<PAGE> 1
SCHEDULE 14A INFORMATION
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 / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Solicitin Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
North Coast Energy, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) 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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / 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.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
NORTH COAST ENERGY, INC.
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
TO BE HELD SEPTEMBER 4, 1996
To Our Stockholders:
The Annual Meeting of Stockholders (the "Meeting") of North Coast
Energy, Inc. (the "Company") will be held at the offices of North Coast Energy,
Inc., 1993 Case Parkway, Twinsburg, Ohio, on Wednesday, September 4, 1996, at
1:00 p.m., EDT, preceded by an Open House at Noon (please note the RSVP card
included with your proxy), to consider and act upon the following:
1. The election of two Directors whose term of office will expire in
1999; and
2. The transaction of such other business as may properly come before the
Meeting or any adjournments thereof.
Holders of Common Stock and Series A Preferred Stock of record at the
close of business on July 8, 1996 are entitled to notice of and to vote at the
Meeting. Stockholders owning Units and separate shares of Series A Preferred
Stock or Common Stock will receive multiple proxies, one blue (Units), one
white (Common Stock) and one pink (Series A Preferred Stock), and should
execute and return all proxies. Stockholders holding only either Units or
Common Stock will receive only one proxy and should execute and return it.
Whether or not you expect to be personally present at the Meeting,
please be sure that the enclosed proxy is properly marked, signed and dated,
and returned without delay in the enclosed prepaid envelope. Such action will
not limit your right to vote in person or to attend the Meeting, but will
ensure your representation if you cannot attend.
By Order of the Board of Directors,
THOMAS HILL
Secretary
August 7, 1996
<PAGE> 3
NORTH COAST ENERGY, INC.
5311 Northfield Road
Cleveland, Ohio 44146-1135
_________________________
PROXY STATEMENT
MAILED ON AUGUST 7, 1996
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 4, 1996
Proxies in the form enclosed with this Proxy Statement are solicited
by the Board of Directors of North Coast Energy, Inc., a Delaware corporation
(the "Company"), for use at the Annual Meeting of Stockholders (the "Meeting")
to be held on Wednesday, September 4, 1996, and any adjournments thereof. The
time, place and purposes of the Meeting are stated in the Notice of Annual
Meeting which accompanies this Proxy Statement.
Only stockholders of record as of July 8, 1996 will be entitled to
vote at the Meeting or any adjournments thereof. As of that date, 8,040,285
shares of Common Stock, par value $.01 per share (the "Common Stock"), and
305,140 shares of Series A, 6% Convertible Preferred Stock (the "Series A
Preferred Stock"), of the Company were issued and outstanding. Each share of
Common Stock outstanding as of the record date will be entitled to one vote,
and each share of Series A Preferred Stock outstanding as of the record date
will be entitled to 2.3 votes. Stockholders may vote in person or by proxy.
The Company's Certificate of Incorporation does not provide for cumulative
voting rights. Execution of a proxy will not in any way affect a stockholder's
right to attend the Meeting and vote in person. Any stockholder has the right
to revoke a proxy by written notice to the Secretary of the Company at any time
before it is exercised, including by executing another bearing a later date, or
by attending the Meeting and voting in person. Stockholders owning Units
and/or separate shares of Common Stock and Series A Preferred Stock will
receive multiple proxies, one blue (Units), one white (Common Stock) and one
pink (Series A Preferred Stock), and should execute and return all proxies that
they receive. Stockholders holding only Units or Common Stock or Series A
Preferred Stock will receive only one proxy and should execute and return it.
A properly executed proxy returned in time to be cast at the Meeting
will be voted in accordance with the instructions contained thereon, if it is
not revoked. If no choice is specified on the proxy, it will be voted "FOR"
the election of the individuals nominated by the Board of Directors.
The cost of soliciting proxies in the form accompanying this Proxy
Statement will be borne by the Company. In addition to solicitation by mail,
proxies may be solicited by Directors, officers and employees of the Company in
person or by mail, telephone, facsimile or telegraph, following the original
solicitation.
1
<PAGE> 4
At the Annual Meeting, in accordance with the Delaware General
Corporation Law and the Company's Certificate of Incorporation, the inspectors
of election appointed by the Board of Directors for the Annual Meeting will
determine the presence of a quorum and will tabulate the results of stockholder
voting. Pursuant to the Company's By-Laws, at the Annual Meeting the holders
of a majority of the outstanding shares of the Company's Common Stock entitled
to vote at the meeting, present in person or by proxy, will constitute a
quorum. The shares represented at the Annual Meeting by proxies which are
marked, with respect to the election of Directors, as "withheld" or, with
respect to any other proposals, "abstain", will be counted as shares present
for purposes of determining whether a quorum is present.
