<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
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>
[X] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
NORTH COAST ENERGY, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NORTH COAST ENERGY, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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. LOGO]
NORTH COAST ENERGY, INC.
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
TO BE HELD DECEMBER 5, 1997
To Our Stockholders:
The Annual Meeting of Stockholders (the "Meeting") of North Coast
Energy, Inc. (the "Company") will be held at Holiday Inn Hudson, Route 8 and
Turnpike Exit 12, Hudson, Ohio, on Friday, December 5, 1997, at 9:00 a.m., EST,
to consider and act upon the following:
1. The election of three Directors whose term of office will
expire in 2000; and
2. A proposal to amend the provisions of Article IV of the
Company's Certificate of Incorporation to increase the number
of authorized shares of Common Stock to 60,000,000.
3. 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 October 9, 1997 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
November 7, 1997
<PAGE> 3
NORTH COAST ENERGY, INC.
1993 Case Parkway
Twinsburg, Ohio 44087-2343
-------------------------
PROXY STATEMENT
MAILED ON NOVEMBER 7, 1997
------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 5, 1997
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 Friday, December 5, 1997, 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 October 9, 1997 will be entitled to
vote at the Meeting or any adjournments thereof. As of that date, 16,542,832
shares of Common Stock, par value $.01 per share (the "Common Stock"), and
75,541 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 and "FOR" the
proposal to increase the number of authorized shares of Common Stock of the
Company.
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, owned on October 9, 1997 by: (i) each person known by the Company to own
beneficially more than 5% of the Company's outstanding Common 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>
COMMON STOCK
------------------------------------
Nature and Address (1) Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
<S> <C> <C> <C>
Charles M. Lombardy, Jr........... 665,242 Shares (2)(3) 3.99%
Garry Regan ...................... 663,294 Shares (2) 3.98%
Saul Siegel....................... 206,000 Shares (2) 1.23%
Leo J.M.J. Blomen................. 0 Shares *%
J.J.M. Smits...................... 0 Shares *%
Nuon International bv............. 17,241,381 Shares (4) 61.50%
Anthony Kovacevich................ 24,500 Shares (2) *%
George Begley..................... 27,125 Shares (5) *%
Steven L. Grose................... 3,692 Shares *%
C. Rand Michaels.................. 2,815 Shares *%
John H. Pinkerton................. 3,185 Shares *%
Lomak Petroleum, Inc.............. 4,079,874 Shares (6) 24.66%
All Directors and executive
officers as a group (12 persons)
persons) 1,660,356 Shares (7) 9.96%
</TABLE>
-------------------------------
* Less than one percent
(1) The address of Nuon International is Utrechtsweg 68, 6812 AH Arnhem,
The Netherlands. The address of Lomak Petroleum, Inc. is 125 State
Route 43, Hartville, Ohio 44632.
(2) Includes 404,582 shares of Common Stock, in the aggregate, which could
be acquired by Messrs. Regan (115,000 shares), Lombardy (115,000
shares), Siegel (201,000 shares) and Kovacevich (22,500 shares) upon
the exercise of immediately exercisable stock options or warrants which
they hold.
(3) The share ownership figures for Mr. Lombardy include 13,738 shares of
Common Stock owned by a trust for which Mr. Lombardy is the trustee and
as to which he disclaims any beneficial interest.
(4) Includes 11,494,254 shares of Common Stock that may be acquired by Nuon
International bv for $0.87 per share.
(5) Includes 10,000 shares of Common Stock which may be acquired upon the
exercise of immediately exercisable options. 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.
(6) Does not include 500,000 shares of Common Stock which may be acquired
upon the exercise of certain Warrants to purchase Common Stock.
(7) Includes 507,025 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 or warrants.
ELECTION OF DIRECTORS
3
<PAGE> 6
The Company's Board of Directors is divided into three classes, with
each class currently consisting of three 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 three Directors whose term will
expire at the 2000 Annual Meeting. Since the last Annual Meeting of
Stockholders, pursuant to authority granted in the Company's By-Laws, John H.
Pinkerton was appointed to the Board of Directors in November 1996 to a term
expiring in 1998, Steven L. Grose and C. Rand Michaels were appointed to the
Board in November 1996 to terms expiring in 1999, Leo J.M.J. Blomen was
appointed to the Board of Directors in September 1997 to a term expiring in 1998
and Jos J. M. Smits and Saul Siegel were appointed to the Board of Directors in
September 1997 to terms expiring at the Annual Meeting of Stockholder in
December 1997. In addition, after many years of faithful service, Charles K.
