As filed with the Securities and Exchange Commission on August 4, 1998
Registration Statement No. 333-____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-----------
FORTUNE NATURAL RESOURCES CORPORATION
(Exact Name of Registrant as specified in its charter)
(formerly Fortune Petroleum Corporation)
DELAWARE 95-4114732
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
TYRONE J. FAIRBANKS
FORTUNE NATURAL RESOURCES CORPORATION
515 WEST GREENS ROAD, SUITE 720 515 WEST GREENS ROAD, SUITE 720
HOUSTON, TEXAS 77067 HOUSTON, TEXAS 77067
(Address, including zip code, and (Name, address, including zip
telephone number, including area code, code, and telephone number,
of registrant's principal including area code of agent
executive offices) for service
COPIES TO:
Bruce L. Ashton, Esq.
Reish & Luftman
11755 Wilshire Blvd., 10th Floor
Los Angeles, California 90025
FORTUNE NATURAL RESOURCES CORPORATION 1998 STOCK OPTION PLAN
FORTUNE NATURAL RESOURCES CORPORATION 401(K) PROFIT SHARING PLAN
(FULL TITLE OF THE PLANS)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Title of Securities Amount Proposed Maximum Proposed Maximum Amount of
to be Registered to be Offering Price Aggregate Offering Registration
Registered(1) Per Share (2) Price Fee
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 40,000 $1.50(3) $ 60,000 $18
$.01 par value shares(3)
Common Stock 727,500 $1.5625(3) $1,136,719 $335
$.01 par value shares
- -------------------------------------------------------------------------------------------
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
registration statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plans described herein.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee.
(3) Pursuant to Rule 457(h) of the General Rules and Regulations under the
Securities Act of 1933 as amended, the proposed offering price per share
for the 1998 Stock Option Plan shares is based upon the average price at
which options may be exercised. The proposed offering price for the 401(k)
Profit Sharing Plan shares is based upon the estimated average closing
price of the Company's Common Stock of the consolidated market as quoted by
the American Stock Exchange on the last day of trading for each month in
such calendar year.
<PAGE>
FORTUNE NATURAL RESOURCES CORPORATION
1998 STOCK OPTION PLAN
GENERAL PLAN DESCRIPTION
August 1998
This Description provides information about the 1998 Stock Option Plan (the
"Plan") adopted by Fortune Natural Resources Corporation ("Fortune" or the
"Company") in connection with the offer to sell shares of Fortune common stock,
$.01 par value per share (the "Common Stock"), pursuant to such options.
The terms and conditions of the Plan are summarized in this Description.
This Description is not intended as a substitute for the Plan and the option
agreements entered into by the Company with option holders. For a complete
description of the Plan and the rights of option holders thereunder, reference
is made to the Plan, copies of which may be obtained from the Secretary of the
Company. For additional information about the Plan, contact
Dean W. Drulias, Corporate Secretary
Fortune Natural Resources Corporation
515 West Greens Road, Suite 720
Houston, Texas 77067
(281) 872-1170
PLAN INFORMATION
The Plan gives key employees, officers and directors of the Company the
opportunity to take part in the growth of the Company through the purchase of
Common Stock pursuant to stock options. The purpose of the Plan is to provide an
incentive to such individuals to increase the Company's profitability. Options
may be granted under the Plan until December 31, 2002, subject to the right of
Fortune's Board of Directors to suspend or terminate the Plan at any time. No
such termination or suspension shall affect outstanding options except with the
consent of the option holder.
The Plan is not subject to the provisions of the Employee Retirement Income
Security Act of 1974 and is not a "qualified" plan under the Internal Revenue
Code of 1986, as amended. Under the Plan, both incentive stock options (commonly
referred to as "ISOs") and options which do not qualify as ISOs (commonly
referred to as "non-qualified options") may be issued. ISOs are entitled to
favorable treatment under federal income tax law. For further information on the
tax treatment of the grant and exercise of options under the Plan, see "Federal
Income Tax Matters" which appears below.
Subject to adjustment in the event of certain changes in the capitalization
of the Company, the aggregate amount of the Common Stock which may be issued by
the Company upon the exercise of options as approved by shareholders on July 1,
1997 is as follows:
Option Grant Period Shares Available
------------------- ----------------
1998 up to 2,000,000
1999 up to 10% of outstanding stock at 12-31-98
2000 up to 10% of outstanding stock at 12-31-99
2001 up to 10% of outstanding stock at 12-31-2000
2002 up to 10% of outstanding stock at 12-31-2001
<PAGE>
Options will be granted at the discretion of a Committee of the Board of
Directors to key employees, officers and directors, although members of the
Committee may not receive options under the Plan, unless the grant is approved
by a disinterested majority of the Board of Directors. Further, to the extent
the aggregate fair market value of options issued under this Plan (and all other
plans established by Fortune) exercisable in a calendar year exceeds $100,000,
such options will not be treated as ISOs.
