<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
FORTUNE PETROLEUM CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
FORTUNE PETROLEUM CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
FORTUNE PETROLEUM CORPORATION
Doing business in Louisiana and Texas as
FORTUNE NATURAL RESOURCES CORPORATION
One Commerce Green, 515 W. Greens Road
Houston, Texas 77067
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
TO THE SHAREHOLDERS:
The Annual Meeting of the shareholders of Fortune Petroleum Corporation
(the "Company") will be held on Tuesday April 30, 1996 at 2:00 p.m. at the
Wyndham Greenspoint Hotel, located at 12400 Greenspoint Drive, Houston, Texas.
The purposes of the meeting are as follows:
1. To elect two members of the Board of Directors;
2. To ratify the selection of KPMG Peat Marwick as independent
auditors for the fiscal year ending December 31, 1996;
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record as of March 22, 1996 will be entitled to notice
of and to vote at the meeting.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO
COMPLETE, SIGN, AND DATE THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN
THE POSTPAID ENVELOPE PROVIDED. SHOULD YOU CHOOSE TO CAST YOUR VOTE IN PERSON,
YOUR PROXY VOTE WILL NOT BE COUNTED.
The Annual Report of Fortune Petroleum Corporation for the year ended
December 31, 1995 is being mailed to shareholders with this notice of meeting.
By order of the Board of Directors,
/s/ Dean W. Drulias
-------------------
Dean W. Drulias
Secretary
Houston, Texas
March 26, 1996
<PAGE> 3
FORTUNE PETROLEUM CORPORATION
Doing business in Texas and Louisiana as
FORTUNE NATURAL RESOURCES CORPORATION
One Commerce Green, 515 W. Greens Road
Houston, Texas 77067
PROXY STATEMENT
Your proxy in the form enclosed is solicited by the Board of Directors of
Fortune Petroleum Corporation ("Fortune" or the "Company") for use in connection
with the Annual Meeting of Shareholders to be held on April 30, 1996. This proxy
statement and accompanying proxy card are being mailed to the shareholders of
the Company on or about March 26, 1996.
A shareholder giving a proxy retains the power to revoke it at any time
before it is exercised. A proxy may be revoked by filing with the Secretary of
the Company at the Company's principal executive offices a written notice of
revocation or a duly executed proxy bearing a later date. The powers of the
proxy holders will be suspended if the person executing the proxy is present at
the meeting and elects to vote in person. If the proxy is neither revoked nor
suspended, it will be voted by those therein named.
Only shareholders of record at the close of business on March 22, 1996 are
eligible to vote at the annual meeting in person or by proxy. The only class of
stock of the Company eligible to vote is the $0.01 par value Common Stock. As of
March 22, 1996, there were 40,000,000 shares authorized, of which 11,169,633
shares were outstanding. Each share of Common Stock entitles the holder to one
vote.
ELECTION OF DIRECTORS
The Directors of the Company are divided into three classes. The Directors
in each class hold office for staggered terms of three years each. In August
1995, following the acquisition of Lagniappe Exploration, Inc., ("LEX"), two
principal holders of LEX and subsequently of Fortune, Mr. William D. Forster,
acting on his own behalf and Mr. Charif Souki, representing the interests of BSR
Investments, Ltd., were asked to join the Board of Directors for a one-year term
ending in 1996. See "Principal Holders of Securities". On February 8, 1996, Mr.
Charles A. Champion resigned as Chairman of the Board and a Director of Fortune
following the relocation of the Company's headquarters to Houston, Texas. As of
this date no one has been designated as Chairman of Fortune's Board of
Directors.
On March 18, 1996, Messrs. Forster and Souki resigned from the Board,
citing their desire to pursue other business opportunities. The by-laws of the
Company provide for a Board of Directors of not less than three and also provide
that the terms of the members of the Board shall be staggered so that
approximately one-third of its members shall be elected annually. The number of
directors comprising the Company's Board has been set at six. The two directors
previously elected by the shareholders who are standing for re-election in 1996,
along with the four directors whose terms do not expire this year, are listed on
the following page.
VOTING RIGHTS
Each shareholder shall be entitled to one vote for each share held of
record on the record date in all matters being voted on at the 1996 annual
meeting. Shareholders will not be entitled to cumulative voting in the election
of directors at this meeting, and directors will be elected by a simple majority
vote of the shares present and voting at the meeting.
