Exhibit 10.34
[NORTH COAST LETTERHEAD]
FORM OF CHANGE IN CONTROL PROTECTION AGREEMENT
March 21, 2003
Xxxxx X. Xxxxxx
Dear Xxxxx:
North Coast Energy, Inc. (the "Company") recognizes that the possibility of a
change in control with respect to the Company may exist and that such
possibility, and the uncertainty and distraction such situations raise among key
employees, may work to the detriment of the Company and its stockholders.
Accordingly, the Board of Directors of the Company (the "Board") has determined
that appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key employees, including yourself, to their assigned
duties without the distraction arising from the possibility of a change in
control of the Company.
In order to induce you to remain in the employ of the Company until the
termination of your employment in conjunction with a "change in control" (as
defined in Section 2 hereof), and to encourage you to do your best to facilitate
the sale of the Company, this letter agreement ("Agreement") sets forth the
severance benefits which this Company agrees will be provided to you in the
event your employment with the Company is terminated within the period specified
in Section 4 hereof immediately following any change in control either by you
for "Good Reason" or by the Company "Without Cause" (both as defined in Section
3 hereof). In the event that a change in control does not occur, your severance
benefits, if any, shall be determined without regard to this Agreement.
Nothing herein shall be construed so as to prevent either you or the Company
from terminating your employment at any time, for cause or otherwise, subject
only to the specific payment and other provisions hereinafter provided for under
certain circumstances in the event a change in control shall have occurred prior
to the date your termination becomes effective. Unless you have a written
employment agreement with the Company, you hereby specifically acknowledge that,
as of the date of effectiveness of this Agreement, your employment by the
Company is employment-at-will, subject to termination by you or by the Company
at any time with or without cause.
1. CONTINUED EMPLOYMENT. Subject to the terms, provisions and conditions
of this Agreement, this confirms that you have advised the Company
that, in consideration of, among other things, the Company's entering
into this Agreement with you, it is your present intention to remain in
the employ of the Company, in the position and with
substantially the same duties and responsibilities that you currently
have, or in a position and with such duties as the Company and you may
hereafter mutually agree in writing, unless and until there occurs a
change in control of the Company.
2. CHANGE IN CONTROL. A "Change in Control" of the Company will be deemed
to occur if at any time after the date of this Agreement:
(a) The Company is merged, consolidated or reorganized into another
corporation or entity or nv NUON (or any successor of nv NUON) or an
affiliate thereof (collectively "NUON") sells or otherwise transfers
all or part of the outstanding voting securities it holds in the
Company and as a result thereof immediately after such transaction an
entity or a group of entities acting in concert holds greater ownership
than NUON of the corporation or entity surviving after such merger,
consolidation, reorganization or sale of securities, or
(b) The Company sells or otherwise transfers all or substantially all
of its assets to another corporation or entity and as a result thereof
immediately after such transaction an entity or a group of entities
acting in concert holds greater ownership than NUON of the corporation
or entity purchasing such assets.
The first date upon which a Change in Control as defined above takes place shall
be known as the "Effective Date."
3. TERMINATION OF EMPLOYMENT. Your employment with the Company shall or
may be terminated, as the case may be, for any of the following
reasons:
(a) Death. Termination of your employment with the Company due to your
death;
(b) Retirement. Termination of your employment with the Company at or
after the attainment of age sixty-five (65);
(c) Disability. Termination of your employment with the Company either
by you or the Company, if you become disabled as determined by a
physician acceptable to you and the Company by reason of physical or
mental impairment for an aggregate of one hundred eighty (180) days
(whether business or non-business days and whether or not consecutive)
during any period of twelve consecutive months to such an extent that
you are unable to substantially perform your duties of employment with
the Company on a full-time basis;
(d) Cause. Termination of your employment with the Company at any time
for Cause. For purposes of this Agreement, "Cause" shall mean:
(i) The willful and continued failure by you to perform
substantially your duties with the Company or one of its affiliates
(other than for Disability or Good Reason), after a written demand
for substantial performance is delivered to you by the Board or the
Chief Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief Executive Officer
believes that you have not substantially performed your duties; or
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(ii) Your willfully engaging in conduct demonstrably and materially
injurious to the Company; or
(iii) Conviction of any felony, any crime involving moral
turpitude, or any crime committed in the conduct of your official
duties which is materially adverse to the welfare of the Company.
For purposes of this Section 3(d), no act or failure to act shall
be considered "willful" unless it is done, or omitted to be done,
in bad faith or without your reasonable belief that such act or
omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given you pursuant to a
resolution duly adopted by the Board shall be conclusively presumed
to be done, or omitted to be done, in good faith and in the best
interests of the Company. Termination of your employment with the
Company shall not be deemed to be for Cause unless and until, in
the case of any failure on your part in respect of clause (i) or
(ii) of this Section 3(d), the Board first gives you written notice
specifying the nature of the failure and the steps that you must
take to cure any such failure, and you fail to take those steps
within 30 days after such notice is given and, in the event the
Board deems such failure not to have been cured, there shall have
been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held
for such purpose (after 30 days' written notice of termination of
employment is provided to you and you are given an opportunity,
together with counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, you are guilty of the
conduct described in subparagraph (i) or (ii) above, and specifying
the particulars thereof in detail.