Ebinger, W. Dale Wegrich and Robert L. Bauman resigned from the Board of
Directors in September, 1997.
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.
NOMINEES FOR ELECTION
Name Age Principal Occupation and History
---- --- --------------------------------
Jos J. M. Smits (1) 48 Director.
Mr. Smits was appointed to the Board of
Directors on September 4, 1996. Mr. Smits
has been Manager-Purchasing and Trade for
Nuon Energy Group since July 1994. From
October 1992 until July 1994, Mr. Smits was
Managing Director of Fels B.V., a Dutch
manufacturer of building materials. Mr.
Smits holds a degree in Economics from the
University of Amsterdam, the Netherlands.
Saul Siegel (1) 67 Chief Operating Officer; Director.
Mr. Siegel was appointed as a Director and
Chief Operating Officer of North Coast in
September 1997. Since July 1996 Mr. Siegel
has been President and owner of Clark
Engineering Services, Inc., a Buchanan,
Michigan testing facility for off-road
vehicles. In addition, for more than five
years Mr. Siegel has been President of
Metalworking International Corporation, a
Cleveland, Ohio company that purchases
manufacturing plants and new and used
metalworking equipment. Mr. Siegel is also
Treasurer of The Precision Rebuilders of New
Orleans, which is engaged in the
remanufacturing of oil and gas valves.
Ralph L. Bradley (1) 56 Mr. Bradley is a nominee for election as a
Director of North
4
<PAGE> 7
Name Age Principal Occupation and History
---- --- --------------------------------
Coast. Mr. Bradley is currently President of
Bradley Energy International, which provides
energy solutions for the world market, and
Bradley Energy USA, which provides
individuals with the opportunity to own
various aspects of natural gas production.
Prior to forming these entities, Mr. Bradley
was chief executive officer of The Eastern
Group, Inc., and its predecessor, Eastern
States Exploration Company, Inc.
DIRECTORS CONTINUING IN OFFICE
Garry Regan (2) 47 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.
John H. Pinkerton (2) 42 Director.
Mr. Pinkerton was appointed to the Board of
Directors of North Coast in 1996. Mr.
Pinkerton is President, Chief Executive
Officer and a Director of Lomak Petroleum,
Inc. and joined Lomak Petroleum in 1988. He
was appointed President of Lomak Petroleum
Inc. In 1990 and Chief Executive Officer of
Lomak Petroleum, Inc. in 1992. Previously,
Mr. Pinkerton was Senior Vice
President-Acquisitions of SOCO. Prior to
joining SOCO in 1980, Mr. Pinkerton was with
Arthur Andersen & Co. Mr. Pinkerton received
his B.A. in Business Administration from
Texas Christian University and his Master of
Arts Degree in Business Administration from
the University of Texas.
Leo J.M.J. Blomen (2) 42 Director.
Mr. Blomen was appointed to the Board of
Directors of North Coast on September 4,
1997. Mr. Blomen has been director of the
International Division of Nuon Energy Group
since March 1997. Since July 1996 Mr. Blomen
has been Managing Director of Nuon
International bv. From March 1994 through
July 1996 Mr. Blomen served as Executive
Vice President of FuellCell Corporation of
America. Mr. Blomen is also the founder and,
from January 1993 to July 1996, the Managing
Director of Blomenco b.v. Mr. Blomen holds a
degree in Chemical Engineering and a Ph.D.
in Medicine.
Charles M. Lombardy, Jr. (3) 47 Chief Executive Officer; Director.
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
5
<PAGE> 8
Name Age Principal Occupation and History
---- --- --------------------------------
of NCE Securities, Inc., a wholly-owned
subsidiary of the Company and a registered
broker-dealer.
Steven L. Grose (3) 47 Director.
Mr. Grose was elected as a Director of North
Coast in 1996. Mr. Grose is Vice
President-Appalachian Region of Lomak
Petroleum, Inc. and joined Lomak Petroleum
in 1980. Previously, Mr. Grose was employed
by Halliburton Services, Inc. as a Field
Engineer from 1971 until 1974. In 1974 he
was promoted to District Engineer and in
1978 was named Assistant District
Superintendent based in Pennsylvania. Mr.
