<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
NORTH COAST ENERGY, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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)(1) 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.
An Affiliate of NUON International
The Netherlands
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
TO BE HELD OCTOBER 6, 2000
To Our Stockholders:
The Annual Meeting of Stockholders (the "Meeting") of North Coast
Energy, Inc. (the "Company") will be held at the Metropolitan Club at the
Huntington Bank Building, 925 Euclid Avenue, Cleveland, Ohio, on Friday, October
6, 2000 at 9:00 a.m., EST, to consider and act upon the following:
1. The election of two (2) Directors whose term of office will expire in 2003;
2. To consider and act upon a proposal to authorize, approve and adopt the North
Coast Energy, Inc. 2000 Employee Stock Bonus Plan to replace a similar plan
that is due to expire February 1, 2001; and
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 August 18, 2000, 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 A. HILL
Secretary
September 15, 2000
<PAGE> 3
NORTH COAST ENERGY, INC.
1993 Case Parkway
Twinsburg, Ohio 44087-2343
-------------------------
PROXY STATEMENT
MAILED ON SEPTEMBER 15, 2000
------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 6, 2000
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, October 6, 2000, 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 August 18, 2000, will be entitled to
vote at the Meeting or any adjournments thereof. As of that date, 15,199,749
shares of Common Stock, par value $.01 per share (the "Common Stock"), and
73,046 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 0.46 votes. Stockholders may vote in person or by proxy. The
Company's Certificate of Incorporation (the "Certificate") 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 proxy
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
adoption of the North Coast Energy, Inc. 2000 Employee Stock Bonus Plan and
"FOR" the election of each of the two 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.
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<PAGE> 4
At the Meeting, in accordance with the Delaware General Corporation Law
and the Certificate, the inspector of election appointed by the Board of
Directors for the Meeting will determine the presence of a quorum and will
tabulate the results of stockholder voting. Pursuant to the Company's By-Laws
(the "By-Laws"), at the Meeting the holders of a majority of the outstanding
shares of the Common Stock entitled to vote at the Meeting, present in person or
by proxy, will constitute a quorum. The shares represented at the 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 provisions of the Delaware General Corporation Law, the
affirmative vote of the majority of the shares cast affirmatively or negatively
at the meeting is required to approve the adoption of the North Coast Energy,
Inc. 2000 Employee Stock Bonus Plan (the "Plan"). Abstentions or broker
non-votes will have no effect on the proposal to adopt the Plan.
Pursuant to the By-Laws, at the 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 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. 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., a Delaware corporation and an affiliate of nv
NUON, with its subsidiaries and predecessors, ("North Coast" or the "Company"),
is an independent natural gas and oil company engaged in exploration,
development and production activities primarily in the Appalachian Basin. The
Company's strategy focuses primarily on its acquisition of proved developed and
undeveloped properties and on the enhancement, drilling and development of such
properties. The Company currently has three wholly-owned subsidiaries, NCE
Securities, Inc., North Coast Operating Company, and Peake Energy, Inc., two of
which are considered active (NCE Securities and Peake). The Company began
operations in 1981 and in August 1988 was incorporated under the laws of
Delaware. In 1990, the Company acquired the assets and properties of 21 Drilling
Programs ("Drilling Programs")* through an exchange offer (the "Exchange Offer")
in which the Company issued publicly-traded stock. In 1997, NUON International
Projects bv ("NUON") and the Company formed a strategic alliance that has
resulted in NUON acquiring an 86% majority ownership position in the Company as
of May 4, 2000. Moreover, NUON has provided significant financial and technical
resources that have enabled the Company to acquire additional oil and gas
producing assets, increase its daily
2
<PAGE> 5
production and reserves, improve its efficiency as an owner/operator and
substantially improve its financial results.
SHARE OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
The following table shows 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 August 18, 2000 by: (i) each person known
by the Company to own beneficially more than 5% of the Common Stock and
Preferred Stock at such date; (ii) each Director of the Company; (iii) each of
the current executive officers listed in the Summary Compensation Table included
elsewhere in this Proxy Statement; and (iv) all Directors and executive officers
as a group, and the percentage of the outstanding shares represented thereby.
Common Stock
-----------------------------------------
<TABLE>
<CAPTION>
Nature and Address (1) Amount and Nature of Percent
of Beneficial Owner_ Beneficial Ownership of Class
---------------------- -------------------- --------
<S> <C> <C>
Garry Regan 118,185 Shares *%
Omer Yonel 5,000 Shares (2) *%
Carel W. J. Kok 0 Shares *%
Cok van der Horst 0 Shares *%
Jos J. M. Smits 0 Shares *%
NUON International 13,048,277 Shares 85.96%
Projects bv (1)
Ralph L. Bradley 20,000 Shares (3) *%
C. Rand Michaels 8,286 Shares (4) *%
All Directors and 157,815 Shares (5) 1.04%
executive officers as
a group (10 persons)
</TABLE>
*Less than one percent
(1) The address of NUON International Projects bv is Utrechtseweg 68, 6812
AH Arnhem, The Netherlands.
(2) Includes 5,000 shares of Common Stock that Mr. Yonel could acquire
upon the exercise of immediately exercisable stock options that he
holds.
(3) Includes 20,000 shares of Common Stock that Mr. Bradley could acquire
upon the exercise of immediately exercisable stock options that he
holds.
(4) Includes 6,667 shares of Common Stock that Mr. Michaels could acquire
upon the exercise of immediately exercisable stock options that he
holds pursuant to a grant of options to acquire 20,000 shares. A
second tranche of options will vest in April 2001, and the remaining
one third in April 2002.
(5) Includes 38,011 shares of Common Stock that 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
The Board of Directors is divided into three classes, with Classes II
and III consisting of two Directors and Class I consisting of three Directors.
One class of directors is generally elected at each annual meeting to serve a
three-year term. At the Meeting, stockholders will be asked to elect two
Directors whose terms will expire at the 2003 annual meeting. Director Jos
3
<PAGE> 6
J.M. Smits, whose term of office is due to expire at the beginning of this
year's Annual Meeting, has decided to retire from service on the Board of
Directors.
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. 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 Directors.