Options granted under the Plan will expire at such time as the Committee
may designate at the time the option is granted but not later than 5 years from
the date of grant. Subject to the discretion of the Board of Directors within
the provisions set by the Plan, the exercise price for the Common Stock subject
to the options may be set by the Committee but shall not be less than the
greater of (a) the fair market value of the Common Stock on date of grant or (b)
the price arrived at pursuant to the following:
Option Grant Period Option Prices
------------------- -------------
1998 100% of fair market on January 1, 1998
1999 110% of fair market value on January 1, 1998
2000 110% of fair market value on January 1, 1999
2001 110% of fair market value on January 1, 2000
2002 110% of fair market value on January 1, 2001
The exercise price must be paid in full in cash at the time of exercise.
Options granted under the Plan may not be transferred, other than by will
or the laws of descent and distribution, and are exercisable generally only so
long as the holder remains employed by the Company. Upon termination of
employment, except for cause, options remain exercisable for twelve (12) months
from the date of termination. Options held by an employee at death are
exercisable for up to one year from the date of death.
RESALE RESTRICTIONS
The Plan does not impose any restrictions on the resale of shares of Common
Stock purchased upon the exercise of options granted under the Plan. However,
the offer and sale of any such shares must be made in compliance with the
requirements of the federal and applicable state securities laws. The Company
has filed a registration statement under the Securities Act of 1933 for the
purpose of complying with such requirements under federal law. However, all
offers and resales by affiliates of the Company (which includes all officers,
directors and more than 5% shareholders of the Company) in any three (3) month
period are limited under Rule 144, which generally restricts resales to an
amount equal to 1% of the Company's outstanding stock.
FEDERAL INCOME TAX MATTERS
Incentive Stock Options. Option holders are not taxed upon receipt of ISOs
or at the time of exercise of the options. The option holder's tax basis in
stock purchased upon exercise of the option is the exercise price. If the stock
is held for a required holding period (the later of two years after grant of the
option or one year from exercise), upon sale of the stock, the option holder is
taxed on the difference between the basis in the stock (the option exercise
price) and the sales price of the stock. The taxable amount is treated as
capital gain and is taxed under the rules set forth in section 1(h) of the
Internal Revenue Code. Option holders should consult with their own tax advisors
regarding the application of these rules.
If the stock is sold before satisfying the holding period requirement, the
option holder is deemed to have received compensation equal to the difference
between the option exercise price and the fair market value of the stock on the
date of exercise. This latter amount is added to the basis of the stock for
computing any capital gain on the sale of the stock.
2
<PAGE>
Non-Qualified Options. Option holders of non-qualified options also are not
taxed at the time of receipt of the options (since the options have no
discernable value) but, unlike ISOs, are taxed upon exercise of the option on
the difference between the "fair market value" of the stock at the time of
exercise and the exercise price. This amount is treated as compensation and is
taxable as ordinary income. Further, at the time of sale of the stock, if the
sales price exceeds the "fair market value" at the time of exercise of the
option, the difference is treated as capital gain income (short-term or
long-term depending on how long the stock has been held after exercise of the
option).
INFORMATION ABOUT THE COMPANY
The Company incorporates by reference in this Description the following
documents, copies of which may be obtained without charge, upon written or oral
request, from the Secretary of the Company shown on the cover page hereof: (1)
the Company's Annual Report on Form 10-K for the year ended December 31, 1997,
(2) Quarterly Reports on Form 10-Q for the periods ended March 31 and June 30,
1998, and (3) Current Report on Form 8-K filed on March 31, 1998.
In addition, all documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
Description and prior to the termination of the offering of shares pursuant to
outstanding options under the Plan shall be deemed to be incorporated by
reference in this Description. Copies of all such documents are also available
without charge, upon written or oral request, from the Secretary of the Company.
3
<PAGE>
FORTUNE NATURAL RESOURCES CORPORATION
401(K) PROFIT SHARING PLAN
GENERAL PLAN DESCRIPTION
August 1998
The 401(k) Profit Sharing Plan (the "401(k) Plan") offered by Fortune
Natural Resources Corporation ("Fortune" or the "Company") allows for
discretionary matching on the part of the Company in the form of Fortune common
stock ("Common Stock"). This Description provides information about the 401(k)
Plan in connection with Participant and Company contributions.