Grose is a member of the Society of
Petroleum Engineers and trustee of The Ohio
Oil and Gas Association. Mr. Grose received
his B.S. in Petroleum Engineering from
Marietta College.
C. Rand Michaels (3) 58 Director.
Mr. Michaels was elected as a Director of
North Coast in 1996. Mr. Michaels, who holds
the office of Vice Chairman of Lomak
Petroleum, Inc. and is a Director of Lomak
Petroleum, Inc., served as President and
Chief Executive Officer of Lomak Petroleum,
Inc. from 1976 through 1988 and Chairman of
the Board from 1984 through 1988, when he
became Vice chairman of Lomak Petroleum,
Inc. Mr. Michaels is also a director of
American Business Computers Corporation of
Akron, Ohio, a public company serving the
beverage dispensing and fast food
industries.
(1) Nominee for election. Term as a Director expires in 2000.
(2) Term as a Director expires in 1998.
(3) Term as a Director expires in 1999.
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 were 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, 1997.
Effective as of October 1, 1997, the members of the Audit Committee are Messrs.
Blomen, Grose, Michaels, Pinkerton and Smits.
The Compensation Committee, of which Dr. Ebinger and Messrs. Wegrich
and Lombardy were 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 twice during the year ended
March 31, 1997.
The Stock Option Committee, of which Dr. Ebinger and Mr. Lombardy were
members, reviews and makes recommendations concerning the Company's Stock Option
Plan and Stock Bonus Plan. The Stock Option Committee met once during the year
ended March 31, 1997. Effective as of October 1, 1997, the Stock Option
Committee merged with the Compensation Committee. The members of the Stock
Option and Compensation Committee are Messrs. Blomen, Pinkerton and Smits.
The Board of Directors of the Company held twelve meetings during the
year ended March 31, 1997. All of the Directors attended at least 75% of the
meetings of the Board of Directors and each committee on which they served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Until October 1, 1997, the Compensation Committee of the Board of
Directors included 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, 1997, 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 eight reports pertaining to eight transactions which were filed
late on behalf of Messrs. Hill, Wagers, Hoisek, Kovacevich, Pinkerton, Grose,
Michaels and Begley.
7
<PAGE> 10
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the annual and long-term compensation
for the Company's Chief Executive Officer and the two executive officers (the
"Named Executive Officers") earning in excess of $100,000 for fiscal 1997.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
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>
Charles M. Lombardy, Jr. 1997 $166,350 $0 N/A -- $7,148
Chief Executive Officer; 1996 165,000 0 N/A -- 6,308
Director 1995 165,635 0 N/A -- 4,974
Garry Regan 1997 166,350 0 N/A -- 6,188
Chairman of the Board; 1996 165,000 0 N/A -- 5,348
President; Director 1995 165,635 0 N/A -- 4,014
Anthony Kovacevich (2) 1997 104,700 1,875 N/A 2,500 3,316
Vice President - Exploration 1996 100,000 1,000 N/A -- 625
and 1995 45,327 0 N/A 20,000 625
Production
</TABLE>
No Named Executive Officer received personal benefits or perquisites
during fiscal year 1997 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, Regan and Kovacevich $2,810, $1,850 and $625,
respectively, for fiscal years 1997, 1996, and 1995 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, $4,338, $3,498, and
$2,164; Mr. Regan, $4,338, $3,498, and $2,164 respectively; Mr.
Kovacevich $2,691 for March 31, 1997. Under the terms of the Profit
Sharing Plan, all employees of the Company who have completed a 12
month period with at least 1,000 hours of service for the Company or
its affiliates are eligible to participate in the plan. The amount
of the Company's contributions to the Profit Sharing Plan is
determined by the Board of Directors. Allocations of Company
contributions under the plan are made on the basis of a
participant's total compensation and are subject to a graded vesting
schedule which allows 20% vesting after two years of service with an
additional 20% vesting for each complete year of service thereafter.
(2) Mr. Kovacevich resigned from his position with the Company on
September 30, 1997.