NOMINEES TO TERM EXPIRING IN 2003
<TABLE>
<CAPTION>
Name Age Principal Occupation and History
---- --- --------------------------------
<S> <C> <C>
Ron L. Langenkamp (1) 55 Ron L. Langenkamp is currently a consultant in the energy industry,
with particular expertise in the areas of natural gas and power
market deregulation. Mr. Langenkamp most recently served for two
years as an external consultant to Reliant Energy, Inc. and
supervised all European commercial activities in his role as Acting
Chief Commercial Officer. From 1994 to 1997 Mr. Langenkamp served
in various capacities, including President, of Norstar, a natural
gas retail sales partnership between Orange and Rockland Utilities,
Inc. and Shell Oil Company. From 1977 to 1994 Mr. Langenkamp held
various management positions in the energy industry including the
office of President of Cabot Transmission Company and then as
President of Chippewa Gas Corporation. Mr. Langenkamp received his
B.A. degree from Sam Houston State University and a Master's degree
from the University of Texas at Austin.
Ralph L. Bradley (1) 59 Ralph Bradley was elected as a Director in December 1997.
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. Mr. Bradley currently chairs the Stock Option and
Compensation Committee of the Board of Directors.
DIRECTORS CONTINUING IN OFFICE
C. Rand Michaels (2) 63 C. Rand Michaels was elected as a Director in 1996. Mr. Michaels
retired from the office of Vice Chairman of Range Resources
Corporation (formerly Lomak Petroleum, Inc.) and is a director of
Range Resources Corporation, served as the 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 received his
B.S. from Auburn University and his M.B.A. from the University of
Denver. 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. Mr. Michaels
currently chairs the Audit Committee of the Board of Directors.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
Name Age Principal Occupation and History
---- --- --------------------------------
<S> <C> <C>
Cok van der Horst (2) 55 Cok van der Horst was appointed to the Board of Directors in
October 1999. Mr. van der Horst is currently the Director, NUON
East and North Holland, where he was the Chief Financial Officer
between 1993 and 1999, and was also in charge of technical affairs,
information technology, personnel and activities in the national
energy market. He has recently assumed responsibilities in the
area of mergers, acquisitions and divestments for the parent
company, nv NUON. Prior to joining NUON in January of 1993, Mr.
van der Horst was chairman of the board of PEB, the energy
distribution company of the province of Friesland (a regional
government in The Netherlands). At PEB he was responsible for the
financial and economic policy. Mr. van der Horst holds a Master's
degree in business administration from Erasmus University in
Rotterdam.
Omer Yonel (3) 36 Omer Yonel was appointed Executive Vice President-Corporate
Development of North Coast Energy, Inc. in January 1999. In May
1999 he was promoted to Chief Operating Officer and in October 1999
Mr. Yonel was promoted to Chief Executive Officer and appointed as
a Director. Mr. Yonel has over ten years of international
experience in project engineering, project management and sales in
the European oil and gas industry. Prior to joining NUON in
January 1998, he was a project manager for the construction of
co-generation and power plants at Schelde Engineering & Contractors
bv. Previous to his service with Schelde, Mr. Yonel held various
project engineering, management and sales positions at ABB Lummus,
an Asea Brown Boveri subsidiary that provides engineering,
management and consultancy services to global chemical,
petrochemical, petroleum refining, oil and gas and other
industries. Mr. Yonel holds a B.S. as well as a MSc. degree in
Engineering from Delft University of Technology in The Netherlands.
Additionally, Mr. Yonel has a certification of Project Management,
is a certified Cost Engineer through the International Cost
Engineering Council and holds several certifications from Executive
Education programs and Post-Graduate programs, including Mergers &
Acquisitions from Columbia University in New York.
Carel W.J. Kok (3) 34 Carel W.J. Kok was elected as a Director in December 1998 and
currently serves as Chairman of the Board of Directors. Mr. Kok
has been Manager of Business Development with the International
Division of the NUON Energy Group since October 1996. From 1990 to
1995, he was with Royal Dutch Shell Group working in a variety of
downstream commercial, trading and new business development
functions in East Asia, the Middle East, as well as Western and
Eastern Europe. Mr. Kok was co-founder of Lone Star Europe
Holding, a U.S. Dutch joint venture with the American chain Lone
Star Steakhouse & Saloon. Mr. Kok has also served on the Board of
Calortex Ltd., a retail gas distribution company in the United
Kingdom serving nearly 500,000 customers and has served as Chairman
of the Board of the Sino-foreign joint venture company Shantou Dan
Nan Windpower Development Company, Ltd., a joint venture now
operating the largest windfarm in China. Mr. Kok holds a B.A. from
Princeton University and an M.B.A. from the Rotterdam School of
Management at Erasmus University.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
Name Age Principal Occupation and History
---- --- --------------------------------
<S> <C> <C>
Garry Regan (3) 50 Mr. Regan had 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 Master's 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, Inc., a wholly owned subsidiary of the Company and a
registered broker-dealer.
</TABLE>
(1) Nominee for election. Term as a Director expires in 2003. (Class III)
(2) Term as a Director expires in 2002. (Class II)
(3) Term as a Director expires in 2001. (Class I)
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee, of which Messrs. Michaels, Bradley and van der
Horst are currently members, oversees the accounting functions of North Coast,
including matters related to the appointment and activities of North Coast's
auditors. The Audit Committee met once during the year ended March 31, 2000.
On June 7, 2000, the Audit Committee approved a formal written Audit
Committee Charter in response to changes in the Nasdaq listing standards that
had been approved by the Securities and Exchange Commission (the "Commission")
on December 14, 1999. Under the new rules companies were given six months in
which to adopt a charter for the Audit Committee and were directed to publish
the charter in a proxy statement once every three years. The action of the Audit
Committee was ratified by the Board of Directors by unanimous written consent
effective June 7, 2000, and a certification was filed with Nasdaq on June 13,
2000. The text of the charter is attached as Appendix B to this Proxy Statement
and is published in compliance with the new standard. No action on the part of
stockholders is required, and no action is being requested in connection with
the adoption of the charter of the Audit Committee. The charter's adequacy will
be reviewed by the Board of Directors on at least an annual basis.
The Stock Option and Compensation Committee, of which Messrs. Bradley,
Smits and Kok are members, reviews and makes recommendations concerning the
salaries of North Coast's executive officers, reviews and makes recommendations
concerning the Company's stock option plan and stock bonus plan and administers
North Coast's profit sharing plan. The Stock Option and Compensation Committee
met once during the year ended March 31, 2000, and took action by unanimous
written consent on two (2) separate occasions.