The terms and conditions of the 401(k) Plan are summarized in this
Description. This Description is not intended as a substitute for the 401(k)
Plan or the Summary Plan Description of the 401(k) Plan. For a complete
description of the 401(k) Plan and the rights of Participants thereunder,
reference is made to the 401(k) Plan, copies of which may be obtained from the
Secretary of the Company. For additional information about the 401(k) Plan,
contact:
Dean W. Drulias, Corporate Secretary
Fortune Natural Resources Corporation
515 W. Greens Road, Suite 720
Houston, Texas 77067
(281) 872-1170
GENERAL PLAN INFORMATION
The 401(k) Plan gives eligible employees an opportunity to participate in
the 401(k) Plan offered by the Company. All individuals employed as of November
1, 1996 and all individuals who have attained age 21 and three months of service
with the Company are eligible to participate in the 401(k) Plan except union
members and non-resident alien employees. Contributions made by a Participant
are allowed as of the first day of the month following their eligibility. A
Participant as of that date may elect to defer a portion of his or her pre-tax
compensation through a written salary reduction agreement with the Company.
Deferrals are subject to percentage and dollar amount limitations set forth in
the Internal Revenue Code and discussed in more detail in "Purchase of
Securities" which appears below. The Company, in its discretion, may elect to
contribute Common Stock to a Participant's account.
The 401(k) Plan was adopted by the Company effective January 1, 1996. The
Company has no current intent to institute any modifications to the 401(k) Plan.
Further, the 401(k) Plan is subject to the reporting, disclosure and fiduciary
requirements of Title I of the Employee Retirement Income Security Act of 1974
("ERISA"). The 401(k) Plan is governed and overseen by the Company. The Company
is the 401(k) Plan Administrator and responsible for operating all aspects of
the 401(k) Plan. To facilitate the administration of the 401(k) Plan, the
Company has engaged the services of a third party recordkeeper and a third party
investment counselor and asset custodian. Participants are furnished annually
with a report setting forth the total amount of money and Common Stock in the
401(k) Plan as well as the specific allocations of plan investments.
PURCHASE OF SECURITIES
A Participant may elect to commence compensation deferral at any time after
eligibility; however, changes in the amount of salary reduction may only be made
on January 1 or July 1 of each year. Salary reduction may be made on a
percentage basis or dollar amount; however, the salary reduction amount may not
exceed the lesser of fifteen percent of income or the maximum dollar amount
allowed by law ($10,000 for 1998). Compensation is limited to cash compensation,
which includes automobile allowances, commission and any bonuses received by a
Participant.
1
<PAGE>
As stated above, the Company may elect to make discretionary contributions
of Common Stock to a Participant's account in the 401(k) Plan. It is currently
the Company's intention to make a matching contribution equal to 50% of a
Participant's deferral to the 401(k) Plan in the form of Company stock, subject
to limitations imposed by the Internal Revenue Code. This policy is subject to
change from time to time in the discretion of management of the Company. The
amount of the contribution is determined at the end of each calendar year. The
price of any Common Stock contributed each year is determined by averaging the
closing price of the Company's Common Stock on the consolidated market as quoted
by the American Stock Exchange on the last day of trading for each month in such
calendar year. Because the 401(k) Plan was adopted by the Company during the
second half of 1996, the price used to calculate the Common Stock shares
contribution by the Company for the 1996 401(k) Plan year was the average
month-end closing price for the last six months of 1996. The contribution is not
limited to Company profits.
RESALE RESTRICTIONS
The Common Stock contributed by the Company may not be resold by the
Participant until after the Participant's account is fully vested. Vesting is
discussed in more detail in "Forfeitures and Penalties" below. Additionally, the
offer and sale or any resale of Common Stock must be made in compliance with the
requirements of the federal and applicable state securities laws. The net
proceeds from the resale of any Common Stock at the direction of a participant
will remain in the Participant's account until the Participant receives a
distribution from the 401(k) Plan.
TAX EFFECTS OF PLAN PARTICIPATION
The 401(k) Plan is a qualified plan under Internal Revenue Code Section
401(a). Participants are not taxed on the contributions that are made by his or
her compensation deferral or by Company contributions to the 401(k) Plan. The
Company is entitled to a tax deduction for the Participant compensation deferral
amount and any Common Stock that is contributed to a 401(k) Plan. Neither the
Participant nor the Company is taxed on income generated by the 401(k) Plan
until distribution. Distributions from the 401(k) Plan are subject to a twenty
percent federal withholding tax unless they are rolled over into an Individual
Retirement Account (IRA) or another qualified retirement plan in accordance with
federal income tax regulations. If the Participant is under the age of 59 1/2,
he or she pays a ten percent add on tax for any amount distributed, subject to
certain exceptions.