<PAGE> 4
If the enclosed Proxy Card is duly executed and returned, it will be voted
in accordance with the instructions on the Proxy Card. If no instructions are
given, it will be voted in favor of the nominees listed in the following table.
The Board of Directors has been informed that both nominees are willing to serve
as Directors, but if either of them should decline or be unable to act as a
Director, the proxy agents will vote for the election of another person or
persons as they, in their discretion, may choose. The Board of Directors has no
reason to believe that any nominee will be unable or unwilling to serve. Certain
information regarding the nominees and the continuing directors is set forth in
the following table:
<TABLE>
<CAPTION>
All Positions held Shares Beneficially
with the Company Owned Directly
or Principal or Indirectly Percent
Occupation Director as of of
Name Age Last Five Years Since March 22, 1996 (1) Class
- ---- --- --------------- ----- ------------------ -----
NOMINEES FOR DIRECTORS FOR TERMS TO EXPIRE IN 1999
<S> <C> <C> <C> <C> <C>
GARY GELMAN 30 Director (2) 1995 19,368 (5) *
</TABLE>
Mr. Gary Gelman was elected to the Company's Board of Directors on January
20, 1995. The Company agreed to elect him pursuant to an arrangement with Mr.
Jack Farber, now deceased, formerly a principal shareholder of the Company. Mr.
Gelman graduated from San Diego State University in 1989 and has served as
president of GAR-COR Holding Corporation, a real estate management and brokerage
firm, since that time. Mr. Gelman also serves as a loan consultant with National
Bank of New York City and is a principal partner of Hands-on Management, a
property management and brokerage company managing approximately 400 apartments
in 15 buildings. Mr. Gelman is the grandson of Mr. Jack Farber.
<TABLE>
<S> <C> <C> <C> <C> <C>
BARRY FEINER 62 Director (3)(4) 1995 13,868 (6) *
</TABLE>
Mr. Barry Feiner was elected to the Company's Board of Directors on January
20, 1995. The Company agreed to elect him pursuant to an arrangement with Mr.
Jack Farber, now deceased, formerly a principal shareholder of the Company. Mr.
Feiner graduated from Columbia Law School and is a member of the Bar of the
State of New York. He has practiced law in the State of New York since 1965. His
practice concentrates on the areas of corporate and securities law. Prior to
beginning private practice, Mr. Feiner served on the staff of the Securities and
Exchange Commission. Mr. Feiner is the chairman of the Company's Compensation
Committee.
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 1997
<TABLE>
<S> <C> <C> <C> <C> <C>
TYRONE J. FAIRBANKS 39 President, Chief Executive 1991 238,440 (7) 2.1%
Officer and Director (4)
</TABLE>
Mr. Tyrone J. Fairbanks has served as a Director of Fortune since January
1991. Mr. Fairbanks also serves as President and Chief Executive Officer of the
Company and Chairman of its Executive Committee. Prior to joining Fortune, Mr.
Fairbanks served as President, Chief Executive Officer and Director of Fairbanks
& Haas, Inc. from January 1990 to January 1991. Fairbanks & Haas, Inc. was an
oil and gas exploration, production, acquisition and operations company located
in Ventura, California. Mr. Fairbanks co-founded Fairbanks & Haas, Inc. and
served in the capacity of Director and Executive Vice-President from February
1987 to January 1990. Prior to Fairbanks & Haas, Inc. Mr. Fairbanks served in
positions of increasing responsibility in the areas of accounting, finance and
administration and operations with various segments of the oil and gas industry.
<TABLE>
<S> <C> <C> <C> <C> <C>
DEAN W. DRULIAS 49 Director and 1990 49,776 (8) *
Secretary (3)(4)
</TABLE>
Mr. Dean W. Drulias is a shareholder of and a practicing attorney at the
law firm of Burris, Drulias & Gartenberg, a Professional Corporation, which has
served as counsel to the Company since its incorporation in May 1987. Mr.
Drulias has served as a director since 1990 and as Secretary since July 1994.
During 1993, 1994 and 1995, his firm billed the Company a total of $117,357,
$109,950, and $182,643, respectively, for legal fees and costs. He has practiced
law in the Los Angeles area since 1977 after graduating from Loyola Law School
and specializes in areas of energy, environmental and real property law. Mr.
Drulias is Vice-Chairman of the Company's Executive Committee.