The Board of Directors of the Company held seven meetings during the
year ended March 31, 2000. All of the Directors attended at least 75% of the
meetings of the Board of Directors and each committee on which they served,
except Messrs. Lombardy and Pinkerton, both of whom resigned during the fiscal
year.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, Directors, and persons who beneficially own more
than 10% of any class of equity
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<PAGE> 9
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, 2000, 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 a report which was filed late on behalf of Mr. Michaels with
respect to his grant of stock options.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the annual and long-term compensation for the
Company's Chief Executive Officer and three executives (the "Named Executive
Officers") earning in excess of $100,000 for fiscal 2000.
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>
Omer Yonel 2000 $109,550 $20,000 N/A 5,000 0
Chief Executive Officer 1999 0 0 N/A 0
Charles M. Lombardy, Jr. 2000 $20,610 (2) $0 N/A -- $370,000(2)
Former Chief 1999 178,050 0 N/A -- 11,654
Executive Officer 1998 173,740 0 N/A 9,576
Garry Regan 2000 $178,623 0 N/A -- $8,183
President; Director 1999 178,050 0 N/A -- 10,694
1998 173,740 0 N/A -- 8,616
Saul Siegel 2000 $113,850 0 N/A -- $0
Former Chief Executive Officer 1999 190,223 0 N/A -- 4,451
1998 102,733 0 N/A -- 0
</TABLE>
No Named Executive Officer received personal benefits or perquisites
during fiscal year 2000 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
2000, 1999, and 1998 in life insurance premiums paid by the Company
pursuant to the terms of employment agreements between the Company and
such persons. See "Compensation of Directors and Executive Officers --
Employment Agreements." With respect to all of the Named Executive
Officers, the amounts shown in the table reflect the following
contributions under the Company's Profit Sharing Plan and matching
funds through the 401(K) Plan: Mr. Lombardy, $0, $8,844, and $6,766,
and Mr. Regan, $6,333, $8,844, and $6,766, for fiscal years 2000, 1999
and 1998, respectively. Mr. Siegel was not eligible under the terms of
the plan for every year presented except 2000 and 1999, in which years
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<PAGE> 10
the amounts were $0 and $4,451. Mr. Yonel was not eligible under the
terms of the plan for every year presented and no life insurance
premiums were paid by the Company on his behalf during fiscal year
2000.
(2) Effective April 30, 1999, Charles M. Lombardy, Jr., the chief executive
officer of North Coast, was paid $370,000 and was granted 60,000
warrants at $5.00 per share in exchange for canceling his employment
agreement and for his resignation as a Director and officer. NUON also
agreed to purchase Mr. Lombardy's Common Stock at $4.375 per share.
This purchase directly reduced the amount of Common Stock NUON was
required to purchase in September, 1999 under its August 1, 1997 stock
purchase agreement. The compensation of $20,610 for fiscal 2000
represents salary for the month of April 2000.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table summarizes options granted to Named
Executive Officers during fiscal year 2000.
<TABLE>
<CAPTION>
Potential
---------
realizable
----------
value at
--------
assumed annual
--------------
rates of stock
--------------
Individual Grants price
---------- ------ -----
appreciation
------------
for option term
---------------
Name Number of Percent
securities Of total Exercise
underlying Options/SARs Of base Expiration 5%(1) 10%(1)
option/SARs Granted to price Date ($) ($)
granted employees in ($/Sh)
(#) fiscal year
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Omer 5,000 46.7% $4.375 10-18-2009 $13,757 $34,863
Yonel
Chief
Executive
Officer
</TABLE>
(1) The potential realizable value of the options, if any, granted in
fiscal year 2000 to the Named Executive Officers was calculated by
multiplying those options by the excess of (a) the assumed market
value, as of October 18, 2009, of Common Stock if the market value of
Common Stock were to increase 5% or 10% in each year of the option's
10-year term, over (b) the base price shown. This calculation does not
take into account any taxes or other expenses that might be owed. The
assumed market value at a 5% assumed annual appreciation rate over the
10 -year term is $7.13 and such value at a 10% assumed annual
appreciation rate over that term is $11.35. The 5% and 10% assumed
appreciation rates are set forth in the Commission rules and no
representation is made that the Common Stock will appreciate at these
rates or at all.
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<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUES
The following table summarizes options exercised during fiscal 2000 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>
Omer Yonel -- $ 0 5,000 0 $ 0 $ 0
Charles M. Lombardy, Jr. -- 0 0 0 0 0
Garry Regan -- 0 0 0 0 0
Saul Siegel -- 0 0 0 0 0
</TABLE>
(1) Based upon the closing bid price of a share of Common Stock as reported
on Nasdaq on March 31, 2000. No options were in the money at March 31,
2000.
Employment Contracts. Mr. Regan has an employment agreement running
through May 3, 2001, unless terminated earlier under the terms of the agreement.
The agreement provides for base annual compensation of $182,642 to Mr. Regan,
with increases for cost of living based upon the Consumer Price Index.
Additional bonuses may be awarded from time to time by the Board of Directors.
The agreements provide 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 North Coast or
otherwise interfere with North Coast's business.
The Board of Directors conditionally approved the award of an
employment contract with Mr. Siegel at its meeting on March 16, 1998, with the
terms and conditions to be substantially the same as those contained in the
employment agreement with Mr. Regan. The agreement was to commence May 3, 1998,
for a three-year period, but was referred to the Executive Committee for review
and final approval. Mr. Siegel received a base annual compensation of $182,230,
which also included payment instead of health and life insurance benefits. The
Executive Committee did not approve the contract, and on October 18, 1999, Mr.
Siegel resigned and executed a separation agreement that disclaimed any rights
under the purported employment agreement.
Mr. Regan's employment agreement contains provisions addressing a
possible change in control of North Coast. The purchase of Common Stock by NUON
was exempted from the change of control provision by a separate agreement. The
change in control provisions provide conditions which continue to exist. The
change in control provisions require the payment of benefits to Mr. Regan upon
the termination of his employment, other than for good cause, after the
occurrence of a change in control of North Coast. A "change in control of North
Coast" includes a change in the ownership of North Coast's securities, which
would be required to be reported as a change in control in a proxy statement
filed under the Exchange Act, North Coast's ceasing to have a class of equity
securities registered under Section 12 of the Exchange Act, or the acquisition
by any person or entity of 50% or more of the outstanding shares of Common Stock
or its equivalent, through the acquisition of a combination of Preferred and
Common Stock, in voting power of North Coast's Common Stock.