Under certain circumstances, the Participant shall pay additional taxes
based on the size of the distribution. If the Participant owns more than five
percent of the Company, he or she must take distributions from the 401(k) Plan
upon reaching the age of 70 1/2. Such distributions are not eligible for roll
over into an IRA or another qualified retirement plan.
INVESTMENT FUNDS
Each Participant has the sole authority to direct the investment of his or
her contributions to the 401(k) Plan. As such, the investment responsibility
rests solely with the Participant and the Company does not provide advice
regarding investment opportunities. Merrill Lynch serves as an investment
advisor by providing investment counseling and information, including investment
prospectuses, to the Participants. The Participant's account is charged with all
brokerage fees charged by Merrill Lynch for handling the Participants' account;
however, all other administrative and recordkeeping fees are currently paid by
the Company.
DISTRIBUTIONS FROM THE PLAN; ASSIGNMENT OF INTEREST
Distributions from the 401(k) Plan are only allowed under limited
circumstances. Distributions are allowed due to the financial hardship of the
Participant. The Company follows the criteria set forth in the Internal Revenue
Code to determine financial hardship. Treasury Regulations sections
1.401(k)-1(d)(2)(iv) and 1.401(k)-1(d)-2(ii)(B), allow financial hardship
distributions only for medical necessity, downpayment for purchase of principal
residence, payment of tuition at the college level for a spouse or child or the
need to prevent foreclosure or eviction from the Participant's principal
residence.
2
<PAGE>
A loan may be made to a Participant under certain circumstances for no less
than three thousand dollars and no more than the lesser of fifty thousand
dollars or one-half of a Participant's vested interest in the 401(k) Plan. Such
loans are permitted generally only for certain educational expenses, medical
expenses, funeral expenses and expenses associated with the Participant's
primary residence.
Further, a participant is prohibited from assigning, hypothecating or
creating a lien on his or her interest in the 401(k) Plan.
FORFEITURES AND PENALTIES
If a Participant is terminated for any reason before he or she is fully
vested, any contribution of Common Stock made by the Company is forfeited. Full
vesting occurs after two years of service to the Company. A year of service for
vesting purposes starts on the date a Participant first performs an hour of
service for the Company and each anniversary thereafter. To be credited with a
year of service, a Participant must complete at least one thousand hours of
service. If a Participant does not complete at least one thousand hours of
service during a twelve-month consecutive period, he or she may suffer a
reduction or denial of benefits under the 401(k) Plan.
INFORMATION ABOUT THE COMPANY
The Company incorporates by reference in this Description the following
documents, copies of which may be obtained without charge, upon written or oral
request, from the Secretary of the Company shown on the cover page hereof: (1)
the Company's Annual Report on Form 10-K for the year ended December 31, 1997,
(2) Quarterly Reports on Form 10-Q for the periods ended March 31 and June 30,
1998, and (3) Current Report on Form 8-K filed on March 31, 1998. In addition,
copies of all 401(k) Plan documents are also available without charge, upon
written or oral request, from the Secretary of the Company.
3
<PAGE>
4 0 , 0 0 0 S H A R E S
FORTUNE NATURAL RESOURCES CORPORATION
COMMON STOCK
($.01 PAR VALUE)
------------------------------
The shares of the Common Stock, $.01 par value (the "Common Stock") of
Fortune Natural Resources Corporation ("Fortune" or the "Company") covered by
this prospectus may be offered from time to time by the Fortune Natural
Resources Corporation 401(k) Profit Sharing Plan (the "401(k) Plan") at the
discretion of 401(k) Plan Participants who have the right under the 401(k) Plan
to direct the investment in the account. The Company will not receive any
proceeds from the sale of shares by the 4019(k) Plan. All proceeds will be
received by and retained in the 401(k) Plan until a participant is entitled to
receive a distribution from the 401(k) Plan.
The 401(k) Plan acquires the shares through discretionary matching
contributions by the Company to the 401(k) Plan.
The expenses incurred in registering the Shares, including legal and
accounting fees, will be paid by the Company. To the knowledge of the Company,
the 401(k) Plan has made no arrangement with any brokerage firm for the sale of
the shares. The 401(k) Plan may be deemed to be an "underwriter" within the
meaning of the Securities Act of 1933, as amended (the "Act"). Any commissions
received by a broker or dealer in connection with resales of the shares may be
deemed to be underwriting commissions or discounts under the Act. The Common
Stock is listed on the American Stock Exchange. On July 31, 1998, the closing
price of the Common Stock on such Exchange was $1.00.
