.
The chief executive officer is responsible for the Holding Company’s strategic initiatives and the Holding Company’s
day-to-day operations and performance, while the chairman of the board provides guidance to the chief executive officer and presides
over meetings of the full board.
Audit
Committee
The
audit committee is currently comprised of Mr. John Williamson, the committee’s chairman, Mr. Henry Cook, and Mr. William
Mirabito, each of whom was determined by our board of directors to be “independent directors” as defined in the New
York Stock Exchange listing standards. Additional information regarding the audit committee is provided in the “Audit Committee
Report” beginning on page [10] of this Proxy Statement.
Nominating
and Compensation Committee
Our
nominating and compensation committee is comprised of Mr. Ted Gibson, the committee’s chairman, Mr. Joseph Mirabito, Mr.
John Williamson III, Mr. Henry B. Cook, and Mr. Robert B. Johnston. The nominating and compensation committee oversees the Holding
Company’s executive compensation program. In this role, the committee reviews and approves, or recommends for approval by
the full Board, the compensation that is paid or awarded to our executive officers. The goal of our nominating and compensation
committee is to ensure that the total compensation paid to our executive officers and significant employees is fair, reasonable,
and competitive.
No
officers or employees of the Holding Company, or its subsidiaries served on the nominating and compensation committee. Mr. German
meets with the committee at their request and makes recommendations with respect to the compensation of other officers. There
are no interlocks between our nominating and compensation committee, our officers, and those of any other company.
The
nominating and compensation committee also administers our 2018 Stock Plan. The nominating and compensation committee met twice
in the last fiscal year to recommend salaries and report those recommendations to the full board of directors for approval and
to nominate directors. The committee does not have a written charter.
9
If
there are any vacancies on the board, or if the nominating and compensation committee determines not to re-nominate an incumbent
director for election to the board, our president and chief executive officer and our chairman of the board generally will identify
a qualified candidate for the committee’s consideration. Director nominees are approved by the nominating and compensation
committee and recommended to the full board for their approval. Nominees are not required to possess specific skills or qualifications;
however, nominees are recommended and approved based on various criteria including relevant skills and experience, personal integrity,
and ability and willingness to devote their time and efforts to the Holding Company. Qualified nominees are considered without
regard to age, race, color, sex, religion, disability, or national origin. We do not use a third party to locate or evaluate potential
candidates for director. Neither the board of directors, nor the nominating and compensation committee have adopted any policy
on whether to consider candidates recommended by shareholders for nomination to fill board seats, or the terms on which any such
consideration would be made. The board of directors has not adopted any policy regarding shareholder recommendations of candidates
since vacancies on the board occur infrequently, and, it has not received any such recommendation.
Corporate
Governance and Community Relations Committee
The
corporate governance and community relations committee is currently comprised of Mr. Welch, the committee’s chairman,
Mr. William Mirabito, Mr. Gibson, and Mr. Johnston. The committee met [once] during our 2017 fiscal year. The committee is responsible
for developing corporate governance principles and practices, considering corporate governance issues, administering our related
person transaction policy, and assisting the board in compliance with our code of business conduct and ethics.
Shareholder
Communications with Directors
A
shareholder who wishes to communicate directly with the board of directors, a committee of the board, or with an individual director,
should send the communication to:
Corning
Natural Gas Holding Corporation
Board
of Directors [or committee name, or director’s name, as appropriate]
330
West William Street
Corning,
New York 14830
We
will forward shareholder correspondence about the Holding Company to the board, committee, or individual director, as appropriate.
Code
of Business Conduct and Ethics
The
Holding Company has adopted Corning Gas’ Code of Business Conduct and Ethics that applies to all employees, including our
chief executive officer and our chief financial officer, who also serves as our principal accounting officer. This code is available
on our website at www.corninggas.com. Any amendments or waivers to the code that apply to our chief executive officer or chief
financial officer will be promptly disclosed to our shareholders by posting that information on our website.
AUDIT
COMMITTEE REPORT
The
Holding Company has a separately designated standing audit committee. In accordance with its written charter that was approved
and adopted by our board. Our audit committee assists the board in fulfilling its responsibility of overseeing the quality and
integrity of our accounting, auditing, and financial reporting practices. A copy of the audit committee charter is available on
our website at www.corninggas.com. The audit committee is directly responsible for the appointment of our independent public accounting
firm, reviewing and approving all services performed for us by the independent accounting firm, and for reviewing the accounting
firm’s fees. The audit committee reviews the independent accounting firm’s internal quality control procedures. The
audit committee also reviews all relationships between the independent accounting firm, and the Holding Company and its subsidiaries
in order to assess the accounting firm’s independence and monitor compliance with our policy regarding non-audit services,
if any, rendered by the independent accounting firm. In addition, the audit committee ensures the regular rotation of the lead
audit partner and concurring partner. The audit committee also reviews management’s programs to monitor compliance with
our policies on business ethics and risk management.
The
audit committee is currently comprised of Mr. Williamson, the committee’s chairman, Mr. Cook, and Mr. William Mirabito.
Mr. Mirabito is an officer, director, and shareholder of a company that has entered into a joint venture with the Holding Company.
The committee met four times in the last fiscal year. Mr. Williamson, Mr. Cook, and Mr. Mirabito are “independent directors”
as defined in the New York Stock Exchange listing standards. In addition, each member of the audit committee is able to read and
understand financial statements, including balance sheets, income statements, and cash flow statements. The board has determined
that Mr. Williamson meets the qualifications for designation as a financial expert as defined in SEC rules through his experience
as the chief executive officer of RGC Resources, Inc., a publicly-held company. The audit committee reviews and reassesses its
charter as needed from time to time, and will obtain the approval of the board for any proposed changes to its charter.
10
The
audit committee oversees management’s implementation of internal controls and procedures for financial reporting designed
to ensure the integrity and accuracy of our financial statements and to ensure that we are able to timely record, process, and
report the information required for public disclosure. In fulfilling its oversight responsibilities, the audit committee reviewed
and discussed the financial statements with management and Freed Maxick CPAs, P.C. (“Freed Maxick”), our independent
accounting firm. The audit committee reviewed and discussed the audited financial statements of the Holding Company for the years
ended September 30, 2017 and September 30, 2016, with Freed Maxick.
The audit committee also discussed with Freed Maxick, the matters required by AU Section 380, “Communication
with Audit Committees” (Statement on Auditing Standards No. 61, as amended). The audit committee reviewed with Freed Maxick,
its judgment as to the quality, not just the acceptability, of our accounting principles and other matters as are required to
be discussed with the audit committee pursuant to generally accepted auditing standards. Freed Maxick is responsible for expressing
an opinion on the conformity of our audited financial statements with accounting principles generally accepted in the United States.
In
discharging its oversight responsibility as to the audit process, the audit committee obtained from our independent accounting
firms a formal written statement describing all relationships between the independent accounting firm and us that might bear on
the accounting firm’s independence consistent with the requirements of the Public Company Accounting Oversight Board. The
audit committee discussed with the accounting firm any relationships that may impact its objectivity and independence. In considering
the accounting firms’ independence, the audit committee also considered whether the non-audit services performed by the
accounting firms on our behalf were compatible with maintaining the independence of the accounting firm.
In
reliance upon (1) the audit committee’s reviews and discussions with management and Freed Maxick, (2) management’s
assessment of the effectiveness of our internal control over financial reporting, and (3) the receipt of an opinion from
Freed Maxick dated December 29, 2017, stating that the Holding Company’s financial statements for the fiscal year ended
September 30, 2017 are presented fairly, in all material respects, in conformity with U.S. Generally Accepted Accounting Principles,
the audit committee recommended to our board that these audited financial statements be included in our Annual Report on Form
10-K/A for the fiscal year ended September 30, 2017, for filing with the SEC.
Audit
Committee
JOHN
B. WILLIAMSON III, CHAIRMAN
HENRY
B. COOK, JR.
WILLIAM
MIRABITO
11
Principal
Accounting Firm Fees and Services
The
following is a summary of the aggregate fees for the fiscal years ended September 30, 2017 and 2016, by our independent registered
public accounting firm, Freed Maxick.
|
|
|
2017
|
|
|
|
2016
|
|
Audit
Fees
|
|
|
$187,100
|
|
|
|
$197,700
|
|
Audit-related Fees
|
|
|
$9,100
|
|
|
|
$25,800
|
|
Tax
Fees
|
|
|
$33,800
|
|
|
|
$17,900
|
|
All Other Fees
|
|
|
$5,200
|
|
|
|
$26,300
|
|
Total
|
|
|
$235,200
|
|
|
|
$267,700
|
|
Audit
Fees.
These are fees for professional services for the audit of our annual consolidated financial statements, the review of
financial statements included in our quarterly reports on Form 10-Q, and services that are typically rendered in connection with
statutory and regulatory filings or engagements.
Audit-related
Fees.
These are fees related to the Employee Benefit Plan audit. In 2016, there were additional fees relating to an S-1 registration.
Tax
Fees.
These are fees for professional services rendered with respect to tax compliance, tax advice and tax planning. These
services include the review of tax returns and consulting on tax planning matters.
All
Other Fees.
These are fees related to filing requirements for Pike County Federal Energy Regulatory Commission reporting.
The
audit committee authorized the payment by us of the fees billed to us by Freed Maxick in fiscal 2017 and 2016. The decision to
engage Freed Maxick was approved by the audit committee. The audit committee has considered whether the provision of non-audit
services is compatible with maintaining independence. All audit and non-audit services are required to be pre-approved by the
audit committee in accordance with its charter. In fiscal 2017 and 2016, Freed Maxick had no direct or indirect financial interest
in the Holding Company in the capacity of promoter, underwriter, voting director, officer, or employee.
Representatives
of Freed Maxick will attend the 2018 Annual Meeting of Shareholders to answer appropriate questions and make statements if they
desire.
EXECUTIVE
OFFICERS
The
names, ages, positions and certain other information concerning our current executive officers and significant employees is set
forth below.
Name
|
Age
|
Position
|
Michael
I. German*
|
67
|
Chief
Executive Officer, President and Director
|
Firouzeh
Sarhangi
|
59
|
Chief
Financial Officer, Treasurer and Corporate Secretary
|
Stanley
G. Sleve**
|
68
|
|
Matthew
J. Cook
|
56
|
Vice
President – Operations
|
Russell
S. Miller
|
54
|
Vice
President – Gas Supply and Marketing
|
*
Biographical information for Mr. German can be found under “Board of Directors.”
**
Mr. Sleve, the former Vice President – Administration and Corporate Secretary, retired on
February 28, 2018.
12
Firouzeh
Sarhangi
has served as Chief Financial Officer and Treasurer of the Holding Company since its organization in 2013. She was
appointed as Chief Financial Officer and Treasurer of Corning Gas in 2006. Ms. Sarhangi was appointed as Corporate Secretary of
Corning Natural Gas Holding Company effective March 1, 2018. She also serves as Treasurer of Corning Appliance and as Chief Financial
Officer of Pike, Leatherstocking Gas, and Leatherstocking Pipeline and serves on the boards of Leatherstocking Gas, Leatherstocking
Pipeline, and Pike. From February 2004 until her appointment as Chief Financial Officer of Corning Gas, she served as Vice President
- Finance of Corning Gas. Previously, she was President of Tax Center International ("TCI"), a company she founded and
operated until Corning Gas purchased TCI in 1998. Ms. Sarhangi has thirty-three years of public accounting experience.
Stanley
G. Sleve
served as Vice President-Administration and Secretary of the Holding Company since its organization in 2013, until
his retirement on February 28, 2018. He joined Corning Gas and has served as Vice President since 1998. He served as Corning Gas’
Corporate Secretary since 2006 and as Vice President - Administration since 2007. Mr. Sleve oversaw corporate operations including
customer service, facilities management, human resources, information technology, and community relations. Mr. Sleve also
served as Secretary of Corning Appliance and Pike. Mr. Sleve served as the chairman of the board of directors of the Corning Area
Chamber of Commerce for two years and now serves as a member of the executive committee and the government affairs committee of
the Corning Chamber Board. He also serves on the Chemung County Chamber of Commerce Public Affairs Committee.
Matthew
J. Cook
joined Corning Gas in February 2008 as vice president – operations. Mr. Cook has 30 years of natural gas
utility experience. From 2000 until joining Corning Gas, Mr. Cook was employed by Mulcare Pipeline Solutions, a supplier of products
and services to the natural gas industry, in various positions including sales manager, and technical specialist. Previously,
Mr. Cook served as operations engineer, and gas engineer for New York State Electric and Gas. He is not related to our director,
Henry B. Cook, Jr. Mr. Matthew Cook also serves as a vice president of Corning Appliance and as a director on the boards of Leatherstocking
Gas, Leatherstocking Pipeline, and Pike.
Russell
S. Miller
rejoined Corning Gas as director of gas supply and marketing in June 2008, and was appointed as vice president –
gas supply and marketing, in December 2009. From 1987 through 2004 he was employed by us in various positions including vice president
– operations, gas supply manager, and mapping technician. From 2006 until rejoining Corning Gas, he was employed by IBM
as energy distribution manager where he managed a team of energy buyers. From 2004 through 2006, he was employed as an industrial
account manager for Sprague Energy Corp. located in Portsmouth, New Hampshire. Mr. Miller also serves as a vice president of Corning
Appliance and as a director on the boards of Leatherstocking Gas, Leatherstocking Pipeline, and Pike.
Executive
officers are generally chosen or elected to their positions annually and hold office until the earlier of their removal or resignation
or until their successors are chosen and qualified.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table summarizes the compensation paid by Corning Gas, our wholly-owned subsidiary, to the following individuals who
are officers of both companies: the chief executive officer, chief financial officer, and our most highly compensated executive
officers.