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<PAGE> 12
Under the change in control provisions, if Mr. Regan remains in the
employ of North Coast following the date of the occurrence of a change in
control of North Coast and his employment is subsequently terminated other than
for good cause, he would be entitled to receive a lump sum payment from North
Coast, regardless of whether the executive officer continues in the employ of
North Coast. After the occurrence of a change in control of North Coast,
"termination" includes 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. 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 North Coast, regardless of whether such change in control is approved
by the Board of Directors and/or stockholders of North Coast.
Under the change in control provisions, in the event of a termination
of Mr. Regan's employment after a change in control of North Coast, other than
for good cause, he would be entitled to change in control payments in the amount
equal either to 2.99 times the average annual salary, bonus, and incentive
compensation amounts paid during the three-year period immediately preceding the
termination after a change in control of North Coast, payable in 36 equal
monthly installments, 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 North Coast 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 North Coast, even though such an attempt might be
beneficial to North Coast and its stockholders. Accordingly, stockholders of
North Coast 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.
Directors Fees. During fiscal 1998, the Board of Directors voted to
discontinue the payment of Directors fees to any member of the Board of
Directors. However, the Board of Directors granted options to purchase 20,000
shares of Common Stock at $4.375 per share to Ralph L. Bradley during the year
ending March 31, 1999. Similarly, the Board of Directors granted options to
purchase 20,000 shares of Common Stock at $4.375 per share to C. Rand Michaels
during the year ending March 31, 2000. Mr. Bradley's options are fully vested
and Mr. Michaels' options vest over a three-year period.
CERTAIN TRANSACTIONS
North Coast believes that the terms of the following transactions were
as favorable to North Coast as could have been obtained from unaffiliated third
parties. All future transactions between North Coast and its affiliates will be
on terms no less favorable to North Coast 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.
North Coast currently manages 29 Drilling Programs, and each Drilling
Program has been conducted as a separate limited partnership with North Coast
serving as managing general partner of each. North Coast contributes the drill
sites to each Drilling Program and agrees to
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<PAGE> 13
contribute all tangible equipment necessary to drill, complete and produce each
well, as well as organizational and syndication costs of each Drilling Program.
Drilling Programs raised $5.2 million during fiscal 2000, $3.5 million during
fiscal 1999, and $2.7 million during fiscal 1998.
Accounts receivable from affiliates consist primarily of receivables
from the partnerships managed by North Coast and are for administrative fees
charged to the partnerships and to reimburse North Coast for amounts paid on
behalf of the partnerships. Substantially all of North Coast's revenues, other
than oil and gas production revenue, are generated from or as a result of the
organization and management of oil and gas partnerships sponsored by North
Coast. During the year ended March 31, 2000, North Coast acquired limited
partnership interests in oil and gas drilling programs that it had sponsored at
a cost of approximately $90,000.
Pursuant to the terms of a stock purchase agreement by and between
North Coast and NUON dated August 1, 1997, North Coast agreed to sell up to
1,149,426 shares of Common Stock each year over a three year period. NUON
purchased 1,149,426 shares of North Coast Common Stock on September 4, 1997,
another 1,149,426 shares on September 30, 1998, and 1,042,125 shares on
September 30, 1999. All shares were purchased at a price of $4.375 per share.
In connection with the sale of shares of Common Stock on September 30,
1998 and 1999 to NUON, Mr. Siegel received cash payment of $75,000 and five-year
warrants to purchase 26,800 shares of Common Stock at a price of $4.375 per
share. Mr. Siegel acted as a consultant to assist North Coast in finding a
partner in the energy industry.
Effective April 30, 1999, Charles M. Lombardy, Jr., the chief executive
officer of North Coast, was paid $370,000 and was granted 60,000 warrants at
$5.00 per share in exchange for canceling his employment agreement and for his
resignation as a director and officer. NUON also agreed to purchase Mr.
Lombardy's Common Stock at $4.375 per share. This purchase directly reduced the
amount of Common Stock NUON was required to purchase in September, 1999 under
its August 1, 1997 stock purchase agreement.
Effective October 18, 1999, Saul Siegel resigned as an officer and
Director and entered into a separation agreement that provided for the extension
of the exercise period under three sets of warrants that had been issued to Mr.
Siegel in partial consideration of the finder's service he provided in
connection with the stock purchase agreement between NUON International Projects
bv and the Company. By the terms of the separation agreement, the exercise
period for the 1997 and 1998 warrants was extended to September 30, 2004. The
separation agreement also provided for the reimbursement of certain expenses
that Mr. Siegel had incurred for the benefit of the Company.
Effective March 14, 2000, the Stock Option and Compensation Committee,
pursuant to authority delegated to it by the Board of Directors, unanimously
approved the grant by the Company of a $96,000 loan to Mr. Omer Yonel, the Chief
Executive Officer, to facilitate the downpayment on the purchase of a home in
the vicinity of the Company's headquarters and for related expenses. The loan
will mature and the principal and interest thereon, compounded monthly at the
Federal Fund's rate of 6.5% per annum, will be due in the form of a balloon
payment on May 1, 2004, the fifth anniversary of Mr. Yonel's employment with the
Company.
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<PAGE> 14
PROPOSAL TO RATIFY THE COMPANY'S STOCK BONUS PLAN
At the Meeting, the stockholders will be asked to ratify, confirm and
adopt the Plan, providing for the granting to selected key employees of the
Company and its subsidiary corporations of Common Stock. The Board of Directors
has adopted the Plan subject to approval by the stockholders. A summary of the
Plan is provided below. This summary description is qualified in its entirety by
reference to the text of the Plan, which is attached as Appendix A to this Proxy
Statement.
BACKGROUND
On February 1, 1991, the Company put into effect a Key Employees Stock
Bonus Plan to provide key employees with greater incentive to serve and promote
the interests of the Company and its stockholders. The original plan is due to
expire on February 1, 2001, and the Board of Directors has authorized and
approved the adoption of the North Coast Energy, Inc. 2000 Employee Stock Bonus
Plan (the "Plan") to replace the original plan.
PURPOSE OF THE PLAN
The purpose of the Plan is to provide greater incentive to such key
employees of the Company and its subsidiaries as may be designated for
participation in the Plan by encouraging them to acquire a new or an additional
share ownership in the Company, thus increasing their proprietary interest in
the Company's business and providing them with an increased personal interest in
the Company's continued success and progress. Accordingly, the Company will,
from time to time during the effective period of the Plan, issue to such key
employees as may be selected to participate in the Plan shares of Common Stock
in consideration of their prior service to the Company or its subsidiaries on
the terms and subject to the conditions of the Plan.