The shares of Common Stock have not been registered for sale under the
securities laws of any state or other jurisdiction as of the date of this
Prospectus. Brokers or dealers effecting transactions in the Common Stock should
confirm the registration of the Common Stock under the securities laws of states
in which such transactions occur or the existence of an exemption from such
registration, or should cause such registration to occur in connection with any
offer or sale of the Common Stock.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED UPON
ACCURACY OR THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- --------------------------------------------------------------------------------
Price to Public Underwriting Discount Proceeds to Company (1)
Per Share.... $ N/A N/A $ N/A
Total........ $ N/A N/A $ N/A
- --------------------------------------------------------------------------------
(1) None. All proceeds will be received by the 401(k) Plan. The account of
participants in the 401(k) Plan from which shares are sold will bear all
commissions payable to brokers or dealers in connection with the sale of
shares. The Company will bear all costs of the offering estimated at
$5,000.
------------------------------
The date of this Prospectus is August 4, 1998
<PAGE>
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and information statements filed
by the Company with the Commission pursuant to the informational requirements of
the Exchange Act may be inspected and copied at the public reference facilities
maintained by the Commission, at Room 1024, Judiciary Plaza Building, 450 Fifth
Street, N.W. Washington, D.C. 20549, and the Regional offices of the Commission:
75 Park Place, 14th Floor, New York, New York 10007, and Kluczynski Federal
Building, 230 South Dearborn Street, Room 3190, Chicago, Illinois 60604. Copies
of such material may be obtained at prescribed rates from the Public Reference
Section of the Commission at Room 1025, Judiciary Plaza Building, 450 Fifth St.,
N.W. Washington, D.C. 20549.
The Company has filed with the Commission a Registration Statement on Form
S-8 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Common Stock being registered
hereby. This Prospectus, filed as part of the Registration Statement, does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain portions of which have been omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is made
to the Registration Statement and to the exhibits and schedules thereto, which
may be inspected at the Commission's offices without charge or copies of which
may be obtained from the Commission upon payment of the prescribed fees.
Statements made in the Prospectus as to the contents of any contract, agreement
or document referred to are not necessarily complete, and in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, and each such statement is qualified in
its entirety by such reference.
INCORPORATION OF INFORMATION BY REFERENCE
There is hereby incorporated by reference in this Prospectus and made a
part hereof (1) the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, (2) Quarterly Reports on Form 10-Q for the periods ended
March 31 and June 30, 1998, and (3) Current Report on Form 8-K filed on March
31, 1998.
There is also hereby incorporated by reference in this Prospectus and made
a part hereof the Company's Registration Statement on Form 8-A filed on
September 13, 1993, which describes the Common Stock.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Common Stock shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement contained in a document incorporated or to be incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein modifies, supersedes or replaces such statement. Any statements
modified or superseded shall not be deemed, except as modified or superseded, to
constitute a part of this Prospectus.
2
<PAGE>
No person is authorized to give any information or make any representations
other than those contained in the Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the registered shares
to which it relates or an offer to sell or a solicitation of an offer to buy
such securities in any circumstances in which such offer or solicitation is
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or that the
information contained herein is correct as of any time subsequent to its date.
THE COMPANY
Fortune is an independent public oil and natural gas company whose primary
focus is on exploration for and development of domestic oil and natural gas
properties. The Company's principal properties are located onshore and offshore
Louisiana and Texas.
The Company has implemented a program of exploration for significant oil
and natural gas reserves using state-of-the-art 3D seismic and computer-aided
exploration (CAEX) technology, believing that the use of 3D seismic and CAEX
technology provides more accurate and comprehensive geological data for
evaluation of drilling prospects than 2D evaluation methods. Since the
implementation of this program, the Company has acquired, with other industry
partners, interests in over 25 oil and gas prospects in the Louisiana and Texas
Gulf Coast regions which are in various stages of evaluation and acquisition and
is continually evaluating other 3D and 2D exploration projects.
The Company also seeks to take advantage of attractive acquisition targets
which will enable it to acquire reserves at an attractive price.
The Company's principal executive offices are located at 515 West Greens
Road, Suite 720, Houston, Texas 77067. Its telephone number at that address is
(281) 872-1170.
USE OF PROCEEDS
The shares which are the subject of this Prospectus may be offered and sold
from time to time by the 401(k) Plan, and the Company will not receive any of
the proceeds of such sales. The Company agreed to bear all expenses of
registering such shares, including legal, accounting and printing costs
estimated at $5,000.
PLAN OF DISTRIBUTION
The 401(k) Plan may offer and sell shares pursuant to this Prospectus from
time to time on the American Stock Exchange or through individually negotiated
transactions or in other ways. The Company is not aware of any agreements which
may have been entered into by the 401(k) Plan with brokers, dealers or third
parties for the offer or sale of any shares. Except as noted below, the Company
will not be a party to any such agreements nor will it participate in the
negotiation or consummation of any such agreements or the offer and sale of any
of the shares covered by this Prospectus.