Under the rules of the New York Stock Exchange, brokers who hold
shares in street name for beneficial owners have the authority to vote on
certain items when they have not received instructions from such beneficial
owners. Under applicable Delaware law, if a broker returns a proxy and has not
voted on a certain proposal, such broker non-votes will count for purposes of
determining a quorum.
Pursuant to the Company's By-Laws, at the Annual Meeting, a majority
of the votes cast is sufficient to elect a nominee as a Director. In the
election of Directors, votes may be cast in favor or withheld; votes that are
withheld or broker non-votes will have no effect on the outcome of the election
of Directors.
Pursuant to the Company's By-Laws, all other questions and matters
brought before the meeting will be decided by the vote of the holders of a
majority of the outstanding shares entitled to vote thereon present in person
or by proxy at the meeting, unless otherwise provided by law or by the
Certificate of Incorporation. In voting for such other matters, votes may be
cast in favor, against or abstained. Abstentions will count as present for
purposes of the proposal on which the abstention is noted and will have the
effect of a vote against the proposal. Broker non-votes, however, are not
counted as present and entitled to vote for purposes of determining whether a
proposal has been approved and will have no effect on the outcome of such
proposal.
THE COMPANY
North Coast Energy, Inc. and its subsidiaries ("North Coast" or the
"Company") are engaged in the business of oil and gas exploration, development
and production. The Company was incorporated under the laws of Delaware in
August, 1988 as a successor to and for the purposes of continuing the business
and operations of an existing corporation and combining the assets and
properties of North Coast with those to be acquired through an acquisition
conducted as an exchange offer.
2
<PAGE> 5
SHARE OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
The following table sets forth information with respect to the Common
Stock, Series A Preferred Stock and Series B Cumulative Convertible Preferred
Stock (the "Series B Preferred Stock" and, collectively with the Series A
Preferred Stock, the "Preferred Stock") owned on July 8, 1996 by: (i) each
person known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock and Preferred Stock at such date; (ii) each Director
of the Company; (iii) each of the executive officers listed in the Summary
Compensation Table included elsewhere herein; and (iv) all Directors and
executive officers as a group, and the percentage of the outstanding shares
represented thereby.
<TABLE>
<CAPTION>
SERIES A SERIES B
COMMON STOCK PREFERRED STOCK(1) PREFERRED STOCK(2)
------------------------------------ --------------------------- -----------------------
Amount and Amount and Amount and
Nature of Percent Nature of Percent Nature of Percent
Nature and Address (3) Beneficial of Beneficial of Beneficial of
of Beneficial Owner Ownership Class Ownership Class Ownership Class
- ----------------------- ---------- ------- ---------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Lombardy, Jr...... 720,158 Shares (4)(5) 8.46% 1,430 Shares(5) .47% 0 Shares 0%
Garry Regan(12)............... 716,871 Shares (4) 8.42% 0 Shares 0% 0 Shares 0%
Charles K. Ebinger............ 10,000 Shares (6)(7) .12% 0 Shares 0% 500 Shares .11%
W. Dale Wegrich.............. 20,750 Shares (7) .24% 0 Shares 0% 1,000 Shares .22%
George R. Begley.............. 23,000 Shares (7)(8) .27% 0 Shares 0% 0 Shares 0%
Robert L. Bauman(12).......... 0 Shares 0% 0 Shares 0% 0 Shares 0%
Robert M. Hoisek.............. 36,489 Shares (4)(9) .43% 0 Shares 0% 0 Shares 0%
Bruce E. Brocker.............. 2,152,599 Shares 25.30% 5,655 Shares 1.85% 0 Shares 0%
Anthony Kovacevich............ 20,000 Shares (4) .24% 0 Shares 0% 6 Shares 0%
NAGIT (USA) INC.............. 1,899,000 Shares (10) 23.64% 0 Shares 0% 0 Shares 0%
Eugene Hershman.............. 437,213 Shares 5.14% 9,960 Shares 3.26% 0 Shares 0%
All Directors and executive 1,607,170 Shares (11) 18.89% 1,430 Shares .47% 1,500 Shares .33%
officers as a group (10
persons)
<FN>
(1) Each share of Series A Preferred Stock is currently convertible into 2.3 shares of Common Stock.
