1
Exhibit 10.19
AGREEMENT
This Agreement is made as of April 30, 1999, by and among North Coast
Energy, Inc., a Delaware corporation (the "Company"), Nuon International
Projects, bv (f/k/a Nuon International, bv), a limited liability company
organized under the laws of the Netherlands ("Nuon"), Xxxxxxx X. Xxxxxxxx, Xx.
("Lombardy") and Xxxxx X. Xxxxxxxx (("Xxxxx") and, together with Lombardy, the
"Lombardys").
WHEREAS, the Company and Lombardy are parties to a Restated Employment
Agreement dated May 3, 1995, as amended by letter agreement dated September 4,
1997 among Lombardy, Nuon, and Xxxxx Xxxxx (the "Employment Agreement"); and
WHEREAS, the Company, Nuon and Lombardy desire to terminate the
Employment Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. TERMINATION OF EMPLOYMENT AGREEMENT. In exchange for the payments
and other benefits described herein, Lombardy and the Company hereby agree that,
except for the provisions in Section 7 of the Employment Agreement which shall
continue in effect pursuant to its terms, the Employment Agreement is hereby
terminated, and that neither the Company nor Lombardy shall have any further
obligations thereunder, except as set forth herein.
2. COMPENSATION. Upon execution of this Agreement, the Company shall
pay to Lombardy $369,870. All of the foregoing payments shall be subject to
applicable federal and state withholding and payroll taxes. Further, upon
execution of this Agreement, Lombardy will receive a ten year warrant
("Warrant") to purchase at $1.00 per share 300,000 shares of the Company's
Common Stock (the "Warrant Shares"). The warrant shall be in the form of Exhibit
A hereto and shall constitute a part of this Agreement.
3. RESIGNATION. Lombardy hereby resigns, effective as of the date
hereof, as a director and officer of the Company and of its subsidiaries, NCE
Securities, Inc. and North Coast Operating Company. Further, the parties
acknowledge that Lombardy's employment with the Company is terminated effective
April 30, 1999.
4. PURCHASE OF THE LOMBARDYS' SHARES. In the event Nuon exercises its
option to acquire 5,747,127 additional shares of North Coast Common Stock (the
"Nuon Shares") from the Company on or before September 30, 1999, then Nuon will
purchase, and the Lombardys agree to sell, their 536,505 shares (the "Lombardy
Shares") of North Coast Common Stock (the "Shares") for $0.875 per share (the
"Purchase Price"), or an aggregate of $469,441.88, on the same day as the
purchase of the Nuon Shares.
The Purchase Price and the number of the Lombardy Shares to be
purchased shall be subject to adjustment from time to time upon the happening of
certain events, as follows:
(1) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding Shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding Shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
Shares of Common Stock into a smaller number of shares (including, but not
limited to the anticipated Reverse Stock Split), the Purchase Price shall be
adjusted, effective immediately after the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification, to a price determined by multiplying the Purchase Price in
effect immediately prior to such record date or effective date by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
immediately before giving effect to such dividend, distribution, subdivision,
combination or reclassification, and the denominator of which shall be the
number of shares of Common Stock outstanding after giving effect to such
dividend, distribution, subdivision, combination or reclassification.
7
2
Exhibit 10.19
(2) Whenever the Purchase Price is adjusted pursuant to subparagraph
(a) above, the number of Shares purchased shall simultaneously be adjusted by
multiplying the number of Shares to be purchased immediately prior to any
adjustment by the Purchase Price in effect immediately prior to any adjustment
and dividing the product so obtained by the Purchase Price as adjusted.
(3) The provisions of subparagraph (a) and (b) above shall not apply to
(i) the issue, sale, distribution or grant of any shares of Common Stock, any
rights, warrants or options to subscribe for or purchase shares of Common Stock
or any securities convertible into or exchangeable for shares of Common Stock to
officers, directors or employees of the Company pursuant to a compensation plan
that currently exists and has been, or in the future may exist and will be,
approved by the stockholders of the Company or (ii) the issuance of shares of
Common Stock to officers, directors or employees of the Company upon any
exercise of rights, warrants or options, or any conversion or exchange of
convertible or exchangeable securities, described in clause (i) above. All
calculations shall be made to the nearest cent or to the nearest one-hundredth
of a share, as the case may be.
(4) Whenever the Purchase Price is adjusted as herein provided, the
Company shall promptly cause a notice setting forth the adjusted Purchase Price
to be mailed to the Lombardys. The Company may retain a firm of nationally
recognized independent certified public accountants employed by the Company to
make any computation required by this Section, and a certificate signed by such
firm shall be conclusive evidence of the correctness of such adjustment.