ADMINISTRATION OF THE PLAN
The Plan is administered by the Stock Option and Compensation Committee
of the Board of Directors (the "Committee"). The Committee will be composed of
no fewer than two members of the Board of Directors who will be designated by
the Board of Directors. Members of the Committee receive no additional
compensation for their service on the Committee.
The Committee is authorized: (i) to select the key employees who will
receive bonuses of Common Stock; (ii) to determine the number of shares of
Common Stock to be issued as a bonus; (iii) to determine the time when bonuses
will be granted; (iv) to adopt, amend and rescind such rules and regulations as,
in the Committee's opinion, may be advisable in the administration of the Plan;
and (v) to construe and interpret the Plan, the rules and regulations and the
instruments evidencing bonuses granted under the Plan and to make all of the
determinations deemed necessary or advisable for the administration of the Plan.
PARTICIPATION IN THE PLAN
Bonuses may be granted from time to time in the discretion of the
Committee only to such key employees of the Company or of a subsidiary
corporation of the Company whose initiative and efforts contribute or may be
expected to contribute to the Company's continued
12
<PAGE> 15
growth and future success, including key employees who may also be members of
the Board of Directors or officers. Members of the Committee shall not be
eligible to participate in the Plan, or to receive bonuses under it while
serving on the Committee. The Committee may grant more than one bonus to the
same employee. No bonus may be issued to any employee during any period of time
when he is on leave of absence.
SHARES SUBJECT TO THE PLAN
The shares to be issued under the Plan will be shares of Common Stock,
par value $.01 per share, of the Company. The aggregate number of shares of
Common Stock which may be issued as bonuses under the Plan is 400,000. Either
treasury or authorized and unissued shares, or both, in such amount or amounts,
within the maximum limits of the Plan, as the Board of Directors shall from time
to time determine, may be so issued.
AMENDMENT OF THE PLAN
The Committee is authorized to interpret the Plan and from time to time
adopt any rules and regulations for carrying out the Plan that it may deem
advisable. Subject to the approval of the Board of Directors, the Committee may
at any time amend, modify, suspend or terminate the Plan. In no event, however,
without the approval of stockholders, may any action of the Committee or the
Board of Directors result in: (i) amending, modifying or altering the
eligibility requirements, or (ii) increasing or decreasing, except as set forth
in "Shares Subject to the Plan" above, the maximum number of shares as to which
bonuses may be granted.
TERMINATION OF THE PLAN
The Plan will terminate by its terms on February 1, 2011.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Upon award of a bonus pursuant to the Plan to a person who is not a
Director, officer or owner of 10% or more of the Common Stock, the Company will
be entitled to a federal income tax deduction in the amount equal to the fair
market value of the shares of Common Stock at the date of such bonus. A
recipient of a bonus who is not an officer, Director or owner of 10% or more of
the Common Stock will realize ordinary income for federal income tax purposes in
an amount equal to the fair market value of the shares of Common Stock received
by such person on the date of such bonus. When the recipient of a bonus is an
officer, Director or owner of 10% or more of the Common Stock, the recipient
will not realize income tax at the time of the bonus unless he makes the
election discussed hereinafter, but the fair market value of the shares on a
date six months after the date of exercise will be taxed at ordinary income tax
rates at that time, and the Company will be entitled to a deduction for a like
amount. The recipient may elect, within 30 days after the date of issuance of
shares pursuant to a bonus (which the Internal Revenue Service may assert occurs
on the date of grant of a bonus), to treat the fair market value of the shares
on the date of issuance as ordinary income at that time, and the Company will be
entitled to a deduction for a like amount. If this election is made, no
additional income will be realized by the recipient on the date six months after
the date of issuance.
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<PAGE> 16
RECOMMENDATION; REQUIRED VOTE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY,
CONFIRM AND ADOPT THE PLAN. RATIFICATION OF THE PLAN REQUIRES THE AFFIRMATIVE
VOTE OF THE HOLDERS OF SHARES ENTITLED TO EXERCISE A MAJORITY OF THE TOTAL
VOTING POWER OF THE COMPANY IN THE ELECTION OF DIRECTORS.
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 Hausser + Taylor LLP, the Company's
independent accountants, will be in attendance at the Meeting, will have an
opportunity to make a statement if that representative so desires 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
meeting of stockholders to be held in 2001 must do so no later than April 10,
2001, which is 120 days in advance of the anticipated mailing date of the proxy
materials for the 2001 annual stockholders meeting. To be eligible for inclusion
in the 2001 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 Commission pursuant to Rule 13a-1 under the Securities Exchange
Act of 1934, for the Company's most recent year. Written requests for such
Annual Report should be directed to:
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 A. Hill
Secretary
September 15, 2000
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<PAGE> 17
APPENDIX A
NORTH COAST ENERGY, INC.
2000 EMPLOYEE STOCK BONUS PLAN
North Coast Energy, Inc. hereby adopts a Stock Bonus Plan for
the benefit of certain persons and subject to the terms and provisions set forth
below.
1. Definitions. The following terms shall have the meanings set forth
below whenever used in this instrument:
(a) The word "Board" shall mean the Board of Directors of the Company.
(b) The word "Committee" shall mean the Stock Option and Compensation
Committee appointed by the Board.
(c) The words "Common Stock" shall mean shares of the Common Stock, par
value of $.01 per share, of the Company.
(d) The word "Company" shall mean North Coast Energy, Inc., a Delaware
corporation, and any successor thereto that shall maintain this Plan.
(e) The words "Key Employee" shall mean any person who is a high level
executive officer or other valuable managerial, marketing or technical employee
of either the Company or any Subsidiary and who does not own beneficially 5% or
more of the Common Stock.
(f) The word "Plan" shall mean this instrument, the North Coast Energy,
Inc. 2000 Employee Stock Bonus Plan, as it is originally adopted and as it may
be amended hereafter.
(g) The word "Subsidiary" shall mean any corporation, partnership or
other business entity at least 50% of whose voting equity securities are owned
directly or indirectly by the Company.