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
Change in Pension
Value and Nonqualified Deferred
|
|
|
|
All Other
|
|
|
|
|
|
|
|
Year
|
|
|
|
Salary
|
|
|
|
Bonus
|
|
|
|
Awards
|
|
|
|
Compensation
|
|
|
|
Compensation
(1)
|
|
|
|
Total
|
Name and
Principal Position
|
|
|
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
Earnings ($)
|
|
|
|
($)
|
|
|
|
($)
|
Michael
I. German, President and Chief
|
|
|
2017
|
|
|
|
170,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
37,871
|
|
|
|
3,727
|
|
|
|
212,098
|
Executive
Officer
|
|
|
2016
|
|
|
|
170,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
38,061
|
|
|
|
5,466
|
|
|
|
213,527
|
Firouzeh Sarhangi,
Chief Financial Officer, Treasurer and
|
|
|
2017
|
|
|
|
152,946
|
|
|
|
18,100
|
|
|
|
—
|
|
|
|
42,844
|
|
|
|
3,030
|
|
|
|
216,920
|
Corporate
Secretary
|
|
|
2016
|
|
|
|
130,904
|
|
|
|
—
|
|
|
|
—
|
|
|
|
34,156
|
|
|
|
3,727
|
|
|
|
168,787
|
Stanley G. Sleve,
Vice President –
|
|
|
2017
|
|
|
|
137,625
|
|
|
|
11,262
|
|
|
|
—
|
|
|
|
65,280
|
|
|
|
3,399
|
|
|
|
217,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administration and
Corporate Secretary [Retired]
|
|
|
2016
|
|
|
|
122,921
|
|
|
|
—
|
|
|
|
—
|
|
|
|
57,125
|
|
|
|
3,688
|
|
|
|
183,734
|
Matthew Cook, Vice
President – Operations
|
|
|
2017
|
|
|
|
152,594
|
|
|
|
14,421
|
|
|
|
—
|
|
|
|
29,020
|
|
|
|
3,779
|
|
|
|
199,814
|
|
|
|
2016
|
|
|
|
129,904
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,595
|
|
|
|
3,897
|
|
|
|
156,396
|
Russell Miller, Vice
President – Gas Supply
|
|
|
2017
|
|
|
|
143,447
|
|
|
|
14,274
|
|
|
|
—
|
|
|
|
37,055
|
|
|
|
1,762
|
|
|
|
196,537
|
and
Marketing
|
|
|
2016
|
|
|
|
120,904
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28,857
|
|
|
|
3,627
|
|
|
|
153,388
|
|
(1)
|
The amounts reported include 401(k) matching
contributions by the Company in fiscal 2017 of $3,727 for Mr. German, $3,030 for Ms. Sarhangi, $3,399 for Mr. Sleve, $3,779
for Mr. Cook and $1,762 for Mr. Miller and in fiscal 2016 of $5,466 for Mr. German, $3,727 for Ms. Sarhangi, $3,688 for Mr.
Sleve, $3,897 for Mr. Cook and $3,627 for Mr. Miller.
|
Employment
Agreements
Pursuant
to his employment agreement dated November 30, 2006, Mr. German continues to serve as president and chief executive officer of
Corning Gas for 2018 under the automatic renewal provisions of his contract. The employment agreement provides termination payments
to Mr. German as follows:
-
If Mr. German terminates
his employment for Good Reason (as defined in the employment agreement – generally a decrease in title, position or responsibilities,
a decrease in salary or bonus or a reduction in benefits), then he will receive compensation and benefits until the effective
date of his termination, plus a severance package equal to his then current annual salary.
-
If Mr. German’s employment
is terminated without cause, then he will receive compensation and benefits until the effective date of his termination, plus
a severance package equal to his then current annual salary.
-
If Mr. German’s employment
is terminated for a Change in Control (as defined in the employment agreement), then he will receive compensation and benefits
until the effective date of his termination, plus a severance package equal to three times his then current annual salary.
The
employment agreement also contains standard confidentiality, non-competition, and non-solicitation provisions for a period including
Mr. German’s employment, and the twelve months immediately following the date of the termination of his employment.
On
April 17, 2012, Corning Gas entered into Change of Control Agreements (the “Agreements”) with all executive officers
other than Mr. German. None of our other executive officers have employment agreements.
14
Change
of Control Agreements
On
April 17, 2012, we entered into Change of Control Agreements with each of our named executive officers other than Mr. German:
Ms. Sarhangi, Mr. Sleve, Mr. Cook, and Mr. Miller. Each agreement was effective as of April 20, 2012, and terminates on the first
to occur of: (i) termination of the executive’s employment with Corning Gas prior to a Change of Control (as defined in
the agreements); (ii) one year from the date of a Change of Control; or (iii) May 1, 2017, but only if no Change of Control has
occurred as of such date. Steve Grandinali, general manager of Pike, also has a Change of Control Agreement.
Under
each agreement, upon termination of the executive’s employment with Corning Gas within 12 months following a Change of Control,
unless such termination is because of the executive’s death, or by Corning Gas for Cause or Disability (each as defined
in the agreements) or by the executive other than for Good Reason (as defined in the agreements), we will be required to pay to
the executive the following: (i) the executive’s full salary through the date of termination and all other unpaid amounts
to which the executive is entitled as of the date of termination under any plan or other arrangement of Corning Gas, at the time
such payments are due (and in any event within 90 days after the executive’s separation of service from Corning); and (ii)
an amount equal to 1.0 multiplied by the executive’s annualized includable compensation for the base period (within the
meaning of Section 280G of the Internal Revenue Code), subject to reduction if such payment is or will be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code, which payment must be made in a lump sum within 90 days after the executive’s
separation from service.
The
executives are not required to mitigate the amount of any payment under the Change of Control Agreements by seeking employment
or otherwise. We also agreed to pay to each of the executives all legal fees and related expenses incurred by the executive in
connection with enforcing the agreement, whether or not the executive prevails.
Executive
Employee Incentive Program
Each
year, the board of directors approves the performance goals and terms of an Executive Employee Incentive Program. The program
is designed to (a) attract and retain high caliber executives who are capable of optimizing the Holding Company’s and its
subsidiaries’ performance, and (b) reward our executive officers and other senior employees for the achievement of annual
corporate and operational goals. Performance bonuses, if earned, are paid in cash during the first calendar quarter of the calendar
year following the calendar year for which performance was measured and are based upon the board of directors’ determination
of the percentage of the goals that were met. Eligible employees include each of our named executive officers other than Mr. German:
Ms. Sarhangi, Mr. Sleve, Mr. Cook, and Mr. Miller, as well as other senior employees. Awards under the program are at the discretion
of the board of directors and may be modified or discontinued at any time. No non-equity incentive plan compensation was paid
in fiscal 2017 because earnings targets were not met in calendar year 2016.
Benefit
Plans
We
provide competitive welfare and retirement benefits to our executive officers as an important element of their compensation packages.
Our executives receive medical and dental coverage, life insurance, disability coverage and other benefits on the same basis as
our other employees. Our executives are also eligible to participate in our employee savings and pension plans.
Employees
Savings Plan
. All employees of the Holding Company who work for more than 1,000 hours per year and who have completed one
year of service may enroll in the savings plan at the beginning of each calendar quarter. Under the savings plan, participants
may contribute up to 50% of their wages. The Holding Company matches one-half of the participant’s contributions up to a
total of 3% of the participant’s wages. Matching contributions vest in the participants’ accounts at a rate of 20%
per year and become fully vested after five years. All participants may select one of ten investment plans, or a combination thereof,
for their account. Distribution of amounts accumulated under the savings plan occurs upon the termination of employment, or death
of the participant. The savings plan also contains loan and hardship withdrawal provisions.
15
Pension
Plan
.
We maintain a defined benefit pension plan,
the Retirement Plan for Salaried and Non-Union Employees
of Corning Gas that covers substantially all of our employees. We make annual contributions to the plan equal to amounts determined
in accordance with the funding requirements of the Employee Retirement Security Act of 1974. The benefit payable under the pension
plan is calculated based upon the employee’s average salary for the four years immediately preceding his retirement. As
defined in the plan, the normal retirement age is 62. The compensation covered by the pension plan includes only base salary,
identified in the summary compensation table as “salary.”
Shareholder
Advisory Vote to Approve Executive Compensation
At
the Holding Company’s 2017 Annual Meeting of Shareholders, executive officer compensation for 2017 was approved by approximately
99% of the votes cast on the matter. The nominating and compensation committee and the board of directors viewed the vote as an
expression of the shareholders’ general satisfaction with our current executive compensation programs and therefore did
not implement any changes to those programs as a result of or reaction to the shareholder advisory vote.
Outstanding
Equity Awards at Fiscal Year End
There
were no outstanding equity awards at the fiscal year ended September 30, 2017.
Equity
Compensation Plan Information
The
2007 Stock Plan provides for the issuance of various equity awards based on shares of our common stock. Beginning in 2008 and
continuing for a period of nine years, on the day of each annual meeting of shareholders, the total maximum number of shares available
for issuance automatically increased to the number of shares equal to 15% of the shares outstanding. On the date of the 2017 annual
meeting, April 27, 2017, the total maximum number of shares available for issuance increased to 372,968. As of March 12, 2018,
there were no options outstanding and the maximum number of shares available for future grants under the plan was [372,968]. This
plan was assumed by the Holding Company as of November 12, 2013, and all outstanding grants were deemed to relate to common stock
of the Holding Company as of that date.
If
the new 2018 Stock Plan is approved by shareholders (as described under Proposal 3), the 2018 Stock Plan will replace the 2007
Stock Plan and permit the grant of comparable awards.
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
securities
|
|
|
|
|
|
|
remaining available
|
|
|
Number
of
|
|
|
|
for future issuance
|
|
|
securities
|
|
|
|
under equity
|
|
|
to
be issued upon
|
|
Weighted-average
|
|
compensation plans
|
|
|
exercise
of
|
|
exercise
price of
|
|
(excluding securities
|
|
|
outstanding
options,
|
|
outstanding
options,
|
|
reflected in the
|
Plan
category
|
|
warrants
and rights
|
|
warrants
and rights
|
|
first
column)
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved
|
|
|
—
|
|
|
|
—
|
|
|
[372,968]
|
by security holders
|
|
|
|
|
|
|
|
|
|
|
Equity compensation
plans not approved
|
|
|
—
|
|
|
|
—
|
|
|
—
|
by security holders
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
[372,968]
|
[Remainder
of this page left blank intentionally]
16
SECURITIES
OWNERSHIP OF
CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
As
of March 12, 2018, there were [3,018,451] shares of common stock outstanding, 210,600 shares of 6% Series A Cumulative Preferred
Stock, and 244,263 shares of Series B Convertible Preferred Stock. Each share of the Series B Convertible Preferred Stock is convertible
into 1.2 shares of common stock at the option of the holder. The following table sets forth, as of March 12, 2018, information
regarding the beneficial ownership of our stock by each shareholder known by us to be the beneficial owner of more than 5% of
our stock, each director, each executive officer, and all our directors and executive officers as a group.
Names
and Address
(1)(2)
|
Common
Stock**
|
6%
Series A Cumulative
|
Series
B Convertible
|
|
|
Preferred
Stock
|
Preferred
Stock
|
|
|
|
|
|
|
|
|
Shares
|
Percentage
|
Shares
|
Percentage
|
Shares
|
Percentage
|
|
|
|
|
|
|
|
The
Gabelli Group
(3)
|
527,745
|
17.55%
|
—
|
|
73,298
|
30.01%
|
One
Corporate Center
|
|
|
|
|
|
|
Rye,
NY 10580
|
|
|
|
|
|
|
Michael
I. German
(4)
|
543,347
|
18.07%
|
5,129
|
2.44%
|
57,936
|
23.72%
|
The
Article 6 Marital Trust
(5)
|
347,341
|
11.55%
|
26,736
|
12.70%
|
—
|
|
under
The First Amended and
|
|
|
|
|
|
|
Restated
Jerry Zucker Revocable Trust
|
|
|
|
|
|
|
4838
Jenkins Avenue
|
|
|
|
|
|
|
North
Charleston, SC 29405
|
|
|
|
|
|
|
Ted
W. Gibson
(6)
|
137,651
|
4.58%
|
43,047
|
20.44%
|
—
|
|
Henry
B. Cook, Jr.
(7)
|
35,260
|
1.16%
|
—
|
|
|
|
Firouzeh
Sarhangi
(8)
|
11,854
|
*
|
1,400
|
*
|
—
|
|
George J.
Welch
(9)
|
20,190
|
*
|
10,600
|
5.03%
|
912
|
*
|
Stanley
G. Sleve
(10)
|
15,102
|
*
|
—
|
|
1,464
|
*
|
Joseph
P. Mirabito
(11)
|
60,755
|
2.02%
|
600
|
*
|
481
|
*
|
William
Mirabito
(12)
|
61,662
|
2.05%
|
6,135
|
2.91%
|
1,351
|
*
|
John
B. Williamson III
(13)
|
16,564
|
*
|
1,052
|
*
|
1,416
|
*
|
Russell
Miller
(14)
|
1,309
|
*
|
—
|
|
—
|
|
Matthew
Cook
(15)
|
1,486
|
*
|
—
|
|
—
|
|
Robert
B. Johnston
(16)
|
13,205
|
*
|
11,000
|
5.22%
|
—
|
|
All
directors, director nominees
|
|
|
|
|
|
|
and
executive officers as a group
|
|
|
|
|
|
|
(12
individuals)
|
918,525
|
30.55%
|
78,963
|
37.49%
|
63,560
|
26.02%
|
* Less
than 1%
** The
common stock holdings may also include shares of the Series B Convertible stock which is convertible on a 1.2-for-one basis (subject
to adjustment) at any time at the option of the holder.
(1)
|
Unless otherwise indicated, we believe that
all persons named in the table have sole investment and voting power over the shares of common stock owned.
|
17
(2)
|
Unless otherwise indicated, the address of each
beneficial owner is c/o Corning Natural Gas Holding Corporation, 330 West William Street, Corning, New York 14830.
|
|
|
(3)
|
Includes 419,063 shares of common stock held
by Gabelli Funds, LLC, and 108,683 shares of common stock held by Teton Advisors, Inc. Each of Gabelli Funds and Teton Advisors
has sole voting and dispositive power over the shares of common stock held by it. Based solely on information in Amendment
No. 17 to Schedule 13D filed with the SEC on June 28, 2016, adjusted for the 20% stock dividend paid to holders of the common
stock on May 30, 2017.
|
(4)
|
Includes 543,357shares of common stock, and
57,936 shares of Series B Convertible Preferred Stock owned by Mr. German’s wife, and 7,686 shares of common stock owned
by Mr. German’s son as to which Mr. German disclaims beneficial ownership.
|
|
|
(5)
|
Based solely on information in Amendment No.