(e) Good Reason. You may terminate your employment with the Company for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean:
(i) The assignment of any duties inconsistent in any material
respect with your position, authority, duties or responsibilities,
as such existed prior to the Effective Date, or any other action by
the Company which results in a diminution in such position,
authority, duties or responsibilities;
(ii) Any failure by the Company to continue to provide you with
Base Compensation (as defined below) or substantially the same
Employee Benefits (as set forth on Exhibit A hereto) to which you
were entitled immediately prior to the Effective Date; excluding,
however, a reduction in your Base Compensation caused by the
implementation of an across-the-board salary reduction program for
other similarly situated employees of the Company;
(iii) The Company's requiring you to be based at or generally work
from any location other than a location within thirty-five (35)
miles of the location where you were based or generally worked from
prior to the Effective Date;
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(iv) Any failure by the Company or any permitted successor to the
Company hereunder to comply with and satisfy its obligations under
Section 10 of this Agreement; or
(v) Any material breach by the Company of provisions of this
Agreement not heretofore referenced in this Section 3(e).
(f) Without Cause. The Company may terminate your employment with the
Company Without Cause. For purposes of this Agreement the term "Without
Cause" shall mean termination of your employment for reasons other than
for Death, Retirement, Disability or Cause. Anything in this Agreement
to the contrary notwithstanding, if a Change in Control occurs and if
your employment with the Company was terminated prior to the date on
which the Change in Control of the Company occurs, and such termination
(i) was at the request of a third party who had taken steps reasonably
calculated to effect a Change in Control of the Company or (ii) was by
the Company and arose with or in anticipation of a Change in Control of
the Company, then for all purposes of this Agreement your employment
shall be deemed to have been terminated by the Company Without Cause
under this Section 3(f) of this Agreement and the "Effective Date"
shall mean the date immediately prior to the Date of Termination.
Furthermore, termination of your employment or removal of you from your
office or position in the Company prior to a Change in Control but
following the commencement of any discussion with any third person that
ultimately results in a Change in Control shall be deemed to be a
termination or removal of you after a Change in Control for purposes of
this Agreement.
(g) Scope of Agreement. Termination of the employment of the employee
for Cause, by the employee other than for Good Reason, or by reason of
death, Disability or Retirement of the employee does not result in
benefits to the employee under the terms of this Agreement, unless and
to the extent explicitly provided for herein.
Except in the case of Retirement or Death, termination of your employment shall
be effective only as of the earliest date (hereinafter referred to as the "Date
of Termination") specified by either you or the Company in a written notice of
termination ("Notice of Termination") to the other party hereto.
4. SEVERANCE PAY. If a Change in Control of the Company occurs and within
two years thereafter your employment with the Company is terminated
either by you for Good Reason or by the Company Without Cause, then in
addition to all other benefits which you have earned prior to such
termination or to which you are otherwise entitled, the Company shall
pay to you as severance pay, in a lump sum on or before the fifth day
following the Date of Termination, the following amounts:
(a) your full base salary and other benefits earned or accrued through
the Date of Termination at the rate in effect ten days prior to the
date the Notice of Termination is given, to the extent not theretofore
paid; and
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(b) an amount equal to the Severance Multiple specified on Exhibit A
hereto times an amount which is determined as follows: one-half of the
cumulative total of your Base Compensation relating to the two calendar
years immediately preceding the year in which the Change in Control
occurs; provided that "Base Compensation" for a calendar year is
defined as the following: the sum of your (i) "Annual Base Salary" plus
(ii) any "Additional Compensation" for that year. "Annual Base Salary"
shall mean the gross amount of your salary for a full calendar year
before any deductions or deferral amounts, which amount shall be
annualized for any calendar year in which you were not employed for the
full year and, if you are only employed during all or part of one
calendar year prior to the Change in Control, such annualized amount
shall be used to determine your Annual Base Salary for the two calendar
years preceding the Change in Control. "Additional Compensation" shall
mean your total short-term incentive compensation, including:
commissions, bonuses, and any elective contributions that are made by
or on behalf of you under any plan maintained by the Company that are
not includable in gross income under Sections 125, 402(e)(3) or
402(h)(1)(B) of the Internal Revenue Code of 1986, as amended from time
to time (the "Code"), but excluding moving or educational reimbursement
expenses, amounts realized from the exercise of any stock options and
imputed income attributable to any fringe benefit. If you were not
eligible for Additional Compensation relating to both of the two years
immediately preceding the Change in Control, the amount of your
"Additional Compensation" relating to the year immediately preceding
the year in which the Change in Control occurs shall be counted twice
for the purpose of determining the cumulative total of your Base
Compensation hereunder.