Sales of shares by the 401(k) Plan will be subject to the restrictions of
Rule 144 under the Securities Act of 1933, as amended (which, among other
things, limits the amount of shares which may be disposed of in any calendar
quarter to 1% of the Company's outstanding shares or currently about 121,075
shares each quarter).
3
<PAGE>
At the date of this Prospectus, the 401(k) Plan owns 15,020 shares
allocated to the account of eight participants of the 401(k) Plan. It is
anticipated that the Company may contribute up to 17,000 additional shares of
Common Stock to the 401(k) Plan in connection with participant deferrals during
the 1998 Plan year.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to the Company, the Company has been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
EXPERTS
The financial statements of the Company as of December 31, 1997 and 1996
and for each of the years in the three-year period ended December 31, 1997, have
been incorporated herein by reference in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated herein by
reference, and upon the authority of said firm as experts in accounting and
auditing.
4
<PAGE>
========================================
TABLE OF CONTENTS
PAGE
Cover Page 1
Additional Information 2
Incorporation of Information
By Reference 2
The Company 3
Use of Proceeds 3
Plan of Distribution 3
Experts 4
========================================
<PAGE>
========================================
40,000 SHARES
COMMON STOCK
($.01 PAR VALUE)
FORTUNE NATURAL RESOURCES CORPORATION
------------
P R O S P E C T U S
------------
AUGUST 4, 1998
========================================
<PAGE>
7 2 7 , 5 0 0 S H A R E S
FORTUNE NATURAL RESOURCES CORPORATION
COMMON STOCK
($.01 PAR VALUE)
------------------------------
The shares of the Common Stock, $.01 par value (the "Common Stock") covered
by this prospectus may be offered from time to time by certain shareholders (the
"Selling Shareholders") of Fortune Petroleum Corporation ("Fortune" or the
"Company"). The Company will not receive any proceeds from the sale of shares by
the Selling Shareholders.
The Selling Shareholders are officers, directors and key employees of
Fortune who acquired their shares through the exercise of stock options granted
to them under the Company's 1998 stock option plan.
The expenses incurred in registering the Shares, including legal and
accounting fees, will be paid by the Company. To the knowledge of the Company,
the Selling Shareholders have made no arrangement with any brokerage firm for
the sale of the Shares. The Selling Shareholders may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Act"). Any commissions received by a broker or dealer in connection with
resales of the Shares may be deemed to be underwriting commissions or discounts
under the Act. The Common Stock is listed on the American Stock Exchange. On
July 31, 1998, the closing price of the Common Stock on such Exchange was $1.00.
The shares of Common Stock have not been registered for sale under the
securities laws of any state or other jurisdiction as of the date of this
Prospectus. Brokers or dealers effecting transactions in the Common Stock should
confirm the registration of the Common Stock under the securities laws of states
in which such transactions occur or the existence of an exemption from such
registration, or should cause such registration to occur in connection with any
offer or sale of the Common Stock.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED UPON
ACCURACY OR THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------------
- --------------------------------------------------------------------------------
Price to Public Underwriting Discount Proceeds to Company (1)
Per Share.... $ N/A N/A $ N/A
Total........ $ N/A N/A $ N/A
- --------------------------------------------------------------------------------
(1) None. All proceeds will be received by the Plan. The account of
participants in the Plan from which shares are sold will bear all
commissions payable to brokers or dealers in connection with the sale of
shares. The Company will bear all costs of the offering estimated at
$5,000.
------------------------------
The date of this Prospectus is August 4, 1998
<PAGE>
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and information statements filed
by the Company with the Commission pursuant to the informational requirements of
the Exchange Act may be inspected and copied at the public reference facilities
maintained by the Commission, at Room 1024, Judiciary Plaza Building, 450 Fifth
Street, N.W. Washington, D.C. 20549, and the Regional offices of the Commission:
75 Park Place, 14th Floor, New York, New York 10007, and Kluczynski Federal
Building, 230 South Dearborn Street, Room 3190, Chicago, Illinois 60604. Copies
of such material may be obtained at prescribed rates from the Public Reference
Section of the Commission at Room 1025, Judiciary Plaza Building, 450 Fifth St.,
N.W. Washington, D.C. 20549.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the"Securities Act"), with respect to the Common Stock being registered hereby.