(5) In the event that at any time, as a result of an adjustment made
pursuant to subparagraphs (a) and (b) above, the Lombardys thereafter shall
become entitled to receive any shares of the Company other than Common Stock,
thereafter the number of such other shares so receivable shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
subparagraphs (a) and (b).
(6) As a condition precedent to the taking of any action which would
require an adjustment pursuant to this Section, the Company shall take any
action which may be necessary in order that the Company may thereafter validly
and legally issue as fully paid and nonassessable all Shares which the Lombardys
are entitled to receive.
Nuon shall make the payment to the Lombardys by wire transfer, in
immediate available U.S. funds, against delivery of the Lombardy Shares,
together with a duly executed stock power. In the event Nuon fails to exercise
its option to acquire the Nuon Shares and fails to acquire the Lombardy Shares,
the Company agrees to purchase the Lombardy Shares on September 30, 1999 on the
same terms as set forth above. To demonstrate its ability to effectuate the
purchase, the Company will escrow an amount equal to the sum necessary to
purchase the Lombardy Shares and to pay all accrued and unpaid dividends due on
the Company's Preferred Stock pursuant to the terms of an Escrow Agreement,
substantially in the form of Exhibit B hereto. The Company warrants and
represents to the Lombardys that, with the exception of the consent by or waiver
from the Company's institutional lender, which waiver or consent is attached
hereto as Exhibit C, no consent or approval are necessary to permit the purchase
of the Lombardy Shares in accordance with the terms of this Agreement.
The Lombardys may sell, assign, donate or otherwise transfer any or all
of the Lombardy Shares to (i) their lineal descendants ("Relatives"), (ii)
trusts which are only for the benefit of their Relatives or themselves, (iii)
corporations, partnerships, limited liability companies of which the only equity
owners are Relatives or themselves, or (iv) any charitable organization;
provided, however, that such transferee agrees, in writing, to be bound by the
terms of this Section 4.
Notwithstanding the foregoing, the Lombardys are free to sell all or
part of the Lombardy Shares in the manner provided in Rule 144 under the
Securities Act of 1933, as amended (the "Act"); provided that they may not sell
more than 25,000 shares in any 30-day period. In the event of any sale under
this paragraph, the number of Shares required to be purchased by Nuon or the
Company under this Section 4 shall be reduced by the number of shares sold by
the
2
3
Exhibit 10.19
Lombardys and the aggregate purchase price for the securities purchased by
Nuon or the Company shall be appropriately reduced.
The Company agrees that any Shares purchased by Nuon from the Lombardys
shall be credited against Nuon's right to purchase an additional 5,714,286
shares from the Company pursuant to the Stock Purchase Agreement dated September
4, 1997.
The Lombardys represent and warrant that (a) they are the record owner
of the Lombardy Shares and all such Shares are duly authorized, validly issued
and fully paid and non-assessable; (b) they have, and at the time of the
transfer of the Lombardy Shares (less Shares sold in the open market or Shares
held by permitted transferees) to Nuon or the Company will have, good and
marketable title to such Shares, free and clear of all liens and encumbrances
and (c) there are no first refusal rights to purchase or otherwise acquire the
Lombardy Shares.
5. ACCRUED VACATION. Lombardy shall be entitled to receive, on May 14,
1999, together with his final paycheck, a cash amount equal to $7,557.11 (an
amount equal to his eleven (11) accrued and unused vacation days) subject to
applicable withholding and payroll taxes.
6. REGISTRATION RIGHTS. In addition to the registration rights included
in Section 7 of the Warrant, the Company shall include the Warrant Shares in
Registration Statement 333-71855 pending with the Securities & Exchange
Commission and shall use all reasonable efforts (i) to have such registration
statement declared effective and (ii) to remain effective until September 30,
2001, or such earlier date as all of the Warrant Shares have been sold or until
the date an exemption from registration pursuant to Rule 144(k) or successor
rule promulgated under the Securities Act of 1933, as amended, is available for
the offer and sale of all of the Warrant Shares. The foregoing registration
shall be in addition to the registrations available to Lombardy under the
Warrant and, except as otherwise provided above, such registration shall
otherwise be subject to the terms of the Warrant.