5. WELFARE BENEFIT PLANS; INSURANCE. If a Change in Control of the Company
occurs and within the specified period thereafter your employment with
the Company is terminated either by you for Good Reason or by the
Company Without Cause, then the Company shall cause to be maintained in
full force and effect, for the continued benefit of you and your
dependents for two years after the Date of Termination, all health and
welfare benefits historically provided to you before the Date of
Termination, including health, accident, disability and life insurance
at the levels in effect before the Date of Termination, and such other
employee benefit plans, programs and arrangements (excluding, however,
any tax-qualified and nonqualified retirement plan or program of the
Company), in which you were entitled to participate immediately prior
to the Date of Termination, provided that your continued participation
is possible under the general terms and provisions of such welfare
plans, programs and arrangements. In the event that your participation
in any such welfare plan, program or arrangement is barred, or any such
plan, program or arrangement is discontinued or the benefits thereunder
materially reduced, the Company shall arrange to provide you with
benefits substantially similar to those which you were entitled to
receive under such plans, programs and arrangements immediately prior
to the Date of Termination. At the end of the period of coverage
hereinabove provided for, you shall have the option to have assigned to
you at no cost and with no apportionment of prepaid premiums, any
assignable insurance owned by the Company and relating specifically to
you.
6. OUTPLACEMENT SERVICES. If a Change in Control of the Company occurs and
within the specified period thereafter your employment with the Company
is terminated either by you for Good Reason or by the Company Without
Cause, then the Company
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shall provide you, at the Company's expense, which shall not exceed 25%
of your Base Compensation in effect at the Effective Date, outplacement
services with a firm selected by you.
7. NO MITIGATION REQUIRED. You shall not be required to mitigate the
amount of any payment or benefit provided for in Section 4 or 5 by
seeking other employment or otherwise. Notwithstanding the foregoing,
you shall be required to inform the Company in the event that you
become re-employed and benefits otherwise receivable under Section 5 of
this Agreement shall be reduced to the extent that, and for any period
during which, you receive substantially similar benefits from another
employer.
8. EXCISE TAX LIMITATION
(a) Notwithstanding anything contained in this Agreement to the
contrary, to the extent that the payments and benefits provided under
this Agreement and benefits provided to you, or for your benefit, under
any other Company plan or agreement (such payments or benefits are
collectively referred to as the "Payments") would be subject to the
excise tax (the "Excise Tax") imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), the Payments
shall be reduced (but not below zero) if and to the extent necessary so
that no Payment to be made or benefit to be provided to you shall be
subject to the Excise Tax. Unless you shall have given prior written
notice specifying a different order to the Company to effectuate the
foregoing, the Company shall reduce or eliminate the Payments, by first
reducing or eliminating cash payments and then by reducing or
eliminating the portions of the Payments which are not payable in cash,
in each case in reverse order beginning with payments or benefits which
are to be paid the farthest in time from the Determination (as
hereinafter defined). Any notice given by the employee pursuant to the
preceding sentence shall take precedence over the provisions of any
other plan, arrangement or agreement governing your rights and
entitlements to any benefits or compensation.
(b) The determination of whether the Payments shall be reduced as
provided in paragraph (a) above and the amount of such reduction shall
be made, at the Company's expense, by an accounting firm selected by
you which is one of the five largest accounting firms in the United
States (the "Accounting Firm"). The Accounting Firm shall provide its
determination (the "Determination"), together with detailed supporting
calculations and documentation to the Company and you within ten (10)
days of the Termination Date, if applicable, or such other time as
requested by the Company or by you (provided the employee reasonably
believes that any of the Payments may be subject to the Excise Tax) and
if the Accounting Firm determines that no Excise Tax is payable by you
with respect to the Payments, it shall furnish you with an opinion
reasonably acceptable to you that no Excise Tax will be imposed with
respect to any such Payments. The Determination shall be binding, final
and conclusive upon the Company and you.
9. INDEMNIFICATION; D&O INSURANCE. If a Change in Control of the Company
occurs and within the specified period thereafter your employment with
the Company is terminated either by you for Good Reason or by the
Company Without Cause, then the Company shall, to the fullest extent
permitted by law, honor all of the Company's
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obligations to indemnify and hold you harmless (whether pursuant to the
Company's Amended and Restated Certificate of Incorporation, By-Laws,
individual indemnity agreements, applicable laws or otherwise),
including any obligations to advance funds against any cost or expenses
(including advancing attorneys' fees and expenses in advance of the
final disposition of any claim, suit, proceeding or investigation to
you to the fullest extent permitted by law), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in
connection with any actual or threatened claim, action, suit,
proceeding or investigative, whether civil, criminal, administrative or
investigative, arising out of, relating to or in connection with any
action or omission occurring or alleged to have occurred relating to or
in connection with any action or omission in connection with your
employment with the Company. In addition, the Company shall continue to
provide directors and officers liability coverage for your benefit in
the same maximum amount, and on substantially the same terms and
conditions, as the policy currently in effect with respect to the
Company's directors and officers, for a period of at least six years.