(2) Each share of Series B Preferred Stock is currently convertible into 5.75 shares of Common Stock.
(3) The address of Messrs. Lombardy and Regan is Suite 320, 5311 Northfield Road, Cleveland, Ohio 44146. The address of
Mr. Brocker is 3769 Tippecanoe Place, Canfield, Ohio 44406. The address of NAGIT (USA) INC. ("NAGIT") is 950 West
Valley Road, #2404, Wayne, Pennsylvania 19087. The address of Mr. Hershman is 13340 Verdon Drive, Palm Beach Gardens,
Florida 33410.
(4) Includes 380,582 shares of Common Stock, in the aggregate, which could be acquired by Messrs. Regan (177,066 shares),
Lombardy (177,066 shares), Kovacevich (20,000 shares) and Hoisek (26,450 shares) upon the exercise of immediately
exercisable stock options which they hold.
(5) The share ownership figures for Mr. Lombardy include 6,588 shares of Common Stock and 1,430 shares of Series A
Preferred Stock owned by a trust for which Mr. Lombardy is the trustee and as to which he disclaims any beneficial
interest.
(6) Does not include 2,875 shares of Common Stock issuable upon conversion of 500 shares of Series B Preferred Stock held
by Dr. Ebinger.
(7) Includes 10,000 shares of Common Stock which may be acquired upon the exercise of immediately exercisable options.
(8) Does not include 8,050 shares of Common Stock issuable upon exercise of 7,000 Series B Warrants held by Mr. Begley's
spouse. Mr. Begley disclaims beneficial ownership of such shares.
(9) Includes 10,039 shares of Common Stock held by Mr. Hoisek's spouse.
(10) Does not include 500,000 shares of Common Stock which may be acquired upon the exercise of certain Warrants to purchase
Common Stock.
(11) Includes 469,107 shares of Common Stock which may be acquired by all Directors and executive officers as a group upon the
exercise of immediately exercisable stock options.
(12) Messrs. Regan and Bauman are brothers-in-law.
</TABLE>
3
<PAGE> 6
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, with
each class currently consisting of two Directors. One class of Directors is
elected at each Annual Meeting to serve a three-year term. At the Annual
Meeting, stockholders will be asked to elect two Directors whose term will
expire at the 1999 Annual Meeting.
Unless otherwise directed, the persons named in the accompanying proxy
will vote for the election of the nominees set forth in the table below as
Directors of the Company. In the event of the death of or inability to act of
such nominees, the proxies will be voted for the election as a Director of
such other persons as the Board of Directors may recommend. The Board of
Directors has no reason, however, to anticipate that this will occur. In no
event will the accompanying proxy be voted for persons other than those named
below and any such substitute nominee. Under applicable provisions of Delaware
law and the Company charter documents, the nominees receiving the greatest
number of votes cast at a meeting at which a quorum is present will be elected
as Director of the company. Accordingly, abstentions and broker non- votes
will have no effect on the election of Directors.
Pursuant to an agreement between the Company and NAGIT, the Company is
required to use its best efforts to elect a representative designated by NAGIT
to the Company's Board of Directors. Pursuant to the terms of a Stockholders
Agreement dated September 29, 1994 ("the Stockholders Agreement"), NAGIT and
Messrs. Regan and Lombardy have agreed to nominate and vote for each party's
designee for election as a Director. The Stockholders Agreement terminates on
September 28, 2004.
Pursuant to an agreement with the Company, Mr. Bruce E. Brocker has
agreed, until January 6, 1997, to vote all of his voting securities of the
Company for the election of those directors nominated by the Board of
Directors.
NOMINEE OF ELECTION
<TABLE>
<CAPTION>
Name Age Principal Occupation and History
---- --- --------------------------------
<S> <C> <C>
Charles M. Lombardy, Jr. 46 Chief Executive Officer; Director.