2 to Schedule 13G filed with the SEC on April 23, 2014, adjusted for the 20% stock dividend paid to holders of the common
stock on May 30, 2017.
|
(6)
|
Includes 16,140 shares of restricted stock.
|
(7)
|
Includes 16,050 shares of restricted stock and
1,853 shares of common stock acquired through the Holding Company’s Dividend Reinvestment Program.
|
(8)
|
Includes 811 shares of common stock acquired
through the Holding Company’s Dividend Reinvestment Program.
|
(9)
|
Includes 16,050 shares of restricted common
stock.
|
(10)
|
Includes 85 shares of common stock acquired
through the Holding Company’s Dividend Reinvestment Program and 1,464 shares of Series B Convertible Preferred Stock.
|
(11)
|
Includes 12,296 shares of restricted stock and
1,299 shares held by Mr. Mirabito’s wife. Mr. Mirabito disclaims beneficial ownership of the securities owned by
his wife except to the extent of his pecuniary interest therein.
|
(12)
|
Includes
12,296 shares of restricted stock and 950 shares of common stock acquired through the Holding Company’s Dividend
Reinvestment Program.
|
(13)
|
Includes
12,296 shares of restricted stock and 1,687 shares owned jointly with his spouse.
|
(14)
|
Includes 58 shares owned by Mr. Miller’s
wife and 127 shares of common stock acquired through the Holding Company’s Dividend Reinvestment Program. Mr. Miller
disclaims beneficial ownership of the securities owned by his wife except to the extent of his pecuniary interest therein.
|
|
|
(15)
|
Includes 168 shares of common stock acquired
through the Holding Company’s Dividend Reinvestment Program.
|
|
|
(16)
|
Includes
11,250 shares of restricted stock.
|
18
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The
Holding Company holds 50/50 joint ventures with Mirabito Regulated Industries, called Leatherstocking Gas Company, LLC and Leatherstocking
Pipeline Company, LLC. Mr. Joseph P. Mirabito and Mr. William Mirabito are officers and directors. Together they hold approximately
4% of the Holding Company’s outstanding common stock. They are also on the board of the Holding Company, Corning Gas, Corning
Appliance, Leatherstocking Gas and Leatherstocking Pipeline. The Holding Company and Mirabito Regulated Industries invested $255,000
each into Leatherstocking Gas in fiscal 2017. No investments were made into Leatherstocking Pipeline by either member in fiscal
2017. The Company paid $96,138 to US Bank Voyager Fleet System for purchase of gas for our service vehicles. Mirabito Energy Products
is a Voyager Network Partner and is the dba of Mirabito Holdings, Inc. Joseph P. Mirabito is currently president and chief executive
officer of Mirabito Holdings, Inc. William Mirabito is currently the senior vice president of Mirabito Holdings, Inc. For coverage
of emergency services in the Town of Virgil, the Company also paid Mirabito Energy, Vestal, $12,995.
The
Company paid a total of $8,462 to the law firm of Welch and Zink, Mr. Welch, managing partner, for legal services performed during
the fiscal year ended September 30, 2017.
The
Company paid $2,710 to Cook Brothers Truck Parts for the fiscal year ended September 30, 2017. Mr. Cook is the majority owner
of Cook Brothers Truck Parts.
PROPOSAL
2
APPROVAL
OF THE AMENDMENT TO THE CERTIFICATE OF
INCORPORATION OF THE HOLDING COMPANY TO INCREASE AUTHORIZED SHARES
The
board of directors is requesting that the shareholders approve the amendment to the Certificate of Incorporation of the Holding
Company (the “Certificate of Amendment”), which was approved by the board of directors on February 6, 2018, subject
to shareholder approval at the 2018 Annual Meeting. Pursuant to the Certificate of Amendment, the authorized number of shares
of common stock of the Holding Company shall be increased by 1,000,000 shares to 4,500,000 shares and the number shares of preferred
stock of the Holding Company shall be increased by 250,000 shares to 750,000 shares.
The
Charter Amendment will become effective upon the approval of the shareholders of the Holding Company and filing of the Certificate
of Amendment with the New York Department of State.
Summary
of the Certificate of Amendment
Our
Certificate of Incorporation currently authorizes 4,000,000 shares of capital stock: 3,500,000 shares of which are currently designated
as common stock, par value $0.01 per share, and 500,000 shares of which are currently designed as preferred stock, par value $0.01
per share, for which the board of directors has the authority to establish, in its discretion from time to time, the dividends,
voting rights, any redemption rights and/or liquidation preferences, and other designations, preferences, rights, qualifications,
limitations and restrictions. Of the shares of Preferred Stock, our Certificate of Incorporation designates 255,500 shares as
6% Series A Cumulative Preferred Stock (“Series A Cumulative Preferred Stock”) and 244,500 shares as Series B Convertible
Preferred Stock (“Series B Convertible Preferred Stock”). As of February 28, 2018, there were 3, 018,451 shares of
Common Stock, 210,600 shares of Series A Cumulative Preferred Stock, and 244,263 shares of Series B Convertible Preferred Stock
outstanding
.
The
board of directors has unanimously approved the advisability of, and adopted, subject to stockholder approval, an amendment to
our Certificate of Incorporation, providing for an increase in the authorized number of shares from 4,000,000 to 5,500,000, with
the increase in the number of authorized shares of common stock from 3,500,000 to 4,500,000 shares, and the increase in the number
of authorized shares of preferred stock from 500,000 shares to 750,000 shares. The board of directors has no current plans for
designating the voting rights and other designations, preferences, rights, qualifications, limitations and restrictions of the
250,000 additional shares of Preferred Stock.
The
affirmative vote of a majority of all outstanding shares of Common Stock is required for approval of the proposed amendment
to the Certificate of Incorporation.
If
this Proposal is approved by our stockholders, the Amendment to our Certificate of Incorporation will become effective upon the
filing of the Certificate of Amendment with the New York Secretary of State. We would expect to make that filing as soon as practicable
following the Annual Meeting.
19
Why
Additional Authorized Shares Are Needed
As
of February 28, 2018, all except 481,549 of the 3,500,000 authorized shares of common stock have either been issued or reserved
for issuance. More particularly,
·
|
●
|
3,018,451
shares of common stock are issued and outstanding;
|
·
|
●
|
244,263 shares
of common stock are reserved for issuance on the conversion of Series B Convertible Stock; and
|
·
|
●
|
237,283 shares
of common stock are reserved for issuance pursuant to the 2007 Stock Plan (of the 372,968 shares covered by the 2017 Stock
Plan).
|
|
|
|
If
the 2018 Stock Plan is adopted by shareholders, as described in Proposal 4 below, shares previously reserved for issuance under
the 2007 Amended and Restated Stock Plan will be released and 350,000 shares of common stock will be reserved for issuance under
the 2018 Stock Plan.
At
this time, the board of directors has not determined to issue any of the newly authorized shares of common stock other than under
the 2018 Stock Plan, if adopted, as described below. In addition, the board of directors has not determined to designate the dividends,
voting rights, any redemption rights and/or liquidation preferences, and other designations, preferences, rights, qualifications,
limitations and restrictions of the 250,000 additional shares of Preferred Stock and nor to issue such designated shares of Preferred
Stock. However, as noted in the Holding Company’s Annual Report on Form 10-K for the year ended September 30, 2017 and Quarterly
Report on Form 10-Q for the fiscal quarter ended December 31, 2017, the Holding Company believes that cash flow from operating
activities and borrowings under the lines of credit of its subsidiaries will not be sufficient to satisfy its debt service and
capital expenditure needs over the next twelve months and that proceeds of new equity and debt issuances will be required to finance
internal growth.
Additional
Factors to be Considered
The
additional shares of common stock authorized by the proposed amendment to the Certificate of Incorporation can generally be issued
upon approval by the board of directors without further vote of the shareholders. The board of directors of the Holding Company
may also determine the dividends, voting rights, any redemption rights and/or liquidation preferences, and other designations,
preferences, rights, qualifications, limitations and restrictions of the additional shares of Preferred Stock and authorize their
issuance without further vote of the shareholders.
Under
New York law, stockholders are not entitled to appraisal rights with respect to their shares of Common Stock in the event that
the Certificate of Incorporation is amended to authorize additional shares.
Information
about the Common Stock
The
rights of the Common Stock to dividends and upon liquidation are subject to the prior rights of the holders of the Series A Cumulative
Preferred Stock and the Series B Convertible Preferred Stock.
20
Upon
liquidation, the Common Stock is entitled to receive distributions on a pro rata basis after payment in full of the preferences
on liquidation on any outstanding preferred stock.
The
Common Stock has no preemptive rights.
The
New York Business Corporation Law requires that the Certificate of Amendment to our Certificate of Incorporation under this Proposal
2 requires the affirmative vote of the holders of a majority of the shares of common stock outstanding as of the record date for
the Annual Meeting. If the Certificate of Amendment is approved, then it will become effective upon filing with the New York Department
of State, which is expect to be made promptly after the Annual Meeting.
The
board of directors recommends a vote
FOR
the proposal to approve the Certificate of Amendment increasing the number of
authorized shares.
PROPOSAL
3
APPROVAL
OF THE ADOPTION OF THE 2018 STOCK PLAN OF
THE HOLDING COMPANY
The
board of directors is requesting that the shareholders approve the adoption of the 2018 Stock Plan, which was approved in the
form attached hereto as Appendix 1 by the board of directors as of March 5, 2018, subject to shareholder approval at the 2018
Annual Meeting.
The
2018 Stock Plan will become effective upon the approval of the shareholders of the Holding Company. The following summary of the
2018 Stock Plan does not purport to summarize all the terms of the 2018 Stock Plan and is subject to and qualified in its entirety
by reference to the full text of the 2018 Stock Plan, which is attached hereto as Appendix 1.
The
board of directors of the Holding Company approved the adoption of the 2018 Employee Long-Term Incentive Plan (the “2018
Stock Plan”), subject to shareholder approval. The 2018 Stock Plan, if approved by shareholders, will replace the Holding
Company’s existing Amended and Restated 2007 Stock Plan, as amended (the “2007 Stock Plan”) and no additional
awards under the 2007 Stock Plan will be made. No stock options or restricted stock grants are currently outstanding under the
2007 Stock Plan, except for the shares of common stock issued on a quarterly basis to members of the board of directors in lieu
of cash compensation. The restrictions on those shares lapse when the individual ceases to serve as a member of the board of directors.
The
affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy and entitled
to vote at the annual meeting will be required to approve the 2018 Stock Plan. If you “Abstain” from voting, it will
have the same effect as an “Against” vote. Broker non-votes will have no effect.
The
description below of the 2018 Stock Plan is qualified in its entirety by reference to the full text of the 2018 Stock Plan, a
copy of which is attached as Exhibit A to this proxy statement.
Summary
of the 2018 Stock Plan
General
The
2018 Stock Plan provides for most of the same types of common stock-based awards permitted under the 2007 Stock Plan: incentive
stock options, nonqualified stock options, stock appreciation rights, restricted stock, and dividend equivalent units. The individuals
who may receive awards under the 2018 Plan (the “Participants”) are also the same as under the 2007 Stock Plan: officers,
employees, and directors of the Holding Company, its subsidiaries, and those other entities designated as “Affiliates”
by the board of directors or its compensation committee. The Holding Company must hold, directly or indirectly, at least 20% of
the voting power or ownership interest in each entity designated as an “Affiliate” under the Plan.
Under
the 2018 Stock Plan, the total number of shares authorized for grant is 350,000 over the ten-year term of the 2018 Stock Plan,
or approximately
[__]%
of the number of shares of common stock, and the number of
shares of common stock issuable upon conversion of the shares of Series B Convertible Preferred Stock outstanding as of February
28, 2018. The number of shares under the 2018 Stock Plan increases annually to a number of shares equal to 10% of the number of
shares of common stock outstanding. Under the 2007 Stock Plan, the maximum number of shares available for issuance under
the plan was 15% of the outstanding shares of common stock on the date of the annual meeting of shareholders. As of March 12,
2018, the number of shares available for issuance under the 2007 Stock Plan was 372,968, less shares issued under exercised stock
options or as restricted stock under the 2007 Stock Plan.
The
approval of the 2018 Stock Plan will allow the board of directors and the compensation committee to continue to grant restricted
stock awards to non-employee directors in lieu of cash compensation and to other participates and grant certain other equity incentives
awards at levels it determines appropriate, subject to certain limitations set forth in the 2018 Stock Plan. The purposes of the
2018 Stock Plan are to encourage employees of the Holding Company’s subsidiaries and affiliates to acquire a proprietary
interest in the growth and performance of the Holding Company, to generate an increased incentive to contribute to the Holding
Company’s future success and prosperity, thus enhancing the value of the Holding Company for the benefit of its shareholders,
and to enhance the ability of the Company, its subsidiaries and affiliates to attract and retain exceptionally qualified individuals
upon whom, in large measure, the sustained progress, growth and profitability of the Holding Company depend.
Administration
Pursuant
to its terms, the 2018 Stock Plan is administered by the compensation committee of the board of directors. The compensation committee
has the power to do the following, among other powers: designate participants, determine the number of shares covered
by an award, determine the terms and conditions of any award, interpret and administer the 2018 Stock Plan, accelerate the vesting,
exercise or payment of an award, correct any defect, supply any omission, or reconcile any inconsistency in the 2018 Stock Plan
or any award in the manner and to the extent it shall deem desirable to carry the 2018 Stock Plan into effect, and make any other
determination and take any other action that the committee deems necessary or desirable for the administration of the 2018 Stock
Plan.
Eligibility
In
general, any employee, officer or non-employee director of the Holding Company, its subsidiaries, and designated Affiliates, is
eligible to be designated as a participant. As of February 28, 2018, the Holding Company, its subsidiaries, and designated
affiliates had approximately 5 officers and 7 non-employee directors eligible for awards under the 2018 Stock Plan.
Stock
Subject to the Plan
A
maximum of 350,000 shares of common stock are available for issuance under the 2018 Stock Plan, subject to adjustment as provided
under the terms of the 2018 Stock Plan, including an increase to 10% of the number of shares of common stock outstanding or subject
to issuance on conversion of outstanding shares of convertible preferred stock determined on the date of the Annual Meeting of
Shareholders in each year if such number is greater than the number of shares theretofore available under the 2018 Stock Plan.