2. PURPOSE OF THE PLAN. The purpose of the Plan is to provide
Key Employees of the Company and its Subsidiaries with greater incentive to
serve and promote the interests of the Company and its shareholders. The premise
of the Plan is that, if Key Employees acquire a proprietary interest in the
business of the Company or increase such proprietary interest as they may
already hold, then the incentive of such Key Employee to work toward the
Company's continued success will be commensurately increased. Accordingly, the
Company will, from time to time during the effective period of the Plan, issue
to such Key Employees as may be selected to participate in the Plan shares of
Common Stock in consideration of their prior service to the Company or its
Subsidiaries on the terms and subject to the conditions of the Plan.
3. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective
on February 1, 2001.
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered
by the Committee. The Committee shall consist of no fewer than two (2) persons,
who shall be designated by the Board and shall be non-employee directors. A
majority of the Committee shall constitute a quorum, and the acts of a majority
of the members present at any meeting at which a quorum is present, or acts
approved in writing by all of the
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<PAGE> 18
members, shall be acts of the Committee. Subject to the terms and conditions of
the Plan, the Committee shall have full and final authority in its absolute
discretion:
(a) To select the Key Employees who will receive bonuses of
Common Stock;
(b) To determine the number of shares of Common Stock issued
as a bonus to any Key Employee;
(c) To determine the time when bonuses of Common Stock will be
paid;
(d) To adopt, amend and rescind such rules and regulations as,
in the Committee's opinion, may be advisable in the administration of
the Plan; and
(e) To construe and interpret the Plan, the rules and
regulations and the instruments evidencing bonuses granted under the
Plan and to make all of the determinations necessary or advisable for
the administration of the Plan.
Any decision made or action taken by the Committee in connection with
the administration, interpretation and implementation of the Plan and of its
rules and regulations, shall, to the extent permitted by law, be conclusive and
binding upon all participants under the Plan and upon any person claiming under
or through such a participant. Neither the Committee nor any of its members
shall be liable for any act taken by the Committee pursuant to the Plan. No
member of the Committee shall be liable for the act of any other member.
5. PERSONS ELIGIBLE FOR BONUSES. Subject to the restrictions
herein contained, bonuses may be granted from time to time in the discretion of
the Committee only to such Key Employees, as designated by the Committee, whose
initiative and efforts contribute or may be expected to contribute to the
continued growth and future success of the Company and/or its Subsidiaries.
Notwithstanding the preceding sentence, a Key Employee who renounces in writing
any right he may have to receive bonuses under the Plan shall not be eligible to
receive any bonus under the Plan. No bonus shall be granted to any Key Employee
during any period of time when he or she is on leave of absence.
6. SHARES SUBJECT TO THE PLAN. Subject to the provisions of
the next succeeding paragraph of this Section 6, the aggregate number of shares
of Common Stock which may be issued as bonuses under the Plan shall be 400,000
shares of Common Stock. Either treasury or authorized and unissued shares of
Common Stock, or both, in such amounts, within the maximum limits of the Plan,
as the Committee shall from time to time determine, may be so issued.
In the event that subsequent to the date of adoption of the
Plan by the Board the authorized number of shares of Common Stock should, as a
result of a stock split, stock dividend, combination or exchange of shares,
exchange for other securities, reclassification, reorganization, redesignation,
merger, consolidation, recapitalization or other such change, be increased or
decreased or changed into or exchanged for a different number or kind of shares
of stock or other securities of the Company or of another corporation, then
there shall automatically be substituted for each share of Common Stock
available for additional bonuses under the Plan the number and kind of shares of
stock or other securities into which each
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outstanding share of Common Stock shall be changed or for which each such share
of Common Stock shall be exchanged.
7. AMENDMENTS TO THE PLAN. The Committee is authorized to
interpret the Plan and from time to time adopt any rules and regulations for
carrying out the Plan that it may deem advisable. Subject to the approval of the
Board, the Committee may at any time amend, modify, suspend or terminate the
Plan.
8. INVESTMENT REPRESENTATION, APPROVALS AND LISTING. The
Committee may condition the issuance of a bonus hereunder upon receipt of an
investment representation from the participant which shall be substantially
similar to the following:
"The participant agrees that any shares of Common Stock of North Coast Energy,
Inc. which he or she may acquire by virtue of this bonus shall be acquired for
investment purposes only and not with a view to distribution or resale;
provided, however, that this restriction shall become inoperative in the event
these shares of Common Stock of North Coast Energy, Inc. which are subject to
this bonus shall be registered under the Securities Act of 1933, as amended, or
in the event that North Coast Energy, Inc. is otherwise satisfied that the offer
or sale of the shares of Common Stock which are subject to this bonus may
lawfully be made without registration under the Securities Act of 1933, as
amended."
The Company shall not be required to issue any certificates
for shares of Common Stock awarded under the Plan prior to (i) obtaining any
approvals from any governmental agency which the Committee shall, in its sole
discretion, determine to be necessary or advisable, (ii) the admission of such
shares to listing on any national securities exchange on which the shares of
Common Stock may be listed, (iii) completion of any registration or other
qualification of the shares of Common Stock under any state or federal law or
ruling or regulations of any governmental body which the Committee shall, in its
sole discretion, determine to be necessary or advisable, or the determination by
the Committee, in its sole discretion, that any registration or other
qualification of the shares of Common Stock is not necessary or advisable, and
(iv) obtaining an investment representation from the participant in the form set
forth above or in such other form as the Committee, in its sole discretion,
shall determine to be adequate.
9. GENERAL PROVISIONS.
(a) NO RIGHT TO BE EMPLOYED, ETC. Nothing in the Plan or the award of
any bonus under the Plan shall confer upon any participant any right to continue
in the employ of the Company or a Subsidiary, or to serve as a member of the
Board, or to be entitled to receive any remuneration or benefits not set forth
in the Plan or to interfere with or limit either the right of the Company or a
Subsidiary to terminate his employment at any time or the right of the
shareholders of the Company to remove him as a member of the Board with or
without cause.
(b) SUCCESSORS IN INTEREST. The Plan shall be binding upon the
successors and assigns of the Company.
(c) NO LIABILITY UPON DISTRIBUTION OF SHARES. The liability of the
Company under the Plan and any distribution of shares of Common Stock made
hereunder is limited to the obligations set forth herein with respect to such
distribution and no term or provision of the Plan shall be construed to impose
any liability on
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<PAGE> 20
the Company or the Committee in favor of any person with respect to any loss,
cost or expense which the person may incur in connection with or arising out of
any transaction in connection with the Plan.