(1) Mr. Lombardy has served as an executive officer and as a Director
of the Company's predecessor since 1981 and has been Chief
Executive Officer and a Director of the Company since August,
1988. Mr. Lombardy holds a B.B.A. from Kent State University and
is a member of the Ohio Oil & Gas Association and the Independent
Petroleum Association of America. Mr. Lombardy also serves as
Secretary/Treasurer of NCE Securities, Inc., a wholly-owned
subsidiary of the Company and a registered broker-dealer.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
Name Age Principal Occupation and History
---- --- --------------------------------
<S> <C> <C>
Charles K. Ebinger (1) 48 Director
Dr. Ebinger has served as a Director of the Company since August,
1988. Dr. Ebinger has over 14 years experience in conventional
energy policy planning, energy pricing analysis, economic and
political risk analysis, market forecasting and energy project
feasibility assessment, design, and implementation for
international corporations, banks and governments. From 1979
through 1987, Dr. Ebinger was the Director of the Energy and
Strategic Resources Program at the Georgetown University for
Strategic and International Studies. From 1987 to 1988, he was
senior consultant to Putnam Hayes and Bartlett, Inc. Since
January, 1988 he has served as Director of the Energy Analysis &
Planning Group of Energy/Development International. Since 1984,
Dr. Ebinger has been a Director of the Kokomo Gas and Fuel
Company. He holds a B.A. from Williams College and Masters and
Doctorate Degrees from the Fletcher School of Law and Diplomacy,
Tufts University.
</TABLE>
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
Name Age Principal Occupation and History
---- --- --------------------------------
<S> <C> <C>
George R. Begley (2) 53 Director.
Mr. Begley was elected as a Director of North Coast in September
1994. Mr. Begley holds a B.A. from New York University. Mr.
Begley joined the investment banking firm of Prescott, Ball and
Turben in 1971 and worked in both its Cleveland and London,
England offices. In 1974, in conjunction with two partners he
established McKinley Allsopp Inc. ("McKinley"), an investment
banking firm with offices in London, Paris and New York. Mr.
Begley remained with McKinley until 1990. In 1990, he became Vice
Chairman of the Forthill Group, based in New York, which
specializes in both raising capital for companies and acquiring
companies for its own account. In 1995, Mr. Begley formed his own
private investment banking office to assist select companies in
financing projects. Mr. Begley serves on the Board pursuant to a
designation by NAGIT under the terms of the Stockholders
Agreement.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
Name Age Principal Occupation and History
---- --- --------------------------------
<S> <C> <C>
Robert L. Bauman (2) 55 Director.
Mr. Bauman was elected as a Director of North Coast in June 1996.
Mr. Bauman is Chairman, President and Chief Executive Officer of
Hickok Incorporated, a publicly traded leader in automotive
electronic diagnostic technology. Mr. Bauman is a graduate
engineer from Case Institute of Technology and received his MBA
from Case Western Reserve University.
Garry Regan (3) 46 President; Director.
Mr. Regan served as an executive officer and Director of the
Company's predecessor since 1981 and has been President and
Director of the Company since August 1988. He holds a B.S. Degree
from Ohio State University and a Masters Degree from Indiana
University. Mr. Regan is a member of the Independent Petroleum
Association of America. Mr. Regan also serves as President of NCE
Securities, a wholly-owned subsidiary of the Company and a
registered broker-dealer.
W. Dale Wegrich (3) 67 Director.
Mr. Wegrich has served as a Director of the Company since August,
1988. From 1955 until his retirement in 1985, Mr. Wegrich was
employed by Diamond Shamrock Corporation (now Maxus Energy) in a
variety of executive positions, including service as Chairman,
President or Board Member of a number of Diamond Shamrock
subsidiaries. From January, 1986 until his retirement in 1991 he
served as the Director of Public Utilities of the City of
Cleveland. Mr. Wegrich received a B.A. Degree from Baylor
University and has completed the advanced management program at
The Harvard School of Business.
<FN>
(1) Nominee for election. Term as a Director expires in 1999.
(2) Term as a Director expires in 1997.
(3) Term as a Director expires in 1998.
</TABLE>
6
<PAGE> 9
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has three standing committees: the Audit
Committee, the Compensation Committee and the Stock Option Committee.
The Audit Committee, of which Dr. Ebinger and Messrs. Begley and
Wegrich are members, oversees the accounting functions of the company,
including matters related to the appointment and activities of the Company's
auditors. The Audit Committee met once during the year ended March 31, 1996.
The Compensation Committee, of which Dr. Ebinger and Messrs. Wegrich
and Lombardy are members, reviews and makes recommendations concerning the
salaries of the Company's executive officers and administers the Company's
Profit Sharing Plan. The Compensation Committee met once during the year ended
March 31, 1996.
The Stock Option Committee, of which Dr. Ebinger and Mr. Lombardy are
members, review and makes recommendations concerning the Company's Stock Option
Plan and Stock Bonus Plan. The Stock Option Committee did not meet during the
year ended March 31, 1996.