Shares issuable under the 2018 Stock Plan may consist of authorized but unissued shares or shares held in our treasury.
21
If
any shares covered by an award granted under the 2018 Stock Plan are forfeited or if an award otherwise terminates without the
delivery of shares or of other consideration, then the shares covered by such award, or the number of shares otherwise counted
against the aggregate number of shares available under the 2018 Stock Plan with respect to such award, to the extent of any such
forfeiture or termination, shall again be available for granting awards under the 2018 Stock Plan.
In
the event of any stock dividend, recapitalization, stock split, merger, or other similar events defined in the 2018 Stock Plan,
the number of shares of common stock subject to outstanding awards under the 2018 Stock Plan and the number of shares of common
stock issuable under the 2018 Stock Plan shall be adjusted as determined by the compensation committee in a manner designed to
prevent dilution or enlargement of the benefits or potential benefits available under the 2018 Stock Plan or any award outstanding.
Section
409A
Except
to the extent specifically provided otherwise by the compensation committee, awards are intended to satisfy the requirements of
Section 409A of the Internal Revenue Code, so as to avoid the imposition of any additional taxes or penalties. Notwithstanding
any provision in the 2018 Stock Plan to the contrary, with respect to any award that is subject to Section 409A, distributions
on account of a separation from service may not be made to a “specified employee,” as defined by Section 409A, before
six months after the date of separation from service, or, if earlier, the date of death of the employee.
Amendments
to and Termination of the 2018 Stock Plan
The
board of directors may amend, alter, suspend, discontinue or terminate the 2018 Stock Plan, in whole or in part, provided that
no material amendment may be made without shareholder approval if said approval is required by applicable law, rule or regulation.
No amendment, alteration, suspension or discontinuation may be made without approval of shareholders if the action would increase
the total number of shares available under the 2018 Stock Plan or would result in a repricing, as described below. No amendment
of the 2018 Stock Plan may materially adversely affect any right of any participant with respect to any outstanding award without
the participant’s written consent. If not earlier terminated by the board of directors, the 2018 Stock Plan will automatically
terminate on the tenth anniversary of its effective date (April 24, 2028). No awards may be granted under the 2018 Stock Plan
after it is terminated, but any previously granted awards will remain in effect until they expire.
Prohibition
of Repricing
Except
in the event of a stock dividend, recapitalization, stock split, merger, or other similar events defined in the 2018 Stock Plan,
the board may not, without shareholder approval, take any action that would: permit options, SARs, or other stock-based
awards encompassing rights to purchase shares of common stock to be repriced, replaced, or regranted through cancellation, or
by lowering the exercise price of a previously granted option or the grant price of a previously granted SAR, or the purchase
price of a previously granted other stock-based award.
Terms
of Options
The
committee may grant non-qualified stock options, incentive stock options, or a combination of the two. Each award will be evidenced
by an agreement, which may have additional conditions or restrictions so long as such provisions are not inconsistent with the
2018 Stock Plan.
Exercise
Price
. The exercise price shall not be less than 100% of the fair market value (as defined in the 2018 Stock Plan) of
the Company’s common stock on the date of the grant.
Option
Term.
The term of each Option shall not exceed ten years from the date of the grant.
22
Vesting.
Options shall become exercisable subject to such vesting criteria or other restrictions on exercise as may be determined by
the committee and set forth in the participant’s award agreement. The committee may accelerate vesting, waive or amend terms,
or otherwise modify an award.
Payment
of Exercise Price
. The exercise price shall be paid in full when an option is exercised, or, at the committee’s discretion,
may be paid pursuant to a broker-assisted cashless exercise, delivery of other shares of common stock of the Holding Company that
have been held for at least six months, or a combination of the above methods.
Termination
of Employment
. Options become immediately exercisable upon the death or disability of a participant, and must be exercised,
if at all, within six months after the death or within twelve months after the disability, but in no event after the date the
options would otherwise lapse. Upon retirement, all options that are not exercisable shall be forfeited, and if exercisable, the
options must be exercised, if at all, within three months of retirement, or such longer period as the compensation committee may
designate, but in no event after the date the options would otherwise lapse. Options that are not exercisable shall lapse upon
a termination of employment for cause. Upon termination of employment for any reason other than death, disability, retirement
or cause, all options that are not exercisable as of the date of termination shall be forfeited, and if exercisable, must be exercised,
if at all, within three months of termination of employment.
Restrictions
on Transfer
. No option shall be assignable, alienable, saleable or transferable by a participant other than by will or the
laws of descent and distribution.
Incentive
Stock Options
Terms.
The terms of incentive stock options (“ISOs”) shall be designed to comply with Section 422 of the Internal
Revenue Code. In the event any provisions of the 2018 Stock Plan would contravene the Code, such 2018 Stock Plan provision shall
not apply to ISOs. In addition to the above conditions regarding stock options, the following also apply to ISOs:
Amount
of Award
. The aggregate fair market value of stock (determined as of the time of grant) with respect to which such ISOs are
exercisable for the first time by the participant during any calendar year may not exceed $100,000. To the extent an option initially
designated as an ISO exceeds this value limit or otherwise fails to satisfy the requirements applicable to ISOs, it shall be deemed
a non-qualified stock option.
Timing
of Exercise
. If the committee exercises its discretion to permit an ISO to be exercised more than three months after the participant’s
termination of employment, and the exercise occurs more than three months after the participant ceases being an employee (or more
than 12 months in the event of the participant’s death or disability), such ISO shall be treated for all purposes as a non-qualified
stock option.
Ten
Percent Owners
. Any ISO granted to any individual who, at the date of grant, owns stock possessing more than ten percent of
the total combined voting power of all classes of the Company’s stock shall have an exercise price per share of at least
110% of the fair market value of the stock at the date of grant, and the ISO shall expire no later than five years after the date
of grant.
Stock
Appreciation Rights
The
committee may grant Stock Appreciation Rights (“SARs”). The grant price shall not be less than 100% of the fair market
value of the stock on the date of grant, except that if a SAR is granted in tandem with an option, the grant price of the SAR
shall not be less than the exercise price of the option. As determined by the committee, the payment upon exercise may be paid
in cash, shares to be valued at their fair market value on the date of exercise, by any other mode of payment deemed appropriate
by the committee or by any combination thereof. The term of each SAR shall not exceed ten years from the date of grant.
23
Restricted
Stock
Restricted
stock may be awarded under the 2018 Stock Plan to any employee, officer or non-employee director selected by the compensation
committee. Generally, the compensation committee has the discretion to fix the amount, terms, conditions and restrictions applicable
to restricted stock awards. Any restricted stock granted may be evidenced as the committee deems appropriate, including, without
limitation, by book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate
is issued in respect of shares of restricted stock granted under the 2018 Stock Plan, such certificate shall be registered in
the name of the participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable
to such restricted stock. Unless otherwise determined by the committee, all shares of restricted stock still subject to restriction
shall be forfeited and reacquired by the Company upon termination of employment for any reason other than death or disability.
Any conditions or restrictions on restricted stock shall lapse upon a change in control.
Except
as otherwise provided in an award agreement or any special plan document governing an award, the participant will have all of
the rights of a shareholder with respect to the restricted stock, including the right to vote. Unless otherwise provided in the
award agreement, awards of restricted stock will be entitled to full dividend rights and any dividends paid with respect to shares
of common stock generally will be paid or distributed to the holder no later than the end of the calendar year in which the dividends
are paid to shareholders or, if later, the 15th day of the third month following the date the dividends are paid to shareholders
(or shall otherwise be in compliance with, or exempt from, Section 409A).
Non-employee
directors receive grants of restricted stock in lieu of cash compensation for their service on the board of directors. Currently
that compensation is set at 450 shares each per quarter with the shares of common stock restricted as to transfer until the individual
director ceases to serve as a director of the Company. One non-employee individual serves as a disinterested manager of the Company’s
two joint venture affiliates: Leatherstocking Gas Company, LLC and Leatherstocking Pipeline Company, LLC. He receives an award
of 150 shares of the Company’s common stock each quarter in lieu of cash compensation (600 shares fiscal quarters). The
shares are expected to be issued under the 2018 Stock Plan, if adopted, and to be unrestricted upon effectiveness of the Company’s
registration statement to be filed with the U.S. Securities and Exchange Commission with respect to the 2018 Stock Plan.
Dividend
Equivalents
The
2018 Stock Plan authorizes the committee to grant participants awards under which the holders thereof are entitled to receive
payments equivalent to dividends or interest, with respect to a number of shares determined by the committee, and the committee
may provide that such amounts (if any) shall be deemed to have been reinvested in additional shares or otherwise reinvested.
Awards
to Non-Employee Directors
Directors
of the Holding Company who are not current employees of the Holding Company or any of the Holding Company’s subsidiaries
are currently compensated for their service on the board of directors by grants of common stock under the 2007 Stock Plan in the
amount of 450 shares of common stock quarterly. If the 2018 Stock Plan is approved by shareholders, seven of our directors proposed
for election at the 2018 Annual Meeting will continue to receive their shares under the 2018 Stock Plan. Mr. German is not eligible
to participate in the Non-Employee Director Plan.
Assuming
the 2018 Stock Plan is approved, commencing June 30
th
, 2018, and every June 30
th
, September 30
th
,
December 31
st
, and March 30
th
, each non-employee director will receive a grant of restricted stock having
a Fair Market Value on the date of grant (determined without regard to the restrictions applicable thereto) equal to the aggregate
dollar amount of cash compensation earned by the non-employee director during the Company’s fiscal quarter ended immediately
prior to the respective grant date.
24
The
restricted shares granted to directors under the Plan will be subject to restrictions prohibiting such restricted shares from
being sold, transferred, assigned otherwise disposed of prior to the time the non-employee director ceases to serve as a
director of the Holding Company or any of its Subsidiaries or designated Affiliates. The restrictions with respect to each award
of restricted shares also lapse immediately prior to a Change in Control (as defined in the 2018 Stock Plan).
During
the restriction period, a director will have the right to vote his or her restricted shares and have the right to receive any
cash dividends with respect to such restricted shares. All distributions, if any, received by a director with respect to restricted
shares as a result of any stock split, stock distribution, combination of shares, or other similar transaction will be subject
to the same restrictions as are applicable to the restricted shares to which such distributions relate.
New
Plan Benefits
As
noted above, no awards under the 2018 Stock Plan have been approved by the compensation committee or the board of directors to
any officer or employee of the Holding Company. Awards of restricted stock to the seven non-employee directors of the Holding
Company under the Plan will be made quarterly in the amount of 450 shares of common stock each in lieu of cash compensation. The
non-employee director restricted stock grants would total 21,150 shares over four fiscal quarters. [In addition, one non-employee
serves as a disinterested manager of the two Affiliates: Leatherstocking Gas Company, LLC and Leatherstocking Pipeline Company,
LLC. He receives an award of 150 shares of the Holding Company’s common stock each quarter in lieu of cash compensation
(600 shares for four fiscal quarters). The shares are expected to be issued under the 2018 Stock Plan without restrictions once
a registration statement with respect to the plan is filed with the U.S. Securities and Exchange Commission.
Summary
of Federal Income Tax Consequences of Awards under the 2018 Stock Plan
The
following is a brief summary of the principal United States Federal income tax consequences of the various awards under the 2018
Stock Plan, under current United States Federal income tax laws. This summary is not intended to constitute tax advice and is
not intended to be exhaustive and, among other things, does not describe state, local or foreign tax consequences.
Nonqualified
Stock Options and Stock Appreciation Rights.
A participant will not recognize any income at the time a nonqualified stock
option or stock appreciation right is granted, nor will we be entitled to a deduction at that time. When a nonqualified stock
option or stock appreciation right is exercised, the participant will recognize ordinary income in an amount equal to the excess
of the fair market value of the shares to which the option exercise pertains on the date of exercise over the exercise price (or,
for a stock appreciation right, the cash or value of shares received on exercise). Payroll taxes are required to be withheld from
the participant on the amount of ordinary income recognized by the participant. We generally will be entitled to a tax deduction
with respect to a nonqualified stock option or stock appreciation right at the same time and in the same amount as the participant
recognizes income. The participant’s tax basis in any shares acquired by exercise of a nonqualified stock option (or received
on exercise of a stock appreciation right) will be equal to the exercise price paid plus the amount of ordinary income recognized.
Upon
a sale of the shares received by a participant upon the exercise of a nonqualified stock option, any gain or loss will generally
be treated as long-term or short-term capital gain or loss, depending on how long the participant held such shares prior to sale.
25
Incentive
Stock Options.
A participant will not recognize any income at the time an ISO is granted. Nor will a participant recognize
any income at the time an ISO is exercised. However, the excess of the fair market value of the shares on the date of exercise
over the exercise price paid will be a preference item that could create an alternate minimum tax liability. If a participant
disposes of the shares acquired on exercise of an ISO after the later of two years after the date of grant of the ISO or one year
after the date of exercise of the ISO (the “holding period”), the gain (
i.e.
, the excess of the proceeds received
on sale over the exercise price paid), if any, will be long-term capital gain eligible for favorable tax rates. If the participant
disposes of the shares prior to the end of the holding period, the disposition is a “disqualifying disposition”, and
the participant will recognize ordinary income in the year of the disqualifying disposition equal to the excess of the lesser
of (i) the fair market value of the shares on the date of exercise or (ii) the amount received for the shares, over the exercise
price paid. The balance of the gain or loss, if any, will be long-term or short-term capital gain or loss depending on how long
the shares were held by the participant prior to disposition.
The
Holding Company generally is not entitled to a deduction as a result of the grant or exercise of an ISO. If a participant recognizes
ordinary income as a result of a disqualifying disposition, the Holding Company will be entitled to a deduction at the same time
and in the same amount as the participant recognizes ordinary income.
Restricted
Stock.
Under Section 83 of the Code, a participant who receives a grant of restricted stock with restrictions which constitute
a substantial risk of forfeiture will generally have income only when the stock vests, equal to the fair market value of the stock
at that time less any amount paid for the shares. However, the grantee may make a so-called “83(b) election” to recognize
ordinary income at the time of grant. Assuming no other applicable limitations, the amount and timing of the deduction available
to the Holding Company will correspond to the income recognized by the grantee. Upon the later sale of the shares, the difference
between the fair market value at vesting and the sale price will be capital gain or loss.