This Prospectus, filed as part of the Registration Statement, does not contain
all the information set forth in the Registration Statement and the exhibits and
schedules thereto, certain portions of which have been omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock, reference is made to the
Registration Statement and to the exhibits and schedules thereto, which may be
inspected at the Commission's offices without charge or copies of which may be
obtained from the Commission upon payment of the prescribed fees. Statements
made in the Prospectus as to the contents of any contract, agreement or document
referred to are not necessarily complete, and in each instance, reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, and each such statement is qualified in its entirety by
such reference.
INCORPORATION OF INFORMATION BY REFERENCE
There is hereby incorporated by reference in this Prospectus and made a
part hereof (1) the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, (2) Quarterly Reports on Form 10-Q for the periods ended
March 31 and June 30, 1998, and (3) Current Report on Form 8-K filed on March
31, 1998.
There is also hereby incorporated by reference in this Prospectus and made
a part hereof the Company's Registration Statement on Form 8-A filed on
September 13, 1993, which describes the Common Stock.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Common Stock shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement contained in a document incorporated or to be incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein modifies, supersedes or replaces such statement. Any statements
modified or superseded shall not be deemed, except as modified or superseded, to
constitute a part of this Prospectus.
No person is authorized to give any information or make any representations
other than those contained in the Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the registered shares
to which it relates or an offer to sell or a solicitation of an offer to buy
such securities in any circumstances in which such offer or solicitation is
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or that the
information contained herein is correct as of any time subsequent to its date.
2
<PAGE>
THE COMPANY
Fortune is an independent public oil and natural gas company whose primary
focus is on exploration for and development of domestic oil and natural gas
properties. The Company's principal properties are located onshore and offshore
Louisiana and Texas.
The Company has implemented a program of exploration for significant oil
and natural gas reserves using state-of-the-art 3D seismic and computer-aided
exploration (CAEX) technology, believing that the use of 3D seismic and CAEX
technology provides more accurate and comprehensive geological data for
evaluation of drilling prospects than 2D evaluation methods. Since the
implementation of this program, the Company has acquired, with other industry
partners, interests in over 25 oil and gas prospects in the Louisiana and Texas
Gulf Coast regions which are in various stages of evaluation and acquisition and
is continually evaluating other 3D and 2D exploration projects.
The Company also seeks to take advantage of attractive acquisition targets
which will enable it to acquire reserves at an attractive price.
The Company's principal executive offices are located at 515 West Greens
Road, Suite 720, Houston, Texas 77067. Its telephone number at that address is
(281) 872-1170.
USE OF PROCEEDS
The shares which are the subject of this Prospectus may be offered and sold
from time to time by the Selling Shareholders, and the Company will not receive
any of the proceeds of such sales. The Company agreed to bear all expenses of
registering such shares, including legal, accounting and printing costs
estimated at $5,000.
PLAN OF DISTRIBUTION
Selling shareholders may offer and sell shares pursuant to this Prospectus
from time to time on the American Stock Exchange or through individually
negotiated transactions or in other ways. The Company is not aware of any
agreements which may have been entered into by any Selling Shareholder with
brokers, dealers or third parties for the offer or sale of any shares. Except as
noted below, the Company will not be a party to any such agreements nor will it
participate in the negotiation or consummation of any such agreements or the
offer and sale of any of the shares covered by this Prospectus.
Sales of shares by affiliates of the Company (including members of
management or more than 5% shareholders of the Company) are subject to
restrictions on trading in the Company's stock under the Securities Exchange Act
of 1934, as amended, as well as certain reporting requirements under such Act.
Affiliates who hold shares covered by this Prospectus include Tyrone J.
Fairbanks, Dean W. Drulias, Graham S. Folsom, Gary Gelman, Barry Feiner, Daniel
R. Shaughnessy, J. Michael Urban and John L. Collins, all of whom are directors
or officers of the Company.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
3
<PAGE>
The table below sets forth data on the number of shares held by each of the
Selling Shareholders who are affiliates of the Company:
<TABLE>
<CAPTION>
SECURITIES
SECURITIES SECURITIES BENEFICIALLY PERCENTAGE
BENEFICIALLY IN OWNED AFTER OF CLASS
NAME POSITION OWNED OFFERING OFFERING OWNED
- -------------------- --------------------------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Tyrone J. Fairbanks President,
Chief Executive Officer,
and Director 433,521 100,000 533,521 4.2%
John L. Collins Vice President 410,267 100,000 510,267 3.3%
Dean W. Drulias Executive Vice President,
General Counsel,
Corporate Secretary,
and Director 183,841 150,000 333,841 2.7%
J. Michael Urban Vice President,
and Chief Financial Officer 173,701 150,000 323,701 2.6%
Graham S. Folsom Director 134,751 37,500 172,251 1.4%
Gary Gelman Director 94,083 37,500 131,583 1.1%
Barry Feiner Director 90,493 37,500 127,993 1.0%
Daniel R. Shaughnessy Director 34,900 37,500 72,400 less than 1%
</TABLE>
EXPERTS
The financial statements of the Company as of December 31, 1997 and 1996
and for each of the years in the three-year period ended December 31, 1997, have
been incorporated herein by reference in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated herein by
reference, and upon the authority of said firm as experts in accounting and
auditing.