(d) EXPENSES. The expenses of administering the Plan shall be borne by
the Company.
(e) CAPTIONS. The captions and section numbers appearing in the Plan
are inserted only as a matter of convenience. They do not define, limit,
construe or describe the scope or intent of the provisions of the Plan.
(f) NUMBER. The use of a singular or plural herein shall not be
restrictive as to number and shall be interpreted in all cases as the context
may require.
(g) GENDER. The use of the feminine, masculine or neuter pronoun
shall not be restrictive as to gender and shall be interpreted in all cases as
the context may require.
10. TERMINATION OF THE PLAN. The Plan shall terminate on
February 1, 2011, and thereafter no bonuses may be issued under the Plan.
11. GOVERNING LAW. The Plan shall be governed by and construed
in accordance with the laws of the State of Delaware and any applicable federal
law.
IN WITNESS WHEREOF, North Coast Energy, Inc., by its appropriate officer duly
authorized, has executed this instrument this FIRST day of August, 2000.
NORTH COAST ENERGY, INC.
By: /s/ Omer Yonel
---------------
Omer Yonel,
Chief Executive Officer
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<PAGE> 21
Appendix B
CHARTER
OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF NORTH COAST ENERGY, INC.
PURPOSE
The primary function of the Audit Committee (the "Committee") is to
assist the Board of Directors (the "Board") in fulfilling its oversight
responsibilities by reviewing the financial reports and other financial
information provided by the Company to any governmental body or the public; the
Company's systems of internal controls regarding finance, accounting, legal
compliance and ethics that management and the Board have established; and the
Company's auditing, accounting and financial reporting processes generally.
Consistent with this function, the Committee should encourage continuous
improvement of, and should foster adherence to, the Company's policies,
procedures and practices at all levels. The Committee's primary duties and
responsibilities are to:
- Serve as an independent and objective party to monitor the
Company's financial reporting process and internal control
system.
- Review and appraise the audit efforts of the Company's
independent accountants and internal accounting department.
- Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal
accounting department, and the Board.
COMPOSITION
The Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Committee.
Notwithstanding the foregoing limitation, the Board may determine that one
director who is also an employee of the Company's majority shareholder, NUON
International Projects bv, may remain as a member of the Committee if it is
determined by the Board that this requirement is in the best interests of the
Company and its shareholders. All members of the Committee shall have a working
familiarity with basic finance and accounting practices, and at least one member
of the Committee shall have accounting or related financial management
B-1
<PAGE> 22
Appendix B
expertise. Committee members may enhance their familiarity with finance and
accounting by participating in educational programs conducted by the Company or
an outside consultant.
The members of the Committee shall be elected by the Board at the Annual Meeting
of the Board and shall serve until the next Annual Meeting, or until their
successors shall be duly elected and qualified. Unless a Chair is elected by the
full Board, the members of the Committee may designate a Chair by majority vote
of the full Committee membership.
MEETINGS
The Committee shall meet at least annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management and the independent
accountants in separate executive sessions to discuss any matters that the
Committee or each of these groups believe should be discussed privately. In
addition, the Committee or at least its Chair should meet with the independent
accountants and management quarterly to review the Company's financials.
RESPONSIBILITIES:
The duties and responsibilities of a member of the Committee are in
addition to those duties set out for a member of the Board.
CONTINUOUS ACTIVITIES - GENERAL
1. Provide an open avenue of communication between the independent
auditor, management, and the Board.
2. Meet annually or more frequently as circumstances require. The
Committee may ask members of management or others to attend meetings
and provide pertinent information as necessary.
3. Confirm and assure the independence of the independent auditor and the
objectivity of the internal financial and accounting managers. On an
annual basis the Committee should review and discuss with the
independent auditor all significant relationships the accounting firm
has with the Company to determine the accountants' independence.
4. Review with the independent auditor and management the coordination of
audit efforts to assure completeness of coverage, reduction of
redundant efforts, and the effective use of audit resources.
5. Inquire of management and the independent auditor about significant
risks or exposures and assess the steps management has taken to
minimize such risk to the Company and related entities.
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<PAGE> 23
6. Consider and review with the independent auditor and management:
(a) The adequacy of the Company's and related entities' internal
controls including computerized information system controls
and security.
(b) Related findings and recommendations of the independent
auditor together with management's responses.
7. Consider and review with management and the independent auditor:
(a) Significant findings during the year, including the status of
previous audit recommendations.
(b) Any difficulties encountered in the course of audit work
including any restrictions on the scope of activities or
access to required information.
(c) Any changes required in the planned scope of the Audit plan,
(d) The Accounting Department budget and staffing.
8. Consider and review with management and the independent auditor the
procedures established by the Company to monitor the compliance by the
Company with its loan covenants and restrictions.
9. Meet periodically with the independent auditor and management in
separate executive sessions to discuss any matters that the Committee
or these groups believe should be discussed privately with the
Committee.
10. Report periodically to the Board on significant results of the
foregoing activities.
11. Instruct the independent auditor that the Board, as the Company's
representative, is the auditor's client.
CONTINUOUS ACTIVITIES - RE: REPORTING SPECIFIC POLICIES
1. Advise financial management and the independent auditor they are
expected to provide a timely analysis of significant current financial
reporting issues and practices.
2. Provide that financial management and the independent auditor discuss
with the Committee their qualitative judgments about the
appropriateness, not just the acceptability, of accounting principles
and financial disclosure practices used or proposed to be adopted by
the Company and, particularly, about the degree of aggressiveness or
conservatism of its accounting principles and underlying estimates.
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<PAGE> 24
Appendix B
3. Inquire as to the auditor's independent qualitative judgments about the
appropriateness, not just the acceptability, of the accounting
principles and the clarity of the financial disclosure practices used
or proposed to be adopted by the Company.
4. Inquire as to the auditor's views about whether management's choices of
accounting principles are conservative, moderate, or aggressive from
the perspective of income, asset, and liability recognition, and
whether those principles are common practices or are minority
practices.
5. Determine, as regards to new transactions or events, the auditor's
reasoning for the appropriateness of the accounting principles and
disclosure practices adopted by management.
6. Assure that the auditor's reasoning is described in determining the
appropriateness of changes in accounting principles and disclosure
practices.
7. Inquire as to the auditor's views about how the Company's choices of
accounting principles and disclosure practices may affect the Company
and public views and attitudes in the investment community about the
Company.