Code
Section 162(m)
. With certain exceptions, Section 162(m) of the Code limits deduction for compensation in excess of $1,000,000
paid to certain “covered employees” whose compensation is reported in the compensation table included in the Company’s
annual proxy statements. However, compensation paid to such employees will not be subject to such deduction limitation if it is
considered “qualified performance-based compensation” (within the meaning of Section 162(m) of the Code, which, among
other requirements, requires shareholder approval of the performance measures available under a plan). As previously noted, notwithstanding
the adoption of the 2018 Stock Plan by shareholders, we reserve the right to pay our employees, including recipients of awards
under the 2018 Stock Plan, amounts which may or may not be deductible under Section 162(m) or other provisions of the Code.
If
and to the extent the compensation committee determines, awards granted under the 2018 Stock Plan to covered employees will comply
with the requirements of Section 162(m). Generally, this requires that the amount paid under such an award be determined based
on the attainment of written, objective performance goals approved by the compensation committee for a performance period established
by the compensation committee (i) while the outcome for that performance period is substantially uncertain and (ii) no more than
90 days after the commencement of the performance period to which the performance goal relates or, if less, the number of days
which is equal to 25 percent of the relevant performance period. The compensation committee will determine whether, with respect
to a performance period, the applicable performance goals have been met with respect to a given participant and, if they have,
will certify and ascertain the amount of the applicable award. No amount will be paid for such performance period until such certification
is made by the compensation committee. The amount actually paid to a participant may be less than (but not more than) the amount
determined under the applicable performance formula, at the discretion of the compensation committee.
The
board of directors recommends a vote
FOR
the proposal to approve the adoption of the 2018 Stock Plan.
26
PROPOSAL
4
ADVISORY
VOTE TO APPROVE THE HOLDING COMPANY’S
EXECUTIVE
COMPENSATION
As
required by Section 14A of the Exchange Act, we are seeking advisory shareholder approval of the compensation of our named executive
officers as disclosed in this Proxy Statement in accordance with the SEC’s rules. Our executive compensation program is
designed to: (a) attract, develop and retain high caliber executives who are capable of optimizing the Holding Company’s
and its subsidiaries’ performance for the benefit of its shareholders, and (b) reward our executive officers for the achievement
of annual, long-term, strategic, and operational goals. Please read the “Executive Compensation” section of this Proxy
Statement beginning on page [14] or additional details about our executive compensation program, including information about the
fiscal year 2017 compensation of our named executive officers.
We
are asking our shareholders to indicate their support for the compensation of our named executive officers as described in this
Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity
to express their views on the compensation of our named executive officers. The vote on this resolution is not intended to address
any specific element of compensation; rather, the vote relates to the compensation of our named executive officers as described
in this Proxy Statement in accordance with the compensation disclosure rules of the SEC. Accordingly, we will ask our shareholders
to vote “FOR” the following resolution at the 2018 Annual Meeting of Shareholders:
“RESOLVED,
that the compensation paid to the Corporation’s chief executive officer, chief financial officer, and other most highly
compensated executives (the “named executive officers”), as disclosed in the Corporation’s Proxy Statement for
the 2018 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission
(Item 402 of Regulation S-K), including the various compensation tables and related narrative discussion, is hereby APPROVED.”
The
vote is advisory, which means that the vote is not binding on the Holding Company, the board of directors or the nominating and
compensation committee. Our board and the nominating and compensation committee value the opinions of our shareholders and to
the extent there is any significant vote against the compensation of our named executive officers as disclosed in this Proxy Statement,
we will consider our shareholders’ concerns and the nominating and compensation committee will evaluate whether any actions
are necessary to address those concerns.
The
board of directors recommends a vote
FOR
the proposal to approve, on a non-binding and advisory basis, the compensation
of our named executive officers as disclosed in this Proxy Statement.
PROPOSAL
5
RATIFICATION
OF APPOINTMENT OF THE HOLDING COMPANY’S
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The
audit committee of the board of directors has appointed and the board of directors has ratified the appointment of the accounting
firm of Freed Maxick CPAs, P.C. (“Freed Maxick”) to serve as the Company’s independent registered public accounting
firm for the fiscal year ending September 30, 2018. Freed Maxick has also served as Corning Gas’ independent registered
public accounting firm since August 20, 2013 and is considered by the audit committee, the board of directors and management
of the Holding Company to be well qualified. The shareholders are being asked to ratify the audit committee’s appointment
of Freed Maxick. If the shareholders fail to ratify this appointment, the audit committee may, but is not required to, reconsider
whether to retain that firm. Even if the appointment is ratified, the audit committee in its discretion may direct the appointment
of a different accounting firm at any time during the year if it determines that such a change would be in the best interests
of the Holding Company and its shareholders. Representatives of Freed Maxick will attend the annual meeting to answer appropriate
questions and make statements if they desire.
The
board of directors recommends a vote
FOR
the proposal to ratify the appointment of Freed Maxick as our independent registered
public accounting firm for the fiscal year ending September 30, 2018.
27
SHAREHOLDER
PROPOSALS
A
shareholder intending to present a proposal to be included in our proxy statement for our 2019 Annual Meeting of Shareholders
must deliver a proposal, in accordance with the requirements of Rule 14a-8 under the Exchange Act, to our corporate secretary
at our principal executive office no later than November 22, 2018. A shareholder’s notice to the corporate secretary must
set forth as to each matter the shareholder proposes to bring before the meeting:
|
•
|
a
brief description of the business desired to be brought before the meeting and the reasons
for conducting such business at the meeting,
|
|
•
|
the
name and record address of the shareholder proposing such business,
|
|
•
|
the
number of shares of our common stock that are beneficially owned by the shareholder,
and
|
|
•
|
any
material interest of the shareholder in such business.
|
A
shareholder may submit nominees for election to the board of directors at our 2019 Annual Meeting. For a nominee to be included
in the 2019 Proxy Statement, it must be submitted to the corporate secretary not before January 24, 2019 and not after February
13, 2019.
A
shareholder may also present a proposal directly to our shareholders at the Annual Meeting. For a proposal to be voted upon at
our 2019 Annual Meeting, it must be submitted to the corporate secretary not before January 24, 2019 and not after February 13,
2019. However, if we do not receive notice of the shareholder proposal prior to the close of business on February 13, 2019, SEC
rules permit management to vote proxies in their discretion on the proposed matter. If we receive notice of the shareholder proposal
not before January 24, 2019 and not after February 13, 2019, management can only vote proxies in their discretion if they advise
shareholders in our 2019 Proxy Statement about the nature of the proposed matter and how management intends to vote on the matter.
OTHER
MATTERS
Our
board of directors is not aware of any other matters to be submitted at the 2018 Annual Meeting of Shareholders. If any other
matters properly come before the meeting, it is the intention of the persons named in the accompanying proxy to vote the shares
they represent as the board of directors may recommend.
You
are urged to sign and return your proxy promptly to make certain your shares will be voted at the 2018 Annual Meeting of Shareholders.
For your convenience, a return envelope is enclosed requiring no additional postage if mailed in the United States.
By
Order of the Board of Directors,
Firouzeh
Sarhangi
Chief
Financial Officer, Treasurer and Corporate Secretary
March
22, 2018
APPENDIX
1
Corning
Natural Gas Holding Corporation
2018
Stock Plan
28
Corning Natural Gas Holding Corporation
2018 EMPLOYEE LONG-TERM INCENTIVE
PLAN
Section 1.
Establishment and Purpose
(a)
Purpose
. The purpose of this Corning Natural Gas Corporation 2018 Stock Plan (the
“Plan”
) is to
encourage and enable the officers, employees, and Directors of Corning Natural Gas Corporation (the
“Company”
)
and its Affiliates upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business
to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company’s
welfare will assure a closer identification of their interests with those of the Company, thereby stimulating their efforts on
the Company’s behalf and strengthening their desire to remain with the Company. The Plan replaces the Amended and Restated
2007 Corning Natural Gas Corporation Stock Plan assumed by Corning Natural Gas Holding Corporation on its formation in 2013, and
provides the Company with the ability to continue to provide awards from time to time on substantially the same terms. The Plan
updates the 2007 Stock Plan to reflect regulatory changes. No awards were outstanding under the 2007 Stock Plan on the Effective
Date of the Plan.
(b)
Effective Date; Shareholder Approval
. The Plan is effective upon the approval by the Company’s shareholders
at the 2017 Annual Meeting of Shareholders on April 24, 2018 (“Effective Date”).
Section 2.
Definitions
As used in the Plan, the following terms
shall have the meanings set forth below:
(a)
“Affiliate”
shall mean (i) any entity that, directly or through one or more intermediaries, is controlled
by the Company and (ii) any entity in which the Company has no less than a 50% equity interest, as determined by the Committee.
With respect to Incentive Stock Options, “Affiliate” means any entity, domestic or foreign, whether or not such entity
now exists or is hereafter organized or acquired by the Company or an Affiliate that is a “subsidiary corporation”
within the meaning of Code Section 424(d) and the rules thereunder.
(b)
“Award” or “Awards”
shall mean any Incentive Options, Non-Qualified Options, Restricted Stock
Award, Stock Appreciation Right, or Dividend Equivalent granted under the Plan.
(c)
“Award Agreement”
shall mean any written agreement, contract, or other instrument or document, including
an electronic communication, evidencing any Award granted under the Plan.
(d)
“Board”
shall mean the Board of Directors of the Company.
(e)
“Cause”
means, and shall be limited to, a vote of the Board to the effect that the participant should
be dismissed as a result of (i) any material breach by the participant of any agreement to which the Participant and the Company
or an Affiliate are parties, (ii) any act (other than retirement, death, or disability) or omission to act by the Participant,
including without limitation, the commission of any crime, which may have a material and adverse effect on the business of the
Company or any Affiliate or on the Participant’s ability to perform services for the Company or any Affiliate, or (iii) any
material misconduct or neglect of duties by the Participant in connection with the business or affairs of the Company or any Affiliate.
(f)
“Change in Control”
shall mean an event that is “a change in the ownership or effective control
of the corporation, or in the ownership of a substantial portion of the assets of the corporation” within the meaning of
Section 409A and that also falls within one of the following events with respect to the Company:
(i)
any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company,
any of its Subsidiaries, any Director, fiduciary or other person or entity holding securities under any employee benefit plan of
the Company or any of its Subsidiaries or the Richard M. Osborne Trust), together with all “affiliates” and “associates”
(as such terms are defined in Rule 12b-2 of the Exchange Act) of such person, shall become the “beneficial owner” (as
such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 40%
or more of either (A) the combined voting power of the Company’s then outstanding securities having the right to vote in
an election of the Company’s Board of Directors (“Voting Securities”) or (B) the then outstanding shares of common
stock of the Company (in either such case other than as a result of acquisition of securities directly from the Company;
29
(ii)
persons who, as of the Effective Date, constitute the Company’s Board of Directors (the
“Incumbent Directors”
)
cease for any reason, including without limitation, as a result of a tender offer, proxy contest, merger or similar transaction,
to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to the Effective
Date whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall,
for purposes of this Plan, be considered an Incumbent Director; or
(iii)
the Shareholders of the Company shall approve (A) any consolidation or merger of the Company or any Subsidiary where the
Shareholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or
merger, beneficially own (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, shares representing
in the aggregate 50% or more of the voting shares of the corporation issuing cash or securities in the consolidation or merger
(or of its ultimate parent corporation, if any), (B) any sale, lease, exchange or other transfer (in one transaction or a series
of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company
or (C) any plan or proposal for the liquidation or dissolution of the Company.
Notwithstanding
the foregoing, a Change of Control shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the
result of an acquisition of securities by the Company which, by reducing the number of shares of Common Stock or other voting securities
outstanding, increases (x) the proportionate number of shares of Common Stock beneficially owned by any person to 40% or more of
the shares of Common Stock then outstanding or (y) the proportionate voting power represented by the voting securities beneficially
owned by any person to 40% or more of the combined voting power of all then outstanding voting securities; provided, however, that
if any person referred to in clause (x) or (y) of this sentence shall thereafter become the beneficial owner of any additional
shares of Common Stock or other voting securities (other than pursuant to a share split, share dividend, or similar transaction),
then a Change in Control shall be deemed to have occurred for purposes of the foregoing clause (i).
(g)
“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time.
(h)
“Committee”
shall mean the Compensation Committee of the Board of Directors of the Company or any such
other committee of not less than two Non-Employee Directors, as appointed by the Board from time to time, or in the absence of
such a committee, the entire Board. The term “Committee” includes any such committee or subcommittee, to the extent
of the Compensation Committee’s delegation.
(i)
“Common Stock”
shall mean shares of the Company’s common stock, par value $0.01 per share.
(j)
“Disability”
shall mean a disability determination in which a Participant meets one of the following
conditions:
(i)
The Participant is unable to engage in any substantial gainful activity by reason of a medically determinable physical or
mental impairment that can be expected to last for a period of not less than 12 months.
(ii)
The Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result
in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for
a period of not less than 3 months under an accident and health plan covering employees of the Company.
Notwithstanding the above, with respect
to an Incentive Stock Option (and if and to the extent required by Code Section 409A with respect to other Awards), Disability
shall mean Permanent and Total Disability as defined in Section 22(e)(3) of the Code. The Committee may establish any process or
procedure it deems appropriate for determining whether a Participant has a “Disability”.
(k)
“Director”
shall mean a member of the Board.
(l)
“Dividend Equivalent”
shall mean any right granted under Section 6(d) of the Plan.
(m)
“Employee”
means any person who is in the employ of the Company or any Affiliate, subject to the control
and direction of the Company or any Affiliate as to both the work to be performed and the manner and method of performance.
(n)
“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended.