The Board of Directions of the company held six meetings during the
year ended March 31, 1996. All of the Directors attended at least 75% of the
meetings of the Board of Directors and each committee on which they served
except Dr. Ebinger and Mr. Begley.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors includes Charles
M. Lombardy, Jr., the Chief Executive Officer of the Company.
UNTIMELY BENEFICIAL OWNERSHIP REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and Directors, and persons who beneficially own
more than 10% of any class of equity security to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Executive
officers, Directors and greater than 10% beneficial owners are required by SEC
regulation to furnish the company with copies of all Section 16(a) forms they
file.
Based solely on a review of the copies of such forms furnished to the
Company, the Company believes that for the fiscal year ended March 31, 1996,
all Section 16(a) filing requirements applicable to its executive officers,
Directors and greater than 10% beneficial owners were complied with, with the
exception of two reports pertaining to two transactions which were filed late
on behalf of Messrs. Regan and Begley.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following tables sets for the annual and long-term compensation
for the Company's Chief Executive Officer and the three highest paid executives
(the "Named Executive Officers") earning in excess of $100,000 for fiscal 1996.
7
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
-
Annual Compensation Compensation
------------------- ------------
Other Number of
Annual Securities All Other
Compen- Underlying Compen-
Name and Principal Position Year Salary Bonus sation Options sation (1)
--------------------------- ---- ------ ----- ------ ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Lombardy, Jr. 1996 $165,000 $ 0 N/A -- $6,308
Chief Executive Officer; 1995 165,635 0 N/A -- 4,974
Director 1994 165,635 0 N/A 115,000 9,671
Garry Regan 1996 165,000 0 N/A -- 5,348
President; Director 1995 165,635 0 N/A -- 4,014
1994 165,635 0 N/A 115,000 8,711
Robert M. Hoisek 1996 134,600 500 N/A -- 3,221
Executive Vice President 1995 154,983 500 N/A -- 1,970
1994 154,595 500 N/A -- 5,562
Anthony Kovacevich 1996 100,000 1,000 N/A -- 625
Vice President - 1995 45,327 0 N/A 20,000 625
Exploration
and Production
</TABLE>
No Named Executive Officer received personal benefits or perquisites
during fiscal year 1996 in excess of the lesser of $50,000 or 10% of his
aggregate salary and bonus.
1. The amounts set forth in the table include, with respect to Messrs.
Lombardy and Regan $2,810 and $1,850, respectively, for fiscal
years 1996, 1995, and 1994 in life insurance premiums paid by the
Company pursuant to the terms of employment agreements between the
Company and of such persons. See "Compensation of Directors and
Executive Officers -- Employment Agreements." With respect to all of
the Named Executive Officers, the amounts set forth in the table
reflect the following contributions under the Company's Profit Sharing
Plan and matching funds through the 401(K) Plan: Mr. Lombardy,
$3,498, $2,164 and $6,861; Mr. Regan, $3,498, $2,164 and $6,861 and
Mr. Hoisek, $3,221, $1,970, and $5,562 for fiscal years 1996, 1995 and
1994, respectively. Mr. Kovacevich was not eligible for the Company's
Profit Sharing Plan. Under the terms of the Profit Sharing Plan, all
employees of the Company who have completed a 12 month period with at
least 1,000 hours of service for the Company or its affiliates are
eligible to participate in the plan. The amount of the Company's
contributions to the Profit Sharing Plan is determined by the Board of
Directors. Allocations of Company contributions under the plan are
made on the basis of a participant's total compensation and are
subject to a graded vesting schedule which allows 20% vesting after
two years of service with an additional 20% vesting for each complete
year of service thereafter.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUES
The following table summarizes options exercised during fiscal 1996
and presents the value of unexercised options held by the Named Executive
Officers at fiscal year end:
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired Options at Fiscal Year-End at Fiscal Year-End(1)
on Value --------------------------- ---------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Lombardy, Jr. -- $ 0 177,066 0 $ 0 $ 0
Garry Regan -- 0 177,066 0 0 0
Robert M. Hoisek -- 0 26,450 0 0 0
Anthony Kovacevich -- 0 20,000 0 0 0
___________
<FN>
1. Based upon the closing bid price of a share of Common Stock as
reported on the NASDAQ system on March 31, 1996. None of the options
were in-the-money at March 31, 1996.