4
<PAGE>
========================================
TABLE OF CONTENTS
PAGE
Cover Page 1
Additional Information 2
Incorporation of Information
By Reference 2
The Company 3
Use of Proceeds 3
Plan of Distribution 3
Experts 4
========================================
<PAGE>
========================================
727,500 SHARES
COMMON STOCK
($.01 PAR VALUE)
FORTUNE NATURAL RESOURCES CORPORATION
------------
P R O S P E C T U S
------------
AUGUST 4, 1998
========================================
<PAGE>
S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
There is hereby incorporated by reference in this Prospectus and made a
part hereof (1) the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, (2) Quarterly Reports on Form 10-Q for the periods ended
March 31 and June 30, 1998, and (3) Current Report on Form 8-K filed on March
31, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Registration Statement and
prior to the termination of the offering of the Common Stock shall be deemed to
be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents.
There is also hereby incorporated by reference in this Prospectus and made
a part hereof the Company's Registration Statement on Form 8-A filed on
September 13, 1993, which describes the Common Stock.
Any statement contained in a document incorporated or to be incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein modifies, supersedes or replaces such statement. Any
statements modified or superseded shall not be deemed, except as modified or
superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits the
indemnification of officers, directors, employees and agents of Delaware
corporations. The Certificate of Incorporation and Bylaws of the Company provide
that the corporation shall, to the fullest extent permitted by Section 145 of
the General Corporation Law of the State of Delaware as it may be amended from
time to time, indemnify and hold harmless each person who was or is a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
whom he or she is a legal representative, is or was a director or officer of the
Company or is or was serving at the request of the Company as director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as a director, officer,
employee or agent, against all costs, charges, expenses, liabilities and losses
(including attorney's fees, judgments, fines, excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith, and such indemnification shall continue as
to person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of his or her heirs, executors and administrators.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
S-1
<PAGE>
ITEM 8. EXHIBITS.
24.1 Consents of KPMG Peat Marwick LLP (filed herewith).
25.1 Power of Attorney (included in the signature page of this
Registration Statement).
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) (1) To file during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar
value of securities offered would not exceed that which
was registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii)To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement:
Provided however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) (b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
S-2
<PAGE>
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer of controlling
person of the registrant in the successful defense of any action, suit of
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
S-3
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on August 4, 1998.
FORTUNE NATURAL RESOURCES CORPORATION
By: /s/ Tyrone J. Fairbanks
------------------------------------------------
Tyrone J. Fairbanks
President, Chief Executive Officer and Director
By: /s/ J. Michael Urban
------------------------------------------------
J. Michael Urban
Vice President, Chief Financial Officer and
Chief Accounting Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Tyrone
J. Fairbanks and Dean W. Drulias, and each of them, as his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and his name, place and stead, in any and all capacities, to sign any or
all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits hereto, and other documents
in connection therewith, with the Securities and Exchange Commission granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the foregoing, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agent, or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following person in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Tyrone J. Fairbanks President, Chief Executive August 4, 1998
- --------------------------- Officer, and Director
Tyrone J. Fairbanks
/s/ Dean W. Drulias Executive Vice President, August 4, 1998
- --------------------------- General Counsel, Corporate
Dean W. Drulias Secretary and Director
/s/ Graham S. Folsom Director August 4, 1998
- ---------------------------
Graham S. Folsom
/s/ Dewey A. Stringer, III Director August 4, 1998
- ---------------------------
Dewey A. Stringer, III
/s/ Barry Feiner Director August 4, 1998
- ---------------------------
Barry Feiner
- -------------------------- Director August 4, 1998
Gary Gelman
- -------------------------- Director August 4, 1998
D. R. Shaughnessy
S-4
<PAGE>
SIGNATURES
The 401(k) Plan. Pursuant to the requirements of the Securities Act of
1933, the trustees have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas, on August 4, 1998.
FORTUNE NATURAL RESOURCES CORPORATION
401(K) PROFIT SHARING PLAN
By: /s/ Dean W. Drulias
----------------------------------
Dean W. Drulias
Trustee
By: /s/ J. Michael Urban
----------------------------------
J. Michael Urban
Trustee
S-5
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Fortune Natural Resources Corporation:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the Prospectus.
/s/ KPMG Peat Marwick LLP
Houston, Texas
August 3, 1998