(o)
“Fair Market Value”
shall mean, as of a given date, the value of a Share determined as follows (in order
of applicability): (A) if on the Grant Date, or other determination date the Share is listed on an established national or regional
stock exchange, is admitted to quotation on The NASDAQ Stock Market, Inc. or is publicly traded on an established securities market,
the Fair Market Value of a Share shall be the closing price of the Share on that exchange or in that market (if there is more than
one such exchange or market the Committee shall determine the appropriate exchange or market) on the Grant Date or such other determination
date (or if there is no such reported closing price, the Fair Market Value shall be the mean between the highest bid and lowest
asked prices or between the high and low sale prices on that trading day) or, (B) if no sale of Shares is reported for that trading
day, on the next preceding day on which any sale has been reported. If the Share is not listed on such an exchange, quoted on such
system or traded on such a market, Fair Market Value shall be the value of the Share as determined by the determined by such methods
or procedures as shall be established from time to time by the Committee in good faith in a manner consistent with Section 409A.
30
(p)
“Grant Date”
shall mean, as determined by the Committee, the latest to occur of: (i) the date of which
the Committee approves an Award, (ii) the date on which the recipient of an Award first becomes eligible to receive an Award under
Section 5 of this Plan, or (iii) any other date as may be specified by the Committee.
(q)
“Incentive Stock Option”
shall mean an option granted under Section 6(a) of the Plan that is intended
to meet the requirements of Sections 422 of the Code, or any successor provision thereto.
(r)
“Non-Employee Director”
shall mean a member of the Board who: (i) is not currently an officer of the
Company or any Affiliate; and (ii) does not receive compensation for services rendered to the Company or any Affiliate in any capacity
other than as a Director.
(s)
“Non-Qualified Stock Option”
shall mean an option granted under Section 6(a) of the Plan that is not
an Incentive Stock Option.
(t)
“Option”
shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
(u)
“Participant”
shall mean an Employee, Officer, or Director of the Company or of any Affiliate designated
to be granted an Award under the Plan.
(v)
“Person”
shall mean any individual, corporation, partnership, association, joint-stock company, trust,
unincorporated organization, or government or political subdivision thereof.
(w)
“Restricted Securities”
shall mean Awards of Restricted Stock or other Awards under which issued and
outstanding Shares are held subject to certain restrictions.
(x)
“Restricted Stock”
shall mean any award of Shares granted under Section 6(c) of the Plan.
(y)
“Section 409A”
means Section 409A of Code, and the Treasury regulations and other authoritative guidance
issued thereunder.
(z)
“Shareholder”
means the holder of a Share.
(aa)
“Shares”
shall mean a share of common stock, $.10 par value, of the Company subject to adjustment pursuant
to Section 4.
(bb)
“Stock Appreciation Right”
shall mean any right granted under Section 6(b) of the Plan.
(cc)
“Subsidiary”
shall mean a “subsidiary corporation” as defined in Section 424(f) of the Code.
Section 3.
Administration
Except as otherwise provided herein,
the Plan shall be administered by the Committee, which shall have the power to interpret the Plan and to adopt such rules and guidelines
for implementing the terms of the Plan as it may deem appropriate. The Committee shall have the ability to modify the Plan provisions,
to the extent necessary, to accommodate any changes in laws and regulations in jurisdictions in which Participants will receive
Awards.
(a)
Subject to the terms of the Plan and applicable law, the Committee shall have full power and authority to:
31
(i)
designate Participants;
(ii)
determine the time or times of grant and the type or types of Awards to be granted to each Participant under the Plan;
(iii)
determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated
in connection with) Awards;
(iv)
determine the terms and conditions of any Award;
(v)
determine the effect of termination of employment on any Award;
(vi)
determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other
securities, or other Awards, or canceled, forfeited, or suspended, and the method or methods by which Awards may be settled, exercised,
canceled, forfeited, or suspended;
(vii)
determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, and other
amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder
thereof or of the Committee;
(viii)
interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan;
(ix)
establish, amend, suspend, or waive such rules and guidelines;
(x)
reduce, eliminate or accelerate any restriction or vesting requirement, applicable to an Award at any time after the grant
of an Award or to extend the time for exercising any Option (but not beyond the original ten-year term), or Restricted Stock Awards;
(xi)
to amend any Award Agreement or waive any provision, condition or limitation thereof;
(xii)
make any other determination and take any other action that the Committee deems necessary or desirable for the administration
of the Plan; and
(xiii)
correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award in the manner and to the
extent it shall deem desirable to carry the Plan into effect.
(b)
Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions
under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time, and
shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or
beneficiary of any Award, any stockholder, and any employee of the Company or of any Affiliate. Any determinations and other actions
of the Committee with respect to any of the matters referred to in this Section 3 or elsewhere in the Plan or in any Award Agreement
need not be consistent, even among Participants who are similarly situated and/or who have previously received similar or other
Awards, except as may be specifically provided to the contrary in the Plan or in the applicable Award Agreement. In addition, actions
of the Committee may be taken by the Committee but with one or more members abstaining or recusing himself or herself from acting
on the matter, so long as two or more members remain to act on the matter. Such action, authorized by the Committee upon the abstention
or recusal of such members, shall be the action of the Committee for purposes of the Plan. The Committee may designate the Secretary
of the Company or other employees of the Company to assist the Committee in the administration and operation of the Plan and may
direct such persons to execute documents on behalf of the Committee.
Section 4.
Shares Available for Awards
(a)
Shares Available
. Subject to adjustment as provided in Section 7, the total number of shares of Common Stock reserved
and available for delivery pursuant to Awards granted under the Plan shall be three hundred fifty thousand (350,000). If any Shares
covered by an Award granted under the Plan, or to which such an Award relates, are forfeited, or if an Award otherwise terminates
without the delivery of Shares or of other consideration, then the Shares covered by such Award, or to which such Award relates,
or the number of Shares otherwise counted against the aggregate number of Shares available under the Plan with respect to such
Award, to the extent of any such forfeiture, cancellation, or termination, shall again be available for granting Awards under the
Plan. Notwithstanding the foregoing, but subject to adjustment as provided in Section 7, no more than three hundred fifty thousand
(350,000). Shares shall be available for delivery pursuant to the exercise of Incentive Stock Options. Any Award made under a previous
Corning Natural Gas Corporation Plan shall continue to be subject to the terms and conditions of the plan under which it was awarded
and the applicable Award Agreement.
(b)
Accounting for Awards
. For purposes of this Section 4,
(i)
if an Award (other than a Dividend Equivalent) is denominated in Shares, the number of Shares covered by such Award, or
to which such Award relates, shall be counted on the date of grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan; and
(ii)
Dividend Equivalents denominated in Shares and Awards not denominated in Shares but potentially payable in Shares shall
be counted against the aggregate number of Shares available for granting Awards under the Plan in such amount and at such time
as the Dividend Equivalents and such Awards are settled in Shares, provided, however, that Awards that operate in tandem with (whether
granted simultaneously with or at a different time from), or that are substituted for, other Awards may only be counted once against
the aggregate number of Shares available, and the Committee shall adopt procedures, as it deems appropriate, in order to avoid
double counting. Any Shares that are delivered by the Company, and any Awards that are granted by, or become obligations of, the
Company through the assumption by the Company or an Affiliate of, or in substitution for, outstanding awards previously granted
by an acquired company, shall not be counted against the Shares available for granting Awards under this Plan.
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(iii)
Notwithstanding anything herein to the contrary, any Shares related to Awards which terminate by expiration, forfeiture,
cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with the
Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant
under this Plan. Shares subject to an Award under the Plan may not again be made available for issuance under the Plan if such
Shares are: (x) Shares that were subject to an Option or a stock-settled Stock Appreciation Right and were not issued upon the
net settlement or net exercise of such Option or Stock Appreciation Right, (y) Shares delivered to or withheld by the Company to
pay the exercise price or the withholding taxes under Options or Stock Appreciation Rights, or (z) Shares repurchased on the open
market with the proceeds of an Option exercise.
(c)
Sources of Shares Deliverable Under Awards
. Any Shares delivered pursuant to an Award may consist, in whole or in
part, of authorized but unissued Shares or of treasury Shares.
(d)
Evergreen Share Reserve Increase
. Notwithstanding Section 4(a), and subject to the provisions of this Section, on
the day of each annual meeting of the Shareholders of the Company, for a period of nine (9) years, commencing with the annual meeting
of Shareholders in 2018, the aggregate number of Shares available for issuance under the Plan shall automatically be increased
to the number of Shares equal to 10% of the Shares outstanding, if greater than the number of Shares then available for issuance
under the Plan.
Section 5.
Eligibility
Participants in the Plan will be Directors
and such full or part-time officers and other employees of the Company and its Affiliates who are responsible for or contribute
to the management, growth or profitability of the Company and its Affiliates and who are selected from time to time by the Committee,
in its sole discretion.
Section 6.
Awards
(a)
Options
. Options granted under the Plan may, at the discretion of the Committee, be in the form of either Non-Qualified
Stock Options, Incentive Stock Options or a combination of the two. Where both a Non-Qualified Stock Option and an Incentive Stock
Option are granted to a Participant at the same time, such Awards shall be deemed to have been granted in separate grants, shall
be clearly identified, and in no event will the exercise of one such Award affect the right to exercise the other Award. Unless
otherwise specified, an Option shall be a Non-Qualified Stock Option. Subject to Section 3, the Committee is hereby authorized
to grant Options to Participants with the following terms and conditions and with such additional terms and conditions, in either
case not inconsistent with the provisions of the Plan, as the Committee shall determine:
(i)
Amount of Shares
. The Committee may grant Options to a Participant in such amounts as the Committee may determine,
subject to the limitations set forth in Section 6(e)(v) of the Plan. The number of Shares subject to an Option shall be set forth
in the applicable Award Agreement.
(ii)
Exercise Price
. The exercise price per Share under an Option shall be determined by the Committee; provided, however,
and except as provided in Section 7, that such exercise price shall not be less than 100% of the Fair Market Value of a Share on
the date of grant of such Option. The exercise price of an Option, as determined by the Committee pursuant to this Section 6(a)(ii),
shall be set forth in the applicable Award Agreement.
(iii)
Option Term
. Except as set forth in Section 6(a)(iv) below, the term of each Option shall not exceed ten (10) years
from the date of grant.
(iv)
Timing of Exercise
. Except as may otherwise be provided in the Award Agreement or as the Committee may otherwise
determine, and subject to the Committee’s authority under Section 3(a) to accelerate the vesting of an Award and to waive
or amend any terms, conditions, limitations or restrictions of an Award, each Option granted under the Plan shall be exercisable
in whole or in part, subject to the following conditions, limitations and restrictions:
(A)
Options shall become exercisable at such time or times, whether or not in installments, and shall be subject to such terms
and conditions as shall be determined by the Committee at or after the grant date;
(B)
All Options subject to the Award shall become immediately exercisable upon a Change in Control;
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(C)
All Options granted to a Participant shall become immediately exercisable upon the death of the Participant and must be
exercised, if at all, within six (6) months after such Participant’s death (or such longer period as the Committee shall
specify at any time) but in no event after the date such Options would otherwise lapse. Options of a deceased Participant may be
exercised only by the estate of the Participant or by the person given authority to exercise such Options by the Participant’s
will or by operation of law. In the event an Option is exercised by the executor or administrator of a deceased Participant, or
by the person or persons to whom the Option has been transferred by the Participant’s will or the applicable laws of descent
and distribution, the Company shall be under no obligation to deliver Shares thereunder unless and until the Company is satisfied
that the person or persons exercising the Option is or are the duly appointed executor(s) or administrator(s) of the deceased Participant
or the person to whom the Option has been transferred by the Participant’s will or by the applicable laws of descent and
distribution;
(D)
Any Option held by an optionee whose service with the Company and its Affiliates has terminated by reason of Disability
may thereafter be exercised, to the extent it was exercisable at the time of such termination, for a period of twelve (12) months
(or such longer period as the Committee shall specify at any time) from the date of such termination of service, or until the expiration
of the state term of the Option, if earlier. The Committee shall have sole authority and discretion to determine whether a participant’s
service has been terminated by reason of Disability. Except as otherwise provided by the Committee at the time of grant or otherwise,
the death of an optionee during a period provided in this Section for the exercise of a Non-Qualified Option, shall extend for
six (6) months from the date of death, subject to termination on the expiration of the stated term of the Option, if earlier.
(E)
The Option shall lapse upon termination of employment for Cause. Except as otherwise provided in Section 6(a)(iv), upon
an Employee’s termination of employment, for any reason other than death, Disability, or Cause, all Options that have not
become exercisable as of the date of termination shall be forfeited and to the extent that Options have become exercisable as of
such date, such Options must be exercised, if at all, within 30 days after such termination of employment or until the expiration
of the stated term of the Option, if earlier; and
(F)
Unless otherwise determined by the Committee, if an optionee’s service with the Company and its Affiliates terminates
for any reason other than death, Disability, or for Cause, any Option held by such optionee may thereafter be exercised, to the
extent it was exercisable on the date of termination of service, for three (3) months (or such longer period as the Committee shall
specify at any time) from the date of termination of service or until the expiration of the stated term of the Option if earlier.
(v)
Payment of Exercise Price
. The exercise price shall be paid in full when the Option is exercised and stock certificates
shall be registered and delivered only upon receipt of such payment. Unless otherwise provided by the Committee, payment of the
exercise price may be made in cash or by certified check, bank draft, wire transfer, or postal or express money order or any other
form of consideration approved by the Committee. In addition, at the discretion of the Committee, payment of all or a portion of
the exercise price may be made by
(A)
Delivering a properly executed exercise notice to the Company, or its agent, together with irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale proceeds with respect to the portion of the Shares to be acquired
upon exercise having a Fair Market Value on the date of exercise equal to the sum of the applicable portion of the exercise price
being so paid and appropriate tax withholding;
(B)
Tendering (actually or by attestation) to the Company previously acquired Shares that have been held by the Participant
for at least six months having a Fair Market Value on the day prior to the date of exercise equal to the applicable portion of
the exercise price being so paid; or
(C)
any combination of the foregoing.
(vi)
Non-transferability of Options
. No Option shall be transferable by the optionee other than by will or by the laws
of descent and distribution.