</TABLE>
Employment Agreements. On May 3, 1995, after being recommended and
approved by the Compensation Committee, the Company entered into employment
contracts with Messrs. Lombardy and Regan providing for the employment of these
officers through January 31, 1998, with an option to extend for a three year
period, unless earlier terminated pursuant to the terms of these agreements.
These agreements provide for base annual compensation of $165,000 to each of
Messrs. Lombardy and Regan, with increases for cost of living based upon the
Consumer Price Index. The base annual salary of $165,000 is the same amount
each executive was receiving under previous employment contracts with the
Company. Additional bonuses may be awarded from time to time by the Board of
Directors. In addition, the Board of Directors has the authority to increase,
but not decrease without the executive's consent, the base salary of automobile
expenses, disability coverage, death benefits, and severance payments. Each
agreement provides that for a period of two years from the date of the
termination of the executive's employment the executive will not, directly or
indirectly, engage in any business competitive with that of the Company or
otherwise interfere with the Company's business.
Each of the employment agreements contains provisions addressing a
possible change in control of the Company (the "Change in Control Provisions").
The Change in Control Provisions require the payment of certain benefits to
these executive officers upon the termination of the employment, other than for
good cause, after the occurrence of a change in control of the Company. A
"change in control of the Company" is defined to include a change in the
securities ownership of the Company's securities which would be required to be
reported as a change in control in a proxy statement filed under the Securities
Exchange Act of 1934, the Company's ceasing to have a class of equity
securities registered under Section 12 of the Securities Exchange Act of 1934,
or the acquisition by any person or entity of 50% or more of the outstanding
shares of Common Stock of the Company (or its equivalent in voting power of any
class or classes of the Company's securities).
9
<PAGE> 12
Under the Change in Control Provisions, either of these two executive
officers who remains in the employ of the Company following the date of the
occurrence of a change in control of the Company and whose employment is
subsequently terminated other than for good cause would be entitled to receive
a lump sum payment from the Company, regardless of whether such executive
officer continues in the employ of the Company (the "Change in Control
Payment"). After the occurrence of a change in control, "termination" is
defined to include relocation of the principal place at which the executive is
to perform his duties to a location outside the Cleveland, Ohio metropolitan
area, a substantial reduction in the benefits provided to the executive, a
substantial reduction in the executive's responsibilities or functions or a
substantial adverse change in the executive's working conditions. It should be
noted that the Change in control Provisions provide for the payment of the
Change in Control Payment in the event of a termination of the executive's
employment after any change in control of the Company, regardless of whether
such change in control is approved by the Board of Directors and/or
stockholders of the Company.
Under such Change in Control Provisions, in the event of a termination
of employment after a Change in Control, other than for good cause, each of
Messrs. Lombardy and Regan would be entitled to Change in Control Payments in
the amount equal to six times the average annual salary, bonus, and incentive
compensation amounts paid during the three year period immediately proceeding
the termination after a Change in Control. Also, at the executive's election,
he could elect to receive seventy-two equal payments for a period of
seventy-two months or a lump sum equal to the aggregate of the monthly amounts
payable discounted to present value at a discount rate of 7% per annum.
The Change in Control Provisions will make more difficult or may
discourage a proxy contest, the assumption of control of the Company by a
substantial shareholder or shareholder group, or the removal of incumbent
management. Additionally, the Change in Control Provisions may have the effect
of discouraging a third party from making a tender offer or otherwise
attempting to obtain control of the Company, even though such an attempt might
be beneficial to the Company and its stockholders. Accordingly, stockholders
of the Company may be deprived of certain opportunities to sell their shares
of Common Stock at temporarily higher market prices often associated with
actual or rumored takeover attempts.
On October 11, 1994, Mr. Kovacevich entered into a three year
employment agreement with the Company providing for base compensation of
$100,000 per year. The agreement also provides for life insurance.
Directors Fees. The Company pays its Directors who are not employees
of the Company an annual retainer of $3,500 and a fee of $500 for attendance in
person, or by telephone if substantive matters are discussed, at each meeting
of the Board of Directors, plus reimbursement of expenses.
CERTAIN TRANSACTIONS
The Company believes that the terms of the following transactions were
as favorable to the Company as could have been obtained from unaffiliated third
parties. All future transactions between the Company and its affiliates will
be on terms no less favorable to the Company than those that could be obtained
from unaffiliated parties and all loans to Company
10
<PAGE> 13
officers, affiliates and stockholders will be approved by a majority of
disinterested directors, if any.