10. COMPANY SUCCESSORS; BINDING AGREEMENT. The Company shall require any
successor (whether direct or indirect, by purchase, merger,
consolidation or other transaction that does not constitute a "Change
in Control") to all or substantially all of the business and/or assets
of the Company to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure
of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall
entitle you to compensation from the Company in the same amount and on
the same terms as you would be entitled to hereunder if the Company had
terminated your employment after a Change in Control occurring at the
time of succession, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective
shall be deemed the Date of Termination.
11. YOUR SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure to the
benefit of and be enforceable by your personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die while any
amounts would still be payable to you hereunder if you had continued to
live, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to your devisees,
legatees, or other designee or, if there be no such devisee, legatee or
other designee, to your estate.
12. LEGAL FEES AND EXPENSES. It is the intent of the Company that you shall
not be required to incur the expenses associated with the enforcement
of your rights under this Agreement by legal action or negotiation to
resolve any disputes in the event that you are the prevailing party in
the dispute. Accordingly, if it should appear to you that the Company
has failed to comply with any of its obligations under this Agreement
or in the event the Company or any other person takes any action to
declare this Agreement void or unenforceable, or institutes any legal
action designed to deny, or to recover from, you the benefits intended
to be provided to you hereunder, the Company irrevocably authorizes you
from time to time to retain counsel of your choice, at the expense of
the Company, to represent you in connection with the initiation or
defense of any legal action
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or negotiation to resolve any disputes relative to this Agreement on
the matters provided for herein, whether by or against the Company or
any director, officer, stockholder or other person affiliated with the
Company; provided, however, that you shall be obligated to reimburse
the expense of the Company for your reasonable counsel fees and related
fees and expenses that the Company has paid on your behalf in the event
that you are not the prevailing party in the dispute. The Company shall
also pay or cause to be paid any and all counsel and related fees and
expenses incurred by you as a result of the Company's failure to
perform this Agreement or any provision hereof (including this Section
12) or as a result of the Company or any person contesting the validity
or enforceability of this Agreement or any provision hereof; provided,
however, that you shall be obligated to reimburse the expense of the
Company for your reasonable counsel fees and related fees and expenses
that the Company has paid on your behalf in the event that you are not
the prevailing party in the dispute.
13. NOTICE. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement, provided that
all notices to the Company shall be directed to the attention of the
Secretary of the Company, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt.
14. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such modification, waiver or discharge is agreed
to in writing signed by you and such officer as may be specifically
designated by the Board, provided, that the Company shall have the
right to terminate its obligations to you under this Agreement by
written notice given to you at any time prior to a Change in Control of
the Company, so long as such termination is not done in anticipation of
or in connection with a Change in Control of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto
of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. This Agreement constitutes the entire agreement
between the Company and you with respect to the subject matter hereof.
15. VALIDITY; GOVERNING LAW. The invalidity or unenforceability of any one
or more provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect. The validity, interpretation,
construction and performance of this Agreement shall be governed by the
laws of the State of Ohio, without giving effect to the principles of
conflicts of law of such state.
16. JURISDICTION. In the event of any dispute or controversy arising under
or in connection with this Agreement the parties hereto hereby
irrevocably consent to the jurisdiction thereof of either the Common
Pleas Court of the State of Ohio (Summit County) or the United States
District Court for the Northern District of Ohio.
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17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
If this letter correctly sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of the letter which will
then constitute our agreement on this subject.
Sincerely,
NORTH COAST ENERGY, INC.
By: /s/ Xxxx Xxxxx
-------------------------------------------------
Xxxx Xxxxx, President and Chief Executive Officer
Accepted and agreed to
this 21st day of March, 2003
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
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CHANGE IN CONTROL PROTECTION AGREEMENT
EXHIBIT A
NAME OF EMPLOYEE SEVERANCE MULTIPLE
---------------- ------------------
Xxxxx X. Xxxxxx 2.0
--------------------------------- ---------------------------------
List of Benefits:
----------------
1. Medical insurance
2. Dental insurance
3. Group term life insurance
4. Short-term disability / salary or wage continuation
5. Long-term disability insurance
6. 401(k) investment plan
7. Paid time off
8. Skills enhancement
9. Automatic payroll deposit
10. Paid jury duty
11. Bereavement leave
12. Workers' compensation
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