3
<PAGE> 5
<TABLE>
<CAPTION>
All Positions held Shares Beneficially
with the Company Owned Directly
or Principal or Indirectly Percent
Occupation Director as of of
Name Age Last Five Years Since March 22, 1996 (1) Class
- ---- --- --------------- ----- ------------------ -----
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 1998
<S> <C> <C> <C> <C> <C>
WILLIAM T. WALKER, JR. 64 Director (3)(4) 1993 152,992 (9) 1.4%
</TABLE>
Mr. William T. Walker, Jr., joined Fortune's Board after the successful
completion of Fortune's $7.425 million secondary equity offering in October
1993. Mr. Walker founded Walker Associates, a corporate finance consulting firm
for investment banking, in 1985 and has participated in or been instrumental in
completing over $250,000,000 in public and private offerings since its
inception. Prior to forming Walker Associates, Mr. Walker served as Executive
Vice President, Manager of Investment Banking, Member of the Board and Executive
Committee and Chairman of the Underwriting Committee for Bateman Eichler Hill
Richards, a New York Stock Exchange Member firm from 1969 to 1985 when Bateman
Eichler Hill Richards was purchased by Kemper Group. Prior to joining Bateman
Eichler Hill Richards, Mr. Walker served in various executive capacities and was
a partner with the investment banking firm of Glore Forgan, William R. Staats &
Co. in New York. Mr. Walker also serves on the boards of directors of Go Video,
Inc. (AMEX) and Ameriquest, Inc. (NYSE).
<TABLE>
<S> <C> <C> <C> <C> <C>
GRAHAM S. FOLSOM 39 Director (2)(4) 1992 58,384 (10) *
</TABLE>
Mr. Graham S. Folsom has served as the Chief Financial Officer of Klein
Ventures, Inc. since April 1987. Klein Ventures, Inc. is a diversified
investment company and a significant shareholder of Fortune. Mr. Folsom has been
active in the oil investments of such company and its affiliates since 1987. Mr.
Folsom has been licensed as a Certified Public Accountant in the State of
California since 1982 and is responsible for all of the accounting and financial
affairs of Klein Ventures and its affiliates. Mr. Folsom is the chairman of the
Company's Audit Committee.
- --------------
* Represents less than 1% of the outstanding shares of Common Stock of the
Company
(1) Based on information furnished by nominees including any outstanding stock
options and warrants.
(2) Member of the Company's Audit Committee
(3) Member of the Company's Compensation Committee
(4) Member of the Company's Executive Committee
(5) Includes 17,500 shares issuable to Mr. Gelman upon the exercise of 17,500
stock purchase warrants assigned to Mr. Gelman by his grandfather, Jack
Farber.
(6) Includes 12,000 shares issuable to Mr. Feiner upon the exercise of 12,000
stock purchase warrants (at $3.75 per share) purchased by Mr. Feiner on the
open market, for his wife, on January 20, 1995.
(7) Includes 216,599 shares issuable to Mr. Fairbanks upon the exercise of
stock options granted to him under the Company's various stock option
plans, exercisable at $2.75 per share.
(8) Includes 26,400 shares issuable to Mr. Drulias upon the exercise of stock
options granted to him under the Company's various stock option plans,
exercisable at $2.75 per share.
(9) Includes 88,289 shares issuable upon the exercise of 64,015 stock purchase
warrants (at $4.41 per warrant) issued to Mr. Walker following the 1993
equity offering and prior to Mr. Walker becoming a director, 22,264 shares
issuable upon the exercise of 3,600 representative warrants (at $11.40 per
unit each representing two shares of common stock and two common stock
purchase warrants), also includes 32,975 shares issuable on exercise of
stock options granted to Mr. Walker under the Company's various stock
option plans exercisable at $2.75 per share.
(10) Includes 36,725 shares issuable upon the exercise of stock options issued
to Mr. Folsom granted to him under the Company's various stock option plans
exercisable at $2.75 a share.
The Company is not aware of any family relationship between any Directors
or Executive Officers of the Company.
4
<PAGE> 6
PRINCIPAL HOLDERS OF SECURITIES
The following table contains information at March 22, 1996, as to all
persons who, to the knowledge of the Company, were the beneficial owners of five
percent (5%) or more of the outstanding shares of the Common Stock of the
Company and of all officers and directors.