7. RELEASE OF CLAIMS AND COVENANT NOT TO XXX.
7.1 In further consideration for the amounts to be paid by the Company
and/or Nuon to the Lombardys hereunder, the Lombardys do hereby release and
forever discharge the Company, Nuon and each of their respective directors,
officers, employees, shareholders, agents (including, but not limited to,
accountants and attorneys) (such individuals, the Company, and Nuon are
hereunder collectively referred to as "Released Parties") from all claims,
causes of action and liabilities of every kind and description whatsoever, known
and unknown, foreseen and unforeseen, suspected and unsuspected, asserted or
unasserted, which either of the Lombardys has or may have against them or any of
them by reason of any fact, matter or thing from the beginning of the world to
the date of this Agreement, except for claims arising out of the breach of any
of Released Parties' obligations under this Agreement. Without limiting the
generality of the preceding sentence, the Lombardys do hereby release the
Released Parties from all claims, causes of action and liabilities arising from
or relating to: (i) Lombardy's employment or other association with the Company
or with any Company affiliate; (ii) any right which Lombardy has, had or may
have had to receive any sum of money of the Company or of any Company affiliate,
whether under the Employment Agreement, or otherwise; (iii) claims based on oral
or written contracts; (iv) claims arising under any federal or state statutes,
including but not limited to, claims asserting discrimination on account of age,
race, color, sex, religion, national origin or veteran or handicap status and
claims under the Age Discrimination in Employment Act of 1967 ("ADEA"), as
amended, ERISA, Title VII of the 1964 Civil Rights Act and the Older Worker
Benefit Protection Act; (v) claims for damages for breach of contract or implied
contract; (vi) claims based on personal injury, including, without limitation,
infliction of emotional distress; (vii) wrongful termination or breach of
covenant of good faith and fair dealing; and (viii) claims asserting defamation,
interference with contract or business relationships or promissory estoppel.
The Lombardys covenant and agree that they will never assert a claim or
institute any cause of action or file a charge based on claims, causes of action
and liabilities of every kind and description whatsoever, known and unknown,
foreseen and unforeseen, suspected and unsuspected, asserted or unasserted,
which the Lombardys have or may have against the Company, or any other Released
Party by reason of any fact, matter or thing from the beginning of the world to
the date of this Agreement (except for claims arising out of the breach of any
of Company's or other Released Party's obligations under this Agreement) with
any court of law or administrative tribunal, and further agrees that should they
3
4
Exhibit 10.19
violate the foregoing covenant not to xxx by asserting a claim, instituting an
action or filing a charge against the Company, or any other Released Party which
is prohibited under this Agreement, the Lombardys will pay all of Company's
costs and expenses (including, without limitation, attorneys' fees) of defending
against the suit incurred by the Company or any other Released Party. The
Lombardys acknowledge and agree that the monetary benefits provided in this
Agreement constitute sufficient consideration for the Release and Covenant Not
to Xxx contained herein in that there are substantial benefits to the Lombardys,
and the Lombardys further acknowledge that they have voluntarily and knowingly
entered into this Agreement with the benefit of advice and counsel of their
choice and a full understanding of its terms and meanings.
Lombardy acknowledges that the Company has notified him that, under
federal law: (i) Lombardy has twenty-one (21) days from the date of execution by
Lombardy of this Agreement to consider the release and covenant not to xxx
solely with respect to claims arising under the ADEA; and (ii) the release of
claims and covenant not to xxx under the ADEA are not enforceable for a period
of seven (7) days following the execution by Lombardy of this Agreement and may
be revoked by Lombardy during such time. Revocation of the release of claims
under ADEA and covenant not to xxx under ADEA may be effected by Lombardy solely
by notifying the Company in writing of his election to revoke and delivering
such notice to the Company within the aforesaid seven (7) day period. Such
revocation shall not affect any of the other terms and provisions of this
Agreement.
7.2 In consideration for the Lombardys' agreements, obligations and
covenants contained in this Agreement, the Company and Nuon do for themselves
and their respective subsidiaries, directors, officers, shareholders, agents and
employees, successors and assigns (the "Corporate Parties") hereby release and
forever discharge the Lombardys and their heirs, executors, administrators,
personal representatives, successors and permitted assigns, from all claims,
causes of action and liabilities of every kind and description whatsoever, known
and unknown, foreseen and unforeseen, suspected or unsuspected, asserted or
unasserted, which the Corporate Parties has or may have against the Lombardys by
reason of any fact, matter or thing from the beginning of the world to the date
of this Agreement, except for claims arising out of (i) the breach by the
Lombardys of any of their obligations, representations, warranties and covenants
under this Agreement or (ii) any breach by Lombardy of Section 7 of the
Employment Agreement (of which, as of the date hereof, the Corporate Parties
have no knowledge of such a breach). Without limiting the generality of the
preceding sentence, the Company does hereby release Lombardy from all claims,
causes of action and liabilities arising from or relating to Lombardy's previous
employment or other association as a director and officer with the Company
and/or the circumstances giving rise to the execution and delivery of this
Agreement. The Company covenants and agrees that it will never assert or
institute any cause of action or file a charge arising from or relating to
Lombardy's previous employment or other association with the Company and/or the
circumstances giving rise to the execution and delivery of this Agreement, and
further agrees that should the Company violate the foregoing covenant not to xxx
by instituting an action or filing a charge against the Lombardys which is
prohibited under this Agreement, Company will pay all costs and expenses
(including, without limitation, attorneys' fees) of defending against the suit
incurred by the Lombardys.
