Change in Control Protection Agreement between North Coast Energy, Inc. and Dean A. Swift

Summary

This agreement between North Coast Energy, Inc. and Dean A. Swift provides severance benefits to Swift if his employment is terminated within a specified period following a change in control of the company. If Swift is terminated without cause or resigns for good reason after such a change, he is entitled to certain protections and payments. The agreement aims to encourage Swift to remain with the company and support a potential sale, while clarifying that his employment remains at-will unless otherwise agreed in writing.

EX-10.35 6 l00414aexv10w35.txt EX-10.35 CHANGE OF CONTROL AGREEMENT - SWIFT Exhibit 10.35 [NORTH COAST LETTERHEAD] FORM OF CHANGE IN CONTROL PROTECTION AGREEMENT March 21, 2003 Dean A. Swift Dear Dean: 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 2 (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; 3 (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 4 (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 5 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 6 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 7 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. 8 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/ Omer Yonel ------------------------------------------------- Omer Yonel, President and Chief Executive Officer Accepted and agreed to this 21st day of March, 2003 /s/ Dean A. Swift - ---------------------------- Dean A. Swift 9 CHANGE IN CONTROL PROTECTION AGREEMENT EXHIBIT A NAME OF EMPLOYEE SEVERANCE MULTIPLE ---------------- ------------------ Dean A. Swift 1.0 - --------------------------------- --------------------------------- 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 10