<TABLE>
<CAPTION>
Amount and Nature Percent
Name of Beneficial Ownership of Class(1)
- ---- ----------------------- -----------
<S> <C> <C>
William D. Forster,
237 Park Ave., #2100, New York NY (2) 1,030,000 (3) 8.8%
BSR Investments, Inc., Paris, France (2) 1,030,000 (4) 8.8%
Barry Blank, 5353 N. 16th St., Phoenix, AZ 711,313 (6) 6.1%
Klein Ventures, Inc., 640,017 (5) 5.6%
1307 E. Pine St., Lodi, CA
Tyrone J. Fairbanks (Director, President,
and CEO) 515 W. Greens Rd., Houston, TX 238,440 (7) 2.1%
William T. Walker, Jr. (Director)
515 W. Greens Rd., Houston TX 152,992 (7) 1.4%
John L. Collins (Vice President)
515 W. Greens Rd., Houston TX 100,000 (7) *
Graham S. Folsom (Director)
515 W. Greens Rd., Houston, TX 58,384 (7) *
Dean W. Drulias (Director and Secretary)
515 W. Greens Rd., Houston, TX 49,776 (7) *
J. Michael Urban (Vice President and CFO)
515 W. Greens Rd., Houston, TX 35,000 (7) *
Gary Gelman (Director)
515 W. Greens Rd., Houston, TX 19,368 *
Barry Feiner (Director)
515 W. Greens Rd., Houston, TX 13,868 *
----------- ---
All Officers and Directors
as a group of eight (8) persons 667,828 (7) 5.7%
</TABLE>
- -----------------
(1) The asterisk (*) indicates less than 1%.
(2) Forster and BSR are the record holders of these shares issued in connection
with the LEX acquisition. Ensign Financial Group Limited claims a one-third
interest in such shares and the stock purchase warrants issued in the
acquisition. In light of the dispute which has arisen over the ownership of
these shares and warrants, the Company is unable to state the beneficial
ownership of such shares and warrants. If Ensign's position is upheld by the New
York courts and it is awarded one-third of the securities issued in the LEX
acquisition, to the best of the Company's knowledge, the ownership, including
shares underlying the stock purchase warrants and other securities noted in
footnote (3) and (4), would be as follows:
<TABLE>
<CAPTION>
Amount and Nature Percent
of Beneficial Ownership of Class
----------------------- --------
<S> <C> <C>
Ensign Financial Group Limited, NY, NY 800,000 6.9%
William D. Forster, New York, NY 630,000 5.5%
BSR Investments, Inc., Paris, France 630,000 5.5%
</TABLE>
(3) Includes 515,000 shares of Common Stock underlying stock purchase warrants
exercisable at $4.75 per share and expiring April 2000.
5
<PAGE> 7
(4) Includes 515,000 shares of Common Stock underlying stock purchase warrants
exercisable at $4.75 per share and expiring April 2000. Based on information
provided to the Company by BSR, voting and dispositive power is exercised by
Samyr Souki, the president of BSR. Charif Souki, a director of the Company and
son of Samyr Souki, disclaims any ownership interest in or dispositive power
over such shares.
(5) Klein Ventures, Inc. is owned by Mr. Bud Klein. The number of shares shown
includes 138,888 shares underlying stock purchase warrants issued to Klein
Ventures, Inc. in the Hinkle acquisition,115,000 shares underlying 80,000 public
stock purchase warrants acquired in the Company's 1993 public equity offering
exercisable at $3.75 per share and an aggregate of 88,629 shares of Common Stock
owned by Klein Bros. Holdings, Ltd., and 10,000 shares issuable upon exercise of
stock purchase warrants with an exercise price of $2.40 per share which will be
issued to Klein Ventures, Inc. in connection with such note. See "Certain
Relationships and Related Transactions." Each record owner possesses sole voting
and disposition power over such shares, and Klein Ventures, Inc. and Mr. Bud
Klein disclaim beneficial ownership of shares owned by Klein Bros. Holdings,
Ltd. which is owned by Klein Ventures, Inc. and five of Mr. Klein's children and
relatives. However, Klein Ventures, Inc., Klein Bros. Holdings, Ltd. and Bud
Klein may be considered a "group" under regulations of the Securities and
Exchange Commission.
(6) Includes 279,200 shares of Common Stock and an additional 432,113 shares of
which are shares underlying 300,600 stock purchase warrants held by Mr. Blank
and exercisable at $3.75 per share. Mr. Blank is a Vice President and registered
representative with Coleman and Company Securities, Inc., one of the
Representatives of the Underwriters. See "Underwriting."