8
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning Stock Options
granted during fiscal 1997 to the Named Executive Officers:
<TABLE>
<CAPTION>
Percent of
Total Potential Realizable
Number of Options Value at Assumed
Name Securities Granted to Annual Rates of Stock
---- Underlying Employees Exercise or Price Appreciation
Options in Base Price Expiration for Option Term
Granted(1) Fiscal Year ($/Share) Date 5% 10%
---------- ----------- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Charles M. Lombardy, Jr. 0 N/A N/A N/A N/A N/A
Garry Regan 0 N/A N/A N/A N/A N/A
Anthony Kovacevich 2,500 13.81% .78125 Sept. 4, 2006 $539 $1,193
</TABLE>
- -----------
(1) Represents options granted by the Board of Directors on September 4,
1996 through the Company's Stock Option Plan.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUES
The following table summarizes options exercised during fiscal 1997 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)
Name on Value -------------------------- ---------------------
Exercisable 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
Anthony Kovacevich -- 0 22,500 0 0 0
</TABLE>
- ----------
(1) Based upon the closing bid price of a share of Common Stock as
reported on the NASDAQ system on March 31, 1997. None of the options
were in-the-money at March 31, 1997.
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 May 3, 2001. 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
9
<PAGE> 12
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).
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.
10
<PAGE> 13
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. On May 28, 1997, the
Board of Directors adopted a plan that allows the Directors to be paid their
fees in the form of Common Stock of the Company. The plan provides that Common
Stock will be issued at the average closing price of the previous five days
prior to the meeting. The annual retainer is similarly calculated at the end of
each quarter. All stock is payable yearly or sooner if a director is no longer
serving as a Board Member. The Company retains the right, with consultation of
the Director, to make any payments in cash. Effective October 1, 1997, the Board
terminated the payment of all Director's fees, either in cash or shares of
Common Stock, except that Directors fees are still payable, in cash, to any
Director who is not affiliated with a major stockholder of the Company.
Individuals who are employed by or sitting on the Board as representatives of a
major stockholder are considered to be affiliates of such stockholder.
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 officers, affiliates and
stockholders will be approved by a majority of disinterested directors, if any.
In connection with the sale of shares of Common Stock of the Company to
Nuon International bv, Mr. Saul Siegel received a cash payment of $75,000 and a
five year warrant to purchase 67,000 shares of Common Stock of the Company at a
price of $0.875 per share. In addition, upon the exercise, by Nuon International
bv, of its right to purchase additional shares of Common Stock of the Company,
Mr. Siegel will receive an additional $75,000 and five year warrants to purchase
an additional 134,000 shares of Common Stock of the Company at a price of $0.875
per share.
PROPOSED AMENDMENT TO ARTICLE IV OF THE COMPANY'S
CERTIFICATE OF INCORPORATION
On October 14, 1997, the Board of Directors recommended the adoption by
the stockholders of a proposed amendment to Article IV of the Certificate of
Incorporation of the Company which would increase the number of shares of Common
Stock which the Company shall have authority to issue from Forty Million
(40,000,000) to Sixty Million (60,000,000).
The proposed increase in the number of authorized shares of Common
Stock has been deemed advisable by the Board of Directors in order to provide
additional authorized but unissued shares for issuance from time-to-time for
such proper corporate purposes as may be determined by the Board, without
further action or authorization by the stockholders. Such corporate purposes
might include the acquisition of additional capital funds through the issuance
of shares, the acquisition of other companies, the declaration of shares splits
and/or share dividends or other corporate actions.
11
<PAGE> 14
The Company is actively seeking to grow through its continued business
of drilling coupled with strategic acquisitions. The Board has determined that
it would enhance the Company's flexibility to have additional authorized shares
of Common Stock available if an acquisition became available. Although the
Company has no present plans, arrangements, understandings or commitments to
issue additional shares of Common Stock, the Board of Directors believes that it
is in the best interests of the Company to have the flexibility to issue Common
Stock without seeking stockholder approval at the time possible actions are
identified. The Company currently has 40,000,000 authorized shares of Common
Stock with 34,977,949 shares either issued or reserved for issuance under
warrants, preferred stock conversion, options and stock bonus plans and pursuant
to a Stock Purchase Agreement with Nuon International bv
If this proposal is adopted, there will be 25,022,051 authorized shares
of Common Stock available for issuance (based on information regarding
outstanding shares of Common Stock as of October 9, 1997).