During the fiscal year ended March 31, 1996, the Company leased its
headquarters in Cleveland, Ohio, from Continental Land and Building Co., which
is owned by Eugene Hershman, who currently owns approximately 5% of the
outstanding Common Stock of the Company. The aggregate annual lease payments
for this facility are approximately $60,000.
On January 6, 1995, the Company entered into an agreement with Mr.
Brocker, formerly Chairman of the Board and Director of the company, relating
to the separation of Mr. Brocker from the Company. The agreement terminated
Mr. Brocker's Employment Agreement and the Restated Stockholders Agreement
between Messrs. Brocker, Regan and Lombardy, and Mr. Brocker resigned as an
Officer and Director of the company. The agreement also provides that Mr.
Brocker will provide consulting services to the Company and that Mr. Brocker is
subject to certain nondisclosure and noncompetition provisions as defined in
the agreement. Pursuant to the agreement, Mr. Brocker receives payments of
$173,100 each year for three years. The agreement also provides for certain
other payments relating to automobile expenses, health coverage, death benefits
and payments in lieu of the Company's contribution on behalf of Mr. Brocker
under the profit sharing plan, as if he had still been employed by the Company.
Effective as of June 30, 1995, Mr. Begley entered into an agreement
with the Company relating to Mr. Begley's previous services to the Company in
connection with various financing efforts, for which Mr. Begley received a
$30,000 fee for his services.
OTHER MATTERS
The Board of Directors is not aware of any matter to come before the
Meeting other than those mentioned in the Notice of Annual Meeting of
Stockholders. If other matters, however, properly come before the Meeting, it
is the intention of the persons named in the accompanying proxy to vote in
accordance with their best judgment on such matters insofar as the proxies are
not limited to the contrary.
A representative of the firm of Arthur Andersen LLP, the Company's
independent accountants, will be in attendance at the Annual Meeting, will have
an opportunity to make a statement if he so desire and will be available to
respond to questions from stockholders concerning the Company's audited
financial statements.
Any stockholder who wishes to submit a proposal for inclusion in the
proxy materials to be distributed by the Company in connection with its Annual
Meetings of Stockholders to be held in 1997 must do so no later than April 10,
1997. To be eligible for inclusion in the 1997 proxy materials of the company,
proposals must conform to the requirements set forth in Regulation 14A under
the Securities Exchange Act of 1934.
Upon receipt of a written request from any stockholder, the Company
will mail, at no charge to the stockholder, a copy of the Company's Annual
Report on Form 10-K, including financial statements and schedules required to
be filed with the Securities and Exchange
11
<PAGE> 14
Commission pursuant to Rule 13a-1 under the Securities Exchange Act of 1934,
for the Company's most recent year. Written request for such Report should be
directed to:
North Coast Energy, Inc.
5311 Northfield Road
Cleveland, Ohio 44146-1135
Attention: President
You are urged to sign and return your proxy promptly in the enclosed
return envelope to make certain your shares will be voted at the Meeting.
By Order of the Board of Directors,
Thomas Hill
Secretary
12
<PAGE> 15
NORTH COAST ENERGY, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS -- SEPTEMBER 4, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints Charles M. Lombardy, Jr., Garry
Regan, and Timothy D. Wagers, and each of them, as Proxy holders and
attorneys, with full power of substitution, to appear and vote all of
the Units of North Coast Energy, Inc. which the undersigned shall be
entitled to vote at the Annual Meeting of Stockholders of the Company to
be held at the offices of North Coast Energy, Inc., 1993 Case Parkway,
Twinsburg, Ohio, on Wednesday, September 4, 1996 at 1:00 P.M. (EDT), and
at any adjournments thereof, hereby revoking any and all proxies
heretofore given, and (ii) authorizes and directs said Proxy holders to
vote all of the shares of Common Stock and Preferred Stock of the
Company represented by this Proxy as follows, WITH THE UNDERSTANDING
THAT IF NO DIRECTIONS ARE GIVEN BELOW, SAID UNITS WILL BE VOTED "FOR"
THE ELECTION OF THE DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS.
<TABLE>
<S> <C> <C>
(1) ELECTION OF DIRECTORS / / FOR both of the nominees listed / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for both nominees
below) listed
Charles M. Lombardy, Jr. and
Charles K. Ebinger
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the following line)
--------------------------------------------------------------
(Continued and to be signed on other side)
UNITS
(Proxy -- continued from other side)
(2) In their discretion to act on any other matter or matters which may
properly come before the Annual Meeting.