(7) Includes 216,599 shares issuable to Mr. Fairbanks upon the exercise of stock
options granted to him under the Company's various stock option plans,
exercisable at $2.75 per share; an aggregate of 139,801 shares issuable upon
exercise of stock options granted to other officers and directors under the
Company's various stock option plans, exercisable at $2.75 per share; 88,289
shares issuable upon exercise of common stock purchase warrants (at $4.41 per
warrant) and 22,264 shares issuable upon exercise of 3,600 warrants (at $11.14
each for 3.3097 shares of Common Stock and two stock purchase warrants
exercisable at $3.75 each for 1.4375 shares) issued in connection with the
Company's 1993 equity offering to William T. Walker, Jr. prior to becoming a
director of the Company; 25,000 shares issuable upon the exercise of common
stock purchase warrants (at $3.25 per share) issued to John L. Collins on May
30, 1995; and 35,000 shares issuable upon the exercise of common stock purchase
warrants (at $2.5625 per share) issued to J. Michael Urban on March 11, 1996.
EXECUTIVE COMPENSATION
The following table lists the total compensation paid by the Company to
its Chief Executive Officer and President.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
------------------- -----------------------------
NAME AND SECURITIES UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS
- ------------------ ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Tyrone J. Fairbanks,(1) 1995 $126,250 25,000 105,599
President, CEO 1994 $102,500 15,000 78,900
</TABLE>
- ----------------
(1) The only years in which Mr. Fairbanks received salary and bonus exceeding
$100,000 were 1994 and 1995. Mr. Fairbanks was elected President of Fortune on
June 23, 1994, and became Chief Executive Officer on January 5, 1995. Prior to
his election as President, he served as a Vice President and Chief Financial
Officer.
On May 30, 1995 the Company hired Mr. John L. Collins as Vice President of
Investor Relations with a salary of $96,000 per year. Fortune issued to Mr.
Collins 25,000 stock purchase warrants exercisable at $3.25 (the market price of
the Common Stock on May 30, 1995, the date of issue) and expiring May 30, 2000.
6
<PAGE> 8
On March 11, 1996, Mr. J. Michael Urban commenced employment as Vice
President and Chief Financial Officer with a salary of $120,000 a year. Fortune
issued Mr. Urban 35,000 stock purchase warrants exercisable at $2.5625 (the
market price of the Common Stock on March 11, 1996, the date of issue) and
expiring on March 11, 20001.
In June 1994, Daniel E. Pasquini, formerly President and a director of
the Company, resigned. At the time of his resignation, Mr. Pasquini was employed
under an employment agreement with terms similar to Mr. Fairbanks's agreement.
In connection with the cancellation of the agreement, Mr. Pasquini and the
Company negotiated a buyout arrangement under which Mr. Pasquini was to be paid
a total severance benefit of $225,000, of which approximately one-half was
deferred until January 1995. To assist the Company's cash flow requirements, Mr.
Pasquini agreed to accept $85,000 in cash, the exercise price of certain stock
options held by him was reduced to $.575 per share and the Company agreed to
issued stock purchase warrants to him in the future to purchase 45,000 shares of
Common Stock at $2.75 per share. The reduction in exercise price of the options
had no financial statement impact, since the Company had previously expensed the
entire amount of the severance benefits payable to Mr. Pasquini.
As compensation to outside directors, the Company pays directors' fees
equal to $2,500 per quarter. One half of the directors' fees is paid in shares
of Fortune common stock valued at $1,250 based on the closing price of the stock
on the last day of each quarter and $1,250 is paid in cash. Inside directors do
not receive such compensation.
The following table lists the outstanding options held by the Company's
Chief Executive Officer and Chief Financial Officer under Company's Stock Option
Plans:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options in-the-Money Options
at FY-End (#) at FY-End ($)(1)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tyrone J. Fairbanks -- -- 216,999/0 $461,122/$0
</TABLE>
- ----------
(1) Based on the closing price of the Common Stock on December 31, 1995. Based
on the closing price of the Company's stock on March 22, 1996, none of the
options are "in-the-money".
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Mr.