(vii)
Incentive Stock Options
. The terms of any Incentive Stock Option granted under the Plan shall be designed to comply
in all respects with the provisions of Section 422 of the Code, or any successor provision thereto, and any regulations promulgated
thereunder which are hereby incorporated by reference. In the event that any provision of the Plan would contravene the Code rules
that apply to Incentive Stock Options, such Plan provision shall not apply to Incentive Stock Options. Incentive Stock Options
granted under the Plan shall be subject to the following additional conditions, limitations and restrictions:
34
(A)
Timing of Grant
. No Incentive Stock Option shall be granted under the Plan after the 10-year anniversary of the date
the Plan is adopted by the Board.
(B)
Amount of Award
. The aggregate Fair Market Value of Shares (determined as of the time of grant) with respect to which
such Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of
the Company and any subsidiary) may not exceed $100,000, taking Incentive Stock Option into account in the order in which they
were granted. To the extent an Option initially designated as an Incentive Stock Option exceeds the value limit of this section
or otherwise fails to satisfy the requirements applicable to Incentive Stock Options, it shall be deemed a Non-Qualified Stock
Option and shall otherwise remain in full force and effect.
(C)
Timing of Exercise
. In the event that the Committee exercises its discretion to permit an Incentive Stock Option
to be exercised by a Participant more than three months after the Participant’s termination of employment and such exercise
occurs more than three months after such Participant has ceased being an Employee (or more than twelve (12) months after the Participant
is Disabled or dies), such Incentive Stock Option shall thereafter be treated as a Non-Qualified Stock Option for all purposes.
(D)
Transfer Restrictions
. In no event shall the Committee permit an Incentive Stock Option to be transferred by a Participant
other than by will or the laws of descent and distribution, and any Incentive Stock Option granted hereunder shall be exercisable,
during his or her lifetime, only by the Participant.
(E)
Ten Percent Owners
. No Incentive Stock Option shall be granted to any individual who, at the date of grant, owns
stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any Affiliate
unless the exercise price per share of such Option is at least 110% of the Fair Market Value per Share at the date of grant and
the Option expires no later than five years after the date of grant.
(viii)
Extension of Option Term for Blackouts
. At its discretion, the Committee may extend the term of any Option beyond
its earlier termination pursuant to Section 6(a)(iii), (iv)(C), (iv)(D), (iv)(E), or (iv)(F) if the Company had prohibited the
participant from exercising the Option prior to termination or expiration in order to comply with applicable Federal, state, local
or foreign law, provided that such extension may not exceed the earlier of thirty (30) days from the date such prohibition is lifted
or ten (10) years after the Option grant date.
(ix)
No Deferral Feature
. No Option shall provide for any feature for the deferral of compensation other than the deferral
of recognition of income until the exercise or disposition of the Option.
(b)
Stock Appreciation Rights
. The Committee is hereby authorized to grant Stock Appreciation Rights to Participants.
Subject to the terms of the Plan and any applicable Award Agreement, a Stock Appreciation Right Award granted under the Plan shall
confer on the holder thereof a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one Share on
the date of exercise over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, multiplied by the
number of Stock Appreciation Rights granted. As determined by the Committee, the payment upon exercise may be paid in cash, Shares
to be valued at their Fair Market Value on the date of exercise, any other mode of payment deemed appropriate by the Committee
or any combination thereof. The Committee may establish a maximum appreciation value payable for stock appreciation rights.
(i)
Grant Price
. Shall be determined by the Committee, provided, however, and except as provided in Section 7, that such
price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right, except
that if a Stock Appreciation Right is at any time granted in tandem with an Option, the grant price of the Stock Appreciation Right
shall not be less than the exercise price of such Option.
(ii)
Term
. The term of each Stock Appreciation Right shall not exceed ten (10) years from the date of grant.
(iii)
Time and Method of Exercise
. The Committee shall establish in the applicable Award Agreement the time or times at
which a Stock Appreciation Right may be exercised in whole or in part.
(iv)
Restrictions on Transfer
. Stock Appreciation Rights shall not be transferred, assigned or encumbered, except that
Stock Appreciation Rights may be exercised by the executor, administrator or personal representative of the deceased participant
within six (6) months of the death of the participant (or such longer period as the Committee shall specify at any time) and transferred
pursuant to a certified domestic relations order.
35
(v)
No Deferral Feature
. No Stock Appreciation Right shall provide for any feature for the deferral of compensation other
than the deferral of recognition of income until the exercise or disposition of the Stock Appreciation Right.
(c)
Restricted Stock
. The Committee is hereby authorized to grant Awards of Restricted Stock to Participants.
(i)
Restrictions
. Shares of Restricted Stock shall be subject to such restrictions as the Committee may establish in
the applicable Award Agreement (including, without limitation, any limitation on the right to vote a Share of Restricted Stock
or the right to receive any dividend or other right), which restrictions may lapse separately or in combination at such time or
times, in such installments or otherwise, as the Committee may deem appropriate. The Committee may remove any vesting condition
or other restriction or reduce any restriction period applicable to a particular award of Restricted Stock. Unrestricted Shares,
evidenced in such manner as the Committee shall deem appropriate, shall be delivered to the holder of Restricted Stock promptly
after such restrictions have lapsed. Except as otherwise provided in an Award Agreement or any special Plan document governing
an Award, the Participant shall have all of the rights of a shareholder with respect to the Restricted Stock. Unless otherwise
provided in the applicable Award Agreement, awards of Restricted Stock will be entitled to full dividend rights and any dividends
paid thereon will be paid or distributed to the holder no later than the end of the calendar year in which the dividends are paid
to shareholders or, if later, the 15th day of the third month following the date the dividends are paid to shareholders (or shall
otherwise be in compliance with, or exempt from, Code Section 409A).
(ii)
Registration
. Any Restricted Stock Awards granted under the Plan may be evidenced in such manner as the Committee
may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates.
In the event any stock certificate is issued in respect of Shares of Restricted Stock granted under the Plan, such certificate
shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock.
(iii)
Forfeiture
. Upon termination of employment during the applicable restriction period for any reason other than death
or Disability, except as determined otherwise by the Committee, all Shares of Restricted Stock still subject to restriction shall
be forfeited and reacquired by the Company.
(iv)
Waiver, Deferral and Reinvestment of Dividends
. The written instrument evidencing the Restricted Stock Award may
require or permit the immediate payment, waiver, deferral or investment of dividends paid on the Restricted Shares.
(d)
Dividend Equivalents
. The Committee is hereby authorized to grant to Participants Awards under which the holders
thereof shall be entitled to receive payments equivalent to dividends or interest with respect to a number of Shares determined
by the Committee, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional
Shares or otherwise reinvested. Subject to the terms of the Plan and any applicable Award Agreement, such Awards may have such
terms and conditions as the Committee shall determine.
(e)
General
.
(i)
No Cash Consideration for Awards
. Awards shall be granted for no cash consideration or for such minimal cash consideration
as may be required by applicable law.
(ii)
Awards may be Granted Separately or Together
. Awards may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution for any other Award or any award granted under any other plan of the Company
or any Affiliate. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted
under any other plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the
grant of such other Awards.
(iii)
Forms of Payment under Awards
. Subject to the terms of the Plan and of any applicable Award Agreement, payments or
transfers to be made by the Company or an Affiliate upon the grant, exercise, or payment of an Award may be made in such form or
forms as the Committee shall determine, including, without limitation, cash, Shares, rights in or to Shares issuable under the
Award or other Awards, other securities, or other Awards, or any combination thereof, and may be made in a single payment or transfer,
in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such
rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment
or deferred payments or the grant or crediting of Dividend Equivalents in respect of installment or deferred payments.
36
(iv)
Limits on Transfer of Awards
. Except as provided by the Committee, no Award and no right under any such Award, shall
be assignable, alienable, saleable, or transferable by a Participant otherwise than by will or by the laws of descent and distribution
provided, however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate
a beneficiary or beneficiaries to exercise the rights of the Participant with respect to any Award upon the death of the Participant.
Each Award, and each right under any Award, shall be exercisable, during the Participant’s lifetime, only by the Participant
or, in the case of Participant’s Disability, by the Participant’s guardian or legal representative. No Award and no
right under any such Award, may be pledged, alienated, attached, or otherwise encumbered, and any purported pledge, alienation,
attachment, or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate.
(v)
Conditions and Restrictions upon Securities Subject to Awards
. The Committee may provide that the Shares issued upon
exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further
agreements, restrictions, conditions or limitations as the Committee in its discretion may specify prior to the exercise of such
Option or Stock Appreciation Right or the grant, vesting or settlement of such Award, including without limitation, conditions
on vesting or transferability and forfeiture or repurchase provisions or provisions on payment of taxes arising in connection with
an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant
or other subsequent transfers by the Participant of any Shares issued under an Award, including without limitation: (A) restrictions
under an insider trading policy or pursuant to applicable law, (B) restrictions designed to delay and/or coordinate the timing
and manner of sales by Participant and holders of other Company equity compensation arrangements, (C) restrictions as to the use
of a specified brokerage firm for such resales or other transfers and (D) provisions requiring Shares to be sold on the open market
or to the Company in order to satisfy tax withholding or other obligations.
(vi)
Share Certificates
. All Shares or other securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan
or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange or automated quotation
system upon which such Shares or other securities are then listed, quoted, or traded, and any applicable Federal, state, or local
securities laws, and the Committee may cause a legend or legends to be put on any such certificates or issue instructions to the
transfer agent to make appropriate reference to such restrictions.
(vii)
Suspension of Exercise
. The Company reserves the right from time to time to suspend the exercise of any stock option
or stock appreciation right where such suspension is deemed by the Company as necessary or appropriate for corporate purposes.
(viii)
Change in Control
. Notwithstanding anything to the contrary in the Plan, any conditions or restrictions on Restricted
Stock or Dividend Equivalents shall lapse upon a Change in Control.
(ix)
Award Agreement
. Each grant of an Award under the Plan will be evidenced by an Award Agreement. Such document will
contain such provisions as the Committee may in its discretion deem advisable, provided that such provisions are not inconsistent
with any of the provisions of the Plan.
(x)
No Repricing
. Repricing of Options or Stock Appreciation Rights shall not be permitted without stockholder approval.
For this purpose, a “repricing” means any of the following (or any other action that has the same effect as any of
the following): (A) changing the terms of an Option or Stock Appreciation Right to lower its exercise price (other than pursuant
to Section 7); (B) any other action that is treated as a “repricing” under generally accepted accounting principles;
and (C) repurchasing for cash or canceling an Option or Stock Appreciation Right at a time when its exercise price is greater than
the Fair Market Value of the underlying stock in exchange for another Award, unless the cancellation and exchange occurs in connection
with an event set forth in Section 7. Such cancellation and exchange would be considered a “repricing” regardless of
whether it is treated as a “repricing” under generally accepted accounting principles and regardless of whether it
is voluntary on the part of the Participant.
(xi)
Employment with Affiliate or Successor
. Employment by the Company, any Affiliate or a successor to the Company shall
be considered employment by the Company for all purposes of any Award. If the Award is assumed or a new award is substituted therefore
in any corporate reorganization (including, but not limited to, any transaction of the type referred to in Section 424(a) of the
Code), employment by such assuming or substituting corporation or by a parent corporation or subsidiary thereof shall be considered
for all purposes of the Award to be employment by the Company.
37
Section 7.
Changes in Capital Structure
(a)
Mandatory Adjustments
. In the event that the Committee shall determine that any stock dividend, recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event constitutes an equity restructuring transaction, as that term is defined
in Statement of Financial Accounting Standards No. 123 (revised) or otherwise affects the Shares, then the Committee shall adjust
the following in a manner that is determined by the Committee to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan:
(i)
the number and type of Shares or other securities which thereafter may be made the subject of Awards including the limit
specified in Section 4(a) regarding the number of shares that may be granted in the form of Restricted Stock;
(ii)
the number and type of Shares or other securities subject to outstanding Awards;
(iii)
the number and type of Shares or other securities specified as the annual per-participant limitation under Section 6(e)(v)
and (vi);
(iv)
the grant, purchase, or exercise price with respect to any Award, or, if deemed appropriate, make provision for a cash payment
to the holder of an outstanding Award; and
(v)
other value determinations applicable to outstanding Awards.
Provided, however
, in each case, that with respect
to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Plan
to violate Sections 422(b)(1) of the Code or any successor provision thereto; and
provided further, however
, that the number
of Shares subject to any Award denominated in Shares shall always be a whole number. Notwithstanding the foregoing, no adjustment
shall be required if the Committee determines that such action could cause an Award to fail to satisfy the conditions of an applicable
exception from the requirements of Section 409A of the Code or otherwise could subject a Participant to the additional tax imposed
under Section 409A in respect of an outstanding Award.
(b)
Discretionary Adjustments
. Upon the occurrence of (i) a merger, consolidation, acquisition of property or stock,
reorganization or otherwise involving the Company in which the Company is not to be the surviving corporation, (ii) a merger, consolidation,
acquisition of property or stock, reorganization or otherwise involving the Company in which the Company is the surviving corporation
but holders of Shares receive securities of another corporation, or (iii) a sale of all or substantially all of the Company’s
assets (as an entirety) or capital stock to another person, any Award granted hereunder shall be deemed to apply to the securities,
cash or other property (subject to adjustment by cash payment in lieu of fractional interests) to which a holder of the number
of Shares equal to the number of Shares the Participant would have been entitled, and proper provisions shall be made to ensure
that this clause is a condition to any such transaction; provided, however, that for an Award that is not subject to Section 409A
the Committee (or, if applicable, the board of directors of the entity assuming the Company’s obligations under the Plan)
shall, in its discretion, have the power to either:
(i)
provide that Awards will be settled in cash rather than Stock;
(ii)
provide that Awards will be assumed by another party to a transaction or otherwise be equitably converted or substituted
in connection with such transaction;
(iii)
provide, upon written notice to Participants, that all Awards that are currently exercisable must be exercised within the
time period specified in the notice and that all Awards not exercised as of the expiration of such period shall be terminated without
consideration; provided, however, that the Committee (or successor board of directors) may provide, in its discretion, that, for
purposes of this subsection, all outstanding Awards are currently exercisable, whether or not vested; or
(iv)
cancel any or all Awards and, in consideration of such cancellation, pay to each Participant an amount in cash with respect
to each Share issuable under an Award equal to the difference between the Fair Market Value of such Share on such date (or, if
greater, the value per Share of the consideration received by holders of Shares as a result of such merger, consolidation, reorganization
or sale) and the Exercise Price; or
(v)
any combination of the foregoing
The Committee’s determination may
not be uniform and may be different for different Participants whether or not such Participants are similarly situated.