The proposed increase in the number of authorized shares of Common
Stock will not change the rights of holders of presently outstanding shares of
Common Stock. The newly authorized shares will have the same rights as presently
outstanding shares. Present stockholders of the Company would not have any
preemptive rights to purchase a portion of the newly authorized shares.
The increase in authorized but unissued shares may have an
anti-takeover effect in that additional shares could be used to dilute the stock
ownership of persons seeking to obtain control of the Company. The resulting
effect may be to render more difficult or to discourage the possibility of
certain mergers, tender offers or proxy contests.
Nuon International bv, Lomak Petroleum, Inc. and Messrs. Lombardy and
Regan have all indicated that they will vote in favor of the proposal to
increase the number of authorized shares of Common Stock.
If the proposed amendment is approved, all or any part of the
authorized, but unissued shares may thereafter be issued without further
approval from the stockholders, except as required by law or the policies of any
stock exchange or registered securities associated on which the shares of stock
of the Company may be listed, if any, for such purposes and on such terms as the
Board of Directors may determine. The Company is not presently subject to any
law or stock exchange or registered securities association policy which would
require further shareholder approval prior to issuance of the shares, except in
certain limited situations, including the issuance of a substantial block of
such shares.
RECOMMENDATION; REQUIRED VOTE
The Board of Directors recommends a vote "FOR" approval and adoption of the
proposal to adopt the following two resolutions:
RESOLVED, That, subject to the approval of the Stockholders of the
Company at the Annual Meeting, the Certificate of Incorporation of the
Company shall be amended by
12
<PAGE> 15
deleting the first full, introductory paragraph of the current Article
IV and replacing it with the following:
"The total authorized capital stock of the Corporation consists of
Sixty-Two Million (62,000,000) shares, of which number Sixty Million
(60,000,000) shall be shares of Common Stock, $.01 par value (the
"Common Stock"), and Two Million (2,000,000) shall be shares of
Preferred Stock, $.01 par value (the "Preferred Stock")."
RESOLVED FURTHER, That, subject to the receipt of the approval of the
stockholders of the Company at the Annual Meeting, the President and
the Secretary of the Company are hereby authorized and directed to
prepare, execute and file or cause to be filed an appropriate
Certificate of Amendment to the Company's Certificate of Incorporation
with the appropriate authorities and to take such other and further
action in order to carry out the intent and purposes of the preceding
resolution and render effective such amendment to the Certificate of
Incorporation.
The persons named in the accompanying proxy or their substitutes will
vote such proxy for this proposal unless it is marked to the contrary. The
affirmative vote of the holders of shares entitled to exercise a majority of the
total voting power of the Company at the Meeting is required for the approval
and adoption of this proposal.
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 1998 must do so no later than July 11,
1998. To be eligible for inclusion in the 1998 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 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:
13
<PAGE> 16
North Coast Energy, Inc.
1993 Case Parkway
Twinsburg, Ohio 44087-2343
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
November 7, 1997
<PAGE> 17
NORTH COAST ENERGY, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS -- DECEMBER 5, 1997
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 Holiday Inn, Hudson, Route 8 and Turnpike Exit 12,
Hudson, Ohio on Friday, December 5, 1997 at 9:00 A.M. (EST), 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 all of the nominees listed / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees
below) listed
Jos J.M. Smits, Saul Siegel
and Ralph L. Bradley
</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: , 1997
-------------
----------------------------------------
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> 18
NORTH COAST ENERGY, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS -- DECEMBER 5, 1997
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 Holiday Inn, Hudson, Route
8 and Turnpike Exit 12, Hudson, Ohio on Friday, December 5, 1997 at
9:00 A.M. (EST), 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 all of the nominees listed / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees
below) listed
Jos J.M. Smits, Saul Siegel
and Ralph L. Bradley
</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: , 1997
----------------------------
----------------------------------------
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> 19
NORTH COAST ENERGY, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS -- DECEMBER 5, 1997
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 Holiday Inn, Hudson,
Route 8 and Turnpike Exit 12, Hudson, Ohio on Friday, December 5, 1997
at 9:00 A.M. (EST), 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 all of the nominees listed / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees
below) listed
Jos J.M. Smits, Saul Siegel
and Ralph L. Bradley
</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: , 1997
-------------------------------
----------------------------------------
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