SCHEDULED ACTIVITIES
1. Recommend the selection of the independent auditor for approval by the
Board, approve the compensation of the independent auditor, and review
and approve the discharge of the independent auditor.
2. Consider, in consultation with the independent auditor and financial
management, the audit scope and plan of the independent auditor.
3. Review with management and the independent auditor the results of
annual audits and related comments as deemed appropriate including:
(a) The independent auditor's audit of the Company's and related
entities' annual financial statements, accompanying footnotes
and its report thereon, along with any reports or other
financial information submitted to any governmental body or
the public,
(b) Any significant changes required in the independent auditor's
audit plans,
(c) Any difficulties or disputes with management encountered
during the course of the audit.
(d) Other matters related to the conduct of the audit which are to
be communicated to the Committee under Generally Accepted
Auditing Standards.
B-4
<PAGE> 25
Appendix B
4. Describe in the Company's Annual Report the Committee's composition and
responsibilities, and how they were discharged.
5. Assure that the auditor's reasoning is described in accepting or
questioning significant estimates by management.
6. Review and update the Committee's Charter at least annually.
"WHEN NECESSARY" ACTIVITIES
1. Review and approve requests for any management consulting engagement to
be performed by the Company's independent auditor and be advised of any
other study undertaken at the request of management that is beyond the
scope of the audit engagement letter.
2. Review periodically with counsel legal and regulatory matters that may
have a material impact on the Company's and related entities' financial
statements, compliance policies and programs.
3. Conduct or authorize investigations into any matters within the
Committee's scope of responsibilities. The Committees shall be
empowered to retain independent counsel and other professionals to
assist in the conduct of any investigation.
In Witness Whereof, the Audit Committee of the Board of Directors of
North Coast Energy, Inc. has executed this Charter effective as of the 7th day
of June, 2000.
Audit Committee
By: /s/ C. Rand Michaels
--------------------
C. Rand Michaels, Chairman
By: /s/ Ralph L. Bradley
--------------------
Ralph L. Bradley, Member
By: /s/ Cok van der Horst
---------------------
Cok van der Horst, Member
B-5
<PAGE> 26
NORTH COAST ENERGY, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS -- OCTOBER 6, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints Omer Yonel and Garry Regan, 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 Metropolitan
Club at the Huntington Bank Building, Cleveland, Ohio on Friday, October
6, 2000 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, AND "FOR" THE PROPOSAL TO AUTHORIZE, APPROVE AND ADOPT THE
NORTH COAST ENERGY, INC. 2000 EMPLOYEE STOCK BONUS PLAN TO REPLACE A
SIMILAR PLAN THAT IS DUE TO EXPIRE ON FEBRUARY 1, 2001.
(1) Proposed to authorize, approve and adopt the North Coast Energy,
Inc. 2000 Employee Stock Bonus Plan.
[ ] FOR the Proposal [ ] AGAINST the Proposal [ ] ABSTAIN
(Continued and to be signed on other side)
UNITS
(Proxy -- continued from other side)
<TABLE>
<S> <C> <C>
(2) Election of (2) directors [ ] FOR all of the nominees listed [ ] WITHHOLD AUTHORITY
whose term of office will (except as marked to the contrary below) to vote for all nominees listed
expire in 2003.
Ron L. Langenkamp and Ralph L. Bradley
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the following line)
--------------------------------------------------------------
(3) In their discretion to act on any other matter or matters which may
properly come before the Annual Meeting.
<TABLE>
<S> <C>
Dated: , 2000
---------------------------------------
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.
1 -- Units
<PAGE> 27
NORTH COAST ENERGY, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS -- OCTOBER 6, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints Omer Yonel and Garry Regan, 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
Metropolitan Club at the Huntington Bank Building, Cleveland, Ohio on
Friday, October 6, 2000, 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, AND "FOR" THE PROPOSAL TO AUTHORIZE, APPROVE AND
ADOPT THE NORTH COAST ENERGY, INC. 2000 EMPLOYEE STOCK BONUS PLAN TO
REPLACE A SIMILAR PLAN THAT IS DUE TO EXPIRE ON FEBRUARY 1, 2001.
(1) Proposed to authorize, approve and adopt the North Coast Energy,
Inc. 2000 Employee Stock Bonus Plan.
[ ] FOR the Proposal [ ] AGAINST the Proposal [ ] ABSTAIN
(Continued and to be signed on other side)
SHARES
(Proxy -- continued from other side)
<TABLE>
<S> <C> <C>
(2) Election of two (2) directors [ ] FOR all of the nominees listed [ ] WITHHOLD AUTHORITY
whose term of office will ex- (except as marked to the contrary below) to vote for all nominees listed
pire in 2003.
Ron L. Langenkamp and Ralph L. Bradley
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the following line)
--------------------------------------------------------------
(3) In their discretion to act on any other matter or matters which may
properly come before the Annual Meeting.
<TABLE>
<S> <C>
Dated: , 2000
---------------------------------------
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.
2 -- Preferred Stock
<PAGE> 28
NORTH COAST ENERGY, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS -- OCTOBER 6, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints Omer Yonel and Garry Regan, 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
Metropolitan Club at the Huntington Bank Building, Cleveland, Ohio on
Friday, October 6, 2000, 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, AND "FOR" THE PROPOSAL TO AUTHORIZE, APPROVE AND ADOPT THE
NORTH COAST ENERGY, INC. 2000 EMPLOYEE STOCK BONUS PLAN TO REPLACE A
SIMILAR PLAN THAT IS DUE TO EXPIRE ON FEBRUARY 1, 2001.
(1) Proposed to authorize, approve and adopt the North Coast Energy,
Inc. 2000 Employee Stock Bonus Plan.
[ ] FOR the Proposal [ ] AGAINST the Proposal [ ] ABSTAIN
(Continued and to be signed on other side)
SHARES
(Proxy -- continued from other side)
<TABLE>
<S> <C> <C>
(2) Election of two (2) directors [ ] FOR all of the nominees listed [ ] WITHHOLD AUTHORITY
whose term of office will ex- (except as marked to the contrary below) to vote for all nominees listed
pire in 2003.
Ron L. Langenkamp and Ralph L. Bradley
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the following line)
--------------------------------------------------------------
(3) In their discretion to act on any other matter or matters which may
properly come before the Annual Meeting.
<TABLE>
<S> <C>
Dated: , 2000
---------------------------------------
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