Fairbanks, its President and Chief Executive Officer. The agreement provides
that if employment is terminated for any reason other than for cause, death or
disability within one year following a change of control (which for purposes of
this Agreement means a change in the majority of the Board of Directors
following certain special events) Mr. Fairbanks is entitled to receive a single
payment equal to two (2) years' compensation. Mr. Fairbanks' agreement also
provides for two (2) years of consulting services upon the completion of the
primary term of his contract at forty percent (40%) of the last compensation
thereunder. Mr. Fairbanks' current annual salary is $150,000. The term of Mr.
Fairbanks' employment contract expires December 31, 1997.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors selected KPMG Peat Marwick as the Company's
independent public accountants for the fiscal years ending December 31, 1992,
1993, 1994 and 1995, and has further directed that management submit the
selection of independent public accountants for ratification by the shareholders
at the Annual Meeting. KPMG Peat Marwick audited the Company's financial
statements for 1992, 1993 1994 and 1995. Its representatives are expected to be
present at the meeting, will have an opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate questions.
7
<PAGE> 9
Shareholder ratification of the selection of KPMG Peat Marwick as the
Company's independent public accountants is not required by the Company's
by-laws or otherwise. The Board of Directors is submitting the selection of KPMG
Peat Marwick to the shareholders for ratification as a matter of good corporate
practice. A majority vote is required for ratification of KPMG Peat Marwick by
the shareholders. In the event the shareholders fail to ratify the selection,
the Board of Directors will reconsider whether or not to retain that firm. Even
if the selection is ratified, the Board of Directors in it discretion may direct
the appointment of a different independent accounting firm at any time during
the year if the Board of Directors determines that such a change would be in the
best interest of the Company and its shareholders. The affirmative vote of the
holders of a majority of the shares represented and voting at the Annual Meeting
will be required to ratify the selection of KPMG Peat Marwick.
OTHER MATTERS
The total cost of this solicitation will be borne by the Company. In
addition to use of the mails, proxies may be solicited by officers, directors,
and employees of the Company by telephone or telegraph.
Management knows of no other business to be presented at the meeting,
but if other matters do properly come before the meeting, it is intended that
the persons named in the proxy will vote on said matters in accordance with
their best judgment.
By order of the Board of Directors,
/s/ Dean W. Drulias
-------------------
Dean W. Drulias
Secretary
Houston, Texas
March 26, 1996
8
<PAGE> 10
PROXY
FORTUNE PETROLEUM CORPORATION
Doing business in Texas and Louisiana as
FORTUNE NATURAL RESOURCES CORPORATION
ANNUAL MEETING OF SHAREHOLDERS -- APRIL 30, 1996
The undersigned shareholder(s) of Fortune Petroleum Corporation ("Fortune")
hereby nominates, constitutes and appoints Dean W. Drulias and Tyrone J.
Fairbanks, and each of them, the attorney, agent and proxy of the undersigned,
with full power of substitution, to vote all stock of Fortune Petroleum
Corporation which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Fortune to be held at the Wyndham Greenspoint Hotel located at
12400 Greenspoint Drive, Houston, Texas at 2:00 p.m. on Tuesday, April 30, 1996
and any and all adjournments thereof, as fully and with the same force and
effect as the undersigned might or could do if personally present thereat, as
follows:
1. ELECTION OF DIRECTORS: Authority to elect two (2) persons named in the
Proxy Statement dated March 26, 1996 to the Board of Directors to serve for the
respective terms set forth in the Proxy Statement and until their successors are
elected and have qualified.
AUTHORITY GIVEN to vote for all nominees WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) / / for all nominees / /
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
through the nominee's name in the list below).
GARY GELMAN BARRY FEINER
2. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS. To ratify the selection
of KPMG Peat Marwick as Fortune's independent public accountants for the year
ending December 31, 1996.
/ / FOR / / AGAINST / / ABSTAIN
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
<PAGE> 11
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" FOR PROPOSAL 1,
AND A VOTE "FOR" PROPOSAL 2. THE PROXY CONFERS AUTHORITY TO AND SHALL BE VOTED
"AUTHORITY GIVEN" FOR PROPOSAL 1, AND "FOR" PROPOSAL 2, UNLESS "WITHHOLD
AUTHORITY", "AGAINST", OR "ABSTAIN" IS INDICATED, IN WHICH CASE THE PROXY SHALL
BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS.
IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
Dated:
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(Signature of
Shareholder)
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(Please Print Name)
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(Signature of
Shareholder)
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(Please Print Name)
I/WE DO EXPECT TO ATTEND THE MEETING / / I/WE DO NOT EXPECT TO ATTEND THE
MEETING / /