<TABLE>
<S> <C>
Dated: , 1996
-------------------
----------------------------------------
Your signature to this Proxy form should
be exactly the same as the name
imprinted hereon. Persons signing as
executors, administrators, trustees or
in similar capacities should so
indicate. For joint accounts, the name
of each joint owner must be signed.
PLEASE DATE, SIGN AND RETURN
PROMPTLY IN THE ACCOMPANYING
ENVELOPE.
</TABLE>
1 -- Units
<PAGE> 16
NORTH COAST ENERGY, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS -- SEPTEMBER 4, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints Charles M. Lombardy, Jr., Garry
Regan, and Timothy D. Wagers, and each of them, as Proxy holders and
attorneys, with full power of substitution, to appear and vote all of
the shares of Preferred Stock of North Coast Energy, Inc. which the
undersigned shall be entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at the offices of North Coast
Energy, Inc., 1993 Case Parkway, Twinsburg, Ohio, on Wednesday,
September 4, 1996 at 1:00 P.M. (EDT), and at any adjournments thereof,
hereby revoking any and all proxies heretofore given, and (ii)
authorizes and directs said Proxy holders to vote all of the shares of
Preferred Stock of the Company represented by this Proxy as follows,
WITH THE UNDERSTANDING THAT IF NO DIRECTIONS ARE GIVEN BELOW, SAID
SHARES WILL BE VOTED "FOR" THE ELECTION OF THE DIRECTORS NOMINATED BY
THE BOARD OF DIRECTORS.
<TABLE>
<S> <C> <C>
(1) ELECTION OF DIRECTORS / / FOR both of the nominees listed / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for both nominees
below) listed
Charles M. Lombardy, Jr. and
Charles K. Ebinger
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the following line)
--------------------------------------------------------------
(Continued and to be signed on other side)
SHARES
(Proxy -- continued from other side)
(2) In their discretion to act on any other matter or matters which may
properly come before the Annual Meeting.
<TABLE>
<S> <C>
Dated: , 1996
----------------------------
----------------------------------------
Your signature to this Proxy form should
be exactly the same as the name
imprinted hereon. Persons signing as
executors, administrators, trustees or
in similar capacities should so
indicate. For joint accounts, the name
of each joint owner must be signed.
</TABLE>
PLEASE DATE, SIGN AND RETURN
PROMPTLY IN THE ACCOMPANYING
ENVELOPEE.
2 -- Preferred Stock
<PAGE> 17
NORTH COAST ENERGY, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS -- SEPTEMBER 4, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints Charles M. Lombardy, Jr., Garry
Regan, and Timothy D. Wagers, and each of them, as Proxy holders and
attorneys, with full power of substitution, to appear and vote all of
the shares of Common Stock of North Coast Energy, Inc. which the
undersigned shall be entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at the offices of North Coast
Energy, Inc., 1993 Case Parkway, Twinsburg, Ohio, on Wednesday,
September 4, 1996 at 1:00 P.M. (EDT), and at any adjournments thereof,
hereby revoking any and all proxies heretofore given, and (ii)
authorizes and directs said Proxy holders to vote all of the shares of
Common Stock of the Company represented by this Proxy as follows, WITH
THE UNDERSTANDING THAT IF NO DIRECTIONS ARE GIVEN BELOW, SAID SHARES
WILL BE VOTED "FOR" THE ELECTION OF THE DIRECTORS NOMINATED BY THE BOARD
OF DIRECTORS.
<TABLE>
<S> <C> <C>
(1) ELECTION OF DIRECTORS / / FOR both of the nominees listed / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for both nominees
below) listed
Charles M. Lombardy, Jr. and
Charles K. Ebinger
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the following line)
--------------------------------------------------------------
(Continued and to be signed on other side)
SHARES
(Proxy -- continued from other side)
(2) In their discretion to act on any other matter or matters which may
properly come before the Annual Meeting.
<TABLE>
<S> <C>
Dated: , 1996
-------------------------------
----------------------------------------
Your signature to this Proxy form should
be exactly the same as the name
imprinted hereon. Persons signing as
executors, administrators, trustees or
in similar capacities should so
indicate. For joint accounts, the name
of each joint owner must be signed.
</TABLE>
PLEASE DATE, SIGN AND RETURN
PROMPTLY IN THE ACCOMPANYING
ENVELOPE.
3 -- Common Stock