7.3 For purposes of this Agreement, "all claims" shall include, without
limitation, all claims of any kind, whether known or unknown, anticipated or
unanticipated, past, present or future, contingent or fixed as of the date
hereof.
7.4 The Company agrees to indemnify and hold harmless Lombardy with
respect to any actions or omissions occurring prior to the date hereof, to the
same extent and to the same manner Lombardy was entitled to indemnification as
an officer, director and employee of the Company.
8. HEALTH INSURANCE. Lombardy has the right to continued health
insurance coverage for himself and his family under the Company's existing
medical plan through the Company pursuant to applicable requirements under the
Consolidated Omnibus Reconciliation Act of 1985, as amended ("COBRA"). The
Company shall provide such coverage to Lombardy, at Lombardy's cost, through the
statutory COBRA period.
9. COSTS AND ATTORNEY FEES. Each party shall be responsible for their
separate costs, expense, attorneys' fees or otherwise; provided, however that if
either party sues to enforce the terms of this Agreement and prevail on his or
its claims at trial, the losing party shall pay the attorney costs of the
prevailing party.
4
5
Exhibit 10.19
10. NON-DISPARAGEMENT. The parties covenant and agree that neither
shall make any statements, written or oral, to any third party which disparages,
criticized, discredits or otherwise operates to the detriment of the Lombardys,
the Company or Nuon, or their respective business reputation and/or goodwill.
11. PRESS RELEASE. None of the parties shall issue a press release
regarding the terms of this Agreement without the consent of the other. The
Lombardys recognize, however, that this Agreement and its terms shall be
required to be disclosed by the Company in its public filings with the
Securities & Exchange Commission.
12. ENTIRE AGREEMENT. This Agreement and the Exhibits attached hereto,
together with the Supplement dated April 30, 1999, executed by Xxxx and Xxx
Xxxxxx, contains the entire agreement among the parties hereto, and there are no
understandings among the parties other than those specifically and expressly set
forth in this Agreement. This Agreement shall not be amended or modified in any
manner except upon written agreement by the parties.
13. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same Agreement. The signature of any party
to any counterpart, including any facsimile thereof, may be appended to any
other counterpart and when so appended shall constitute an original.
14. GOVERNING LAWS. This Agreement shall be governed and interpreted
pursuant to the laws of the State of Ohio.
15. BINDING EFFECT. This Agreement shall inure to the benefit of not
only the parties but their respective heirs, successors, assigns, subsidiaries,
affiliates, parents, officers, directors, employees, shareholders, agents,
attorneys, and representatives and shall be binding not only upon the parties
but also the aforesaid respective parties.
16. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, or twenty-four (24)
hours after being sent by confirmed facsimile transmission, with subsequent mail
delivery, or three (3) days after being mailed (by registered or certified mail,
return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to the Lombardys:
Xxxxxxx X. Xxxxxxxx, Xx.
00000 Xxxxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxxx 00000
With a copy to:
Xxxxx Xxxxxxx, Esq.
XxXxxxxx, Xxxxx, Crystal & Haiman Co.
000 Xxxxxxxx Xxxxxx, Xxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000
(b) If to Company or Nuon:
North Coast Energy, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: General Counsel
With a copy to:
5
6
Exhibit 10.19
Xxxxxxx X. Xxxxx, Esq.
Kahn, Kleinman, Xxxxxxxx & Xxxxxx
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000
6
7
Exhibit 10.19
IN WITNESS WHEREOF, the parties have represented to one another that
they have carefully read the foregoing terms of this Agreement, that they know
and understand the contents of this Agreement, that they have authority to
execute this Agreement, that they have undertaken to sign the same as their own
respective free act and deed having declared their intention to be bound
contractually by all such terms and conditions, and do hereby execute and
deliver this Agreement this ___ day of May, 1999, effective as of the date set
forth above.
NORTH COAST ENERGY, INC.
By: ____________________________________
Xxxxx Xxxxx, President
NUON INTERNATIONAL, bv
By: ___________________________________
Dr. Leo J.M.J. Blomen, Executive
Director
-----------------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
-----------------------------------------
Xxxxx X. Xxxxxxxx