38
Section 8.
Amendment and Termination
Except to the extent prohibited by applicable
law and unless otherwise expressly provided in an Award Agreement or in the Plan:
(a)
Amendments to the Plan
. The Board of Directors of the Company may amend, alter, suspend, discontinue, or terminate
the Plan, in whole or in part; provided, however, that without the prior approval of the Company’s stockholders, no material
amendment shall be made if stockholder approval is required by applicable law, rule or regulation, and; provided, further, that,
notwithstanding any other provision of the Plan or any Award Agreement, no such amendment, alteration, suspension, discontinuation,
or termination shall be made without the approval of the stockholders of the Company that would:
(i)
increase the total number of Shares available for Awards under the Plan, except as provided in Section 7 hereof; or
(ii)
except as provided in Section 7, permit Options or Stock Appreciation Rights encompassing rights to purchase Shares to be
repriced, replaced, or regranted through cancellation, or by lowering the exercise price of a previously granted Option or the
grant price of a previously granted Stock Appreciation Right.
(b)
Amendments to Awards
. The Committee may waive any conditions or rights under, amend any terms of, or amend, alter,
suspend, discontinue, or terminate, any Awards theretofore granted, prospectively or retroactively. No such amendment or alteration
shall be made which would impair the rights of any Participant, without such Participant’s consent, under any Award theretofore
granted, provided that no such consent shall be required with respect to any amendment or alteration if the Committee determines
in its sole discretion that such amendment or alteration either (i) is required or advisable in order for the Company, the Plan
or the Award to satisfy or conform to any law or regulation or to meet the requirements of any accounting standard, or (ii) is
not reasonably likely to significantly diminish the benefits provided under such Award.
Section 9.
General Provisions
(a)
No Rights to Awards
. No Participant or other Person shall have any claim to be granted any Award under the Plan,
or, having been selected to receive an Award under this Plan, to be selected to receive a future Award, and further there is no
obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards under the Plan. The terms and conditions
of Awards need not be the same with respect to each recipient.
(b)
Withholding
. A participant may elect to have such tax withholding obligation satisfied, in whole or in part, by (i)
authorizing the Company to withhold from Shares to be issued pursuant to any Award a number of Shares with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the withholding amount due, or (ii) transferring to the Company
Shares owned by the participant with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy
the withholding amount due. With respect to any participant who is subject to Section 16 of the Exchange Act, the following additional
restrictions shall apply:
(i)
the election to satisfy tax withholding obligations relating to an Award in the manner permitted by this Section 9(b) and
the actual tax withholding shall be made during the period beginning on the third (3
rd
) business day following the release
of quarterly or annual summary statements of revenues and earnings of the Company and ending on the twelfth (12
th
) business
day following such date. Alternatively, such election may be made at least six (6) months prior to the date as of which the receipt
of such an Award first becomes a taxable event for Federal income tax purposes;
(ii)
such election shall be irrevocable;
(iii)
such election shall be subject to the consent or disapproval of the Committee; and
(iv)
the Share(s) withheld to satisfy tax withholding, if granted at the discretion of the Committee, must pertain to an Award
which has been held by the participant for at least six (6) months from the date of grant of the Award.
(c)
Other Company Benefit and Compensation Arrangements
. Payments and other benefits received by a Participant under
an Award made pursuant to the Plan shall not be deemed a part of a Participant’s regular, recurring compensation for purposes
of any termination, indemnity or severance pay law and shall not be included in, nor have any effect on, the determination of benefits
under any pension or other employee benefit plan or similar arrangement provided by the Company or Affiliate, unless (i) expressly
so provided by such other plan or arrangement or (ii) the Committee expressly determines that an Award or a portion thereof should
be included as recurring compensation. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or
applicable only in specific cases.
(d)
No Right to Employment
. The grant of an Award shall not constitute an employment contract nor be construed as giving
a Participant the right to be retained in the employ of the Company or any Affiliate. Further, the Company or an Affiliate may
at any time dismiss a Participant from employment, free from any liability, or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any Award Agreement.
39
(e)
Governing Law
. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan
shall be determined in accordance with the laws of the State of New York and applicable Federal law without regard to conflict
of law.
(f)
Severability
. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable
in any jurisdiction, or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by
the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed
or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, Person, or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.
(g)
No Trust or Fund Created
. Neither the Plan nor any Award shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the
extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.
(h)
No Fractional Shares
. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash or other securities shall be paid or transferred in lieu of any fractional Shares, or whether
such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.
(i)
Headings
. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference.
Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision
thereof, and, in the event of any conflict, the text of the Plan, rather than such headings, shall control.
(j)
Indemnification
. Subject to requirements of Delaware State law, each individual who is or shall have been a member
of the Board, or a Committee appointed by the Board or a delegate of the Committee so acting, shall be indemnified and held harmless
by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he
or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts
paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment
in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf, unless such loss,
cost, liability, or expense is a result of his/her own willful misconduct or except as expressly provided by statute. The foregoing
right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled
under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company
may have to indemnify them or hold them harmless.
(k)
Compliance with Section 409A
. Except to the extent specifically provided otherwise by the Committee, Awards under
the Plan are intended to either be exempt from Section 409A or structured to comply with the requirements of Section so as to avoid
the imposition of any additional taxes or penalties under Section 409A. If the Committee determines that an Award, Award Agreement,
payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the
Plan would, if undertaken, cause a Participant to become subject to any additional taxes or other penalties under Section 409A,
then unless the Committee specifically provides otherwise, such Award, Award Agreement, payment, distribution, deferral election,
transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions
of the Plan and/or Award Agreement will be deemed modified, or, if necessary, suspended in order to comply with the requirements
of Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Participant.
For any Award that is subject to Section 409A, all rights to amend, terminate or modify the Plan or such Award are subject to the
requirements and limitations of Section 409A. Notwithstanding any provision in the Plan to the contrary, with respect to any Award
that is subject to Section 409A, distributions on account of a separation from service may not be made to a “specified employee”
(as defined by Section 409A) before the date which is six (6) months after the date of separation from service (or, if earlier,
the date of death of the employee). A Participant who is subject to the restriction described in the previous sentence shall be
paid on the first day of the seventh month after the Participant’s separation from service an amount equal to the benefit
that the Participant would have received during such six-month period absent the restriction.
(l)
No Representations or Covenants with Respect to Tax Qualification
. Although the Company may endeavor to (i) qualify
an Award for favorable U.S. tax provisions (e.g., incentive stock options under Section 422 of the Code) or (ii) avoid adverse
tax treatment (e.g., under Section 409A of the Code), the Company makes no representation to that effect and expressly disavows
any covenant to maintain favorable or avoid unfavorable tax treatment. The Company shall be unconstrained in its corporate activities
without regard to the potential negative tax impact on holders of Awards under the Plan.
40
(m)
Compliance with Laws
. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental agencies or stock exchanges or automated quotation systems
on which the Company is listed, quoted or traded as may be required. The Company shall have no obligation to issue or deliver evidence
of title for Shares issued under the Plan prior to:
(i)
obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and
(ii)
completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling
of any governmental body that the Company determines to be necessary or advisable or at a time when any such registration or qualification
is not current, has been suspended or otherwise has ceased to be effective.
The inability or impracticability of the Company to obtain
or maintain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder shall relieve the Company of any liability in respect of the
failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
(n)
Code Section 83(b) Elections
. Neither the Company, any Affiliate, nor the Committee shall have any responsibility
in connection with a Participant’s election, or attempt to elect, under Code section 83(b) to include the value of a Restricted
Stock Award in the Participant’s gross income for the year of payment. Any Participant who makes a Code section 83(b) election
with respect to any such Award shall promptly notify the Committee of such election and provide the Committee with a copy thereof.
(o)
Successors
. All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding
on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger,
consolidation, or otherwise, of all or substantially all of the business, stock and/or assets of the Company.
Section 10.
Term of the Plan
The Plan shall remain in full force and
effect through the tenth (10
th
) anniversary of the Effective Date, unless sooner terminated by the Board. After the
Plan is terminated, no future Awards may be granted, but Awards previously granted shall remain outstanding in accordance with
their applicable terms and conditions and the Plan’s terms and conditions.
41
IMPO
R
T
AN
T
ANNUA
L
MEETIN
G
INFORM
A
TION
Using
a
black
ink
pen,
mark
your
votes
with
an
X
as
shown
in this
example.
Please
do
not
write
outside
the
designated
areas.
Annual
Meeting
Proxy Card
PLEASE
FOLD
ALONG
THE
PERFOR
A
TION,
DE
T
ACH
AND
RETURN
THE
BOT
T
OM
PORTION
IN
THE
ENCLOSED
ENVELOPE.
A
Proposals
—
THE
BOARD
OF
DIREC
T
ORS
RECOMMENDS
TH
A
T
YOU
VOTE
“FOR”
PROPOSALS
1,
2,
3,
4,
5
AND
6.
1.
T
o
elect
eight
directors
to
serve
for
a
one
year
term.
For
W
ithhold For
W
ithhold For
W
ithhold
01
-
Henry
B.
Cook,
J
r
.
04
-
Robert B.
Johnston
07
-
George
J.
W
elch
02
-
Michael
I.
German
05
-
Joseph
P
.
Mirabito
08
-
John
B.
Williamson
III
03
-
T
ed
W
.
Gibson
06
-
William
Mirabito
2.
T
o
approve
an
amendment
to
the
certificate
of
incorporation to
increase
the
authorized
number
of
shares
of
common stock
to
4,500,000
shares
and
preferred
stock
available
for designation
by
the
Board of
Directors
to
750,000
shares.
4.
Non-binding
advisory
vote
to
approve
the
Company
’
s executive
compensation.
6.
T
o
transact
such
other
business
as
may
properly
come before
the
meeting
or
any
adjournment
thereof.
For Against
Abstain
For Against
Abstain
For Against
Abstain
3.
T
o
adopt
the
2018
Stock
Plan.
5.
T
o
ratify
the
appointment
of
Freed
Maxick
C
P
As,
P
.C. as our independent registered public accounting firm for
the
fiscal
year
ending
September
30,
2018.
For Against
Abstain
For Against
Abstain
B
Authorized
Signatures
—
This
section
must
be
completed
for
your
vote
to
be
counted.
—
Date
and
Sign
Below
When
shares
are
held
by
joint
tenants,
both
should
sign.
Executors,
administrators,
trustees,
etc.
should
give
full
title
as
s
u
ch.
If
the
signer
is
a
corporation,
please
sign
full
corporate
name
by duly
authorized
o
f
fice
r
.
Date
(mm/dd/yyyy)
—
Please
print
date
belo
w
.
Signature
1
—
Please
keep
signature
within
the
box. Signature
2
—
Please
keep
signature
within
the
box.
IF
VOTING
BY
MAIL,
YOU
MUST
COMPLETE
SECTIONS
A
-
C
ON
BOTH SIDES OF
THIS
CARD.
42
IMPOR
T
ANT
ANNUAL
MEETING
INFORM
A
TION
IMPO
R
T
ANT
NOTICE
REGARDING
THE
AV
AILABILITY
OF
PROXY
M
A
TERIALS
FOR
THE
ANNUAL
MEETING
OF
SHAREHOLDERS
T
O
BE
HELD
ON
APRIL
24,
2018
THE
PROXY
S
TA
TEMENT
AND
OUR
ANNUAL
REPO
R
T
FOR
THE
FISCAL
YEAR
ENDING
SEPTEMBER
30,
2017,
ARE
AV
AILABLE
ON
OUR
WEBSITE
A
T
:
WW
W
.CORNINGGAS.COM
PLEASE
FOLD
ALONG
THE
PERFOR
A
TION,
DE
T
ACH
AND
RETURN
THE
BOT
T
OM
PORTION
IN
THE
ENCLOSED
ENVELOPE.
+
ANNUAL
MEETING
OF
SHAREHOLDERS
APRIL
24,
2018,
10:00
A.M.
LOCAL
TIME
THIS
PROXY
IS
SOLICITED
BY THE
BOARD
OF
DIREC
T
ORS.
The undersigned
hereby appoints each of Michael I. German and Firouzeh Sarhangi, acting alone or togethe
r
,
the proxy or proxies
of the undersigned to attend
the
Annual
Meeting
of
Shareholders
of
Corning
Natural
Gas
Holding
Corporation
to
be
held
on
April
24,
2018,
at
330
W
est
William
Street,
Corning, New
Y
ork
14830,
located
south
of
W
est
Pulteney
Street
and
west
of
Go
f
f
Street,
beginning
at
10:00
a.m.
local
time,
and
any
adj
o
urnments,
and
to
vote
all shares
of
stock
that
the
undersigned
would
be
entitled
to
vote
if
personally
present
in
the
manner
indicated
belo
w
,
and
on
any
other matters
properly
brought before
the
Meeting
or
any
adjournments
thereof,
all
as
set
forth
in
the
March
22,
2018
Proxy
Statement. The
undersigned
hereby
acknowledges
receipt
of the
Notice
of
Annual
Meeting,
Proxy
Statement
and
Annual
Report of
Corning
Natural
Gas
Holding
Corporation.
THE
BOARD
OF
DIREC
T
ORS
RECOMMENDS
TH
A
T
YOU
VOTE
“FOR”
PROPOSALS
1,
2,
3,
4,
5
AND
6.
This
prox
y
, when
properly
executed,
will
be
voted
in
the
manner
directed
herein
by
the
undersigned
shareholde
r
.
If
no
direction
is
given
herein, this
proxy
will
be
voted
FOR
proposals
1,
2,
3,
4,
5
and
6.
In
the
discretion
of
the
proxies
on
all
other
matters
properly
brought
before
the
meeting.
(Items
to
be
voted
appear
on
reverse
side.)
C
Non-
V
oting
Items
Change
of
Address
—
Please
print
your
new
address
belo
w
.
Comments
—
Please
print
your
comments
belo
w
.
Meeting
Attendance
Mark
the
box
to
the
right if
you
plan
to
attend
the Annual
Meeting.
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