SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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:
/ / Preliminary proxy statement
/ / Confidential, for use of the Commission only (as permitted by Rule
14a-b(e)(2)
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FORTUNE NATURAL RESOURCES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box)
/x/ No fee required.
/ / $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 previously 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>
[FORTUNE LOGO]
515 W. Greens Road, Suite 720
Houston, Texas 77067
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------
TO THE STOCKHOLDERS:
The Annual Meeting of the stockholders of Fortune Natural Resources
Corporation will be held at 8:30 a.m. on Thursday, June 8, 2000, at the offices
of the Company, located at the address listed above. The purposes of the meeting
are:
1. To elect two members of the Board of Directors;
2. To ratify the selection of KPMG LLP as independent auditors for
the fiscal year ending December 31, 2000; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record as of April 24, 2000 will be entitled to receive
notice of, and to vote at, the meeting.
ALL STOCKHOLDERS 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 Natural Resources Corporation for the year ended
December 31, 1999, is being mailed to stockholders with this notice of meeting.
By order of the Board of Directors,
/s/ Dean W. Drulias
------------------------------------
Dean W. Drulias
Secretary
Houston, Texas
May 1, 2000
<PAGE>
FORTUNE NATURAL RESOURCES CORPORATION
515 W. Greens Road, Suite 720
Houston, Texas 77067
PROXY STATEMENT
The Board of Directors of Fortune Natural Resources Corporation hereby
solicits your proxy for use in connection with the annual meeting of
stockholders to be held on June 8, 2000. This proxy statement and accompanying
proxy card are being mailed to the stockholders of the Company on or about May
1, 2000.
You have the power to revoke your proxy at any time before it is voted. Your
proxy may be revoked by filing a written notice of revocation, or a duly
executed proxy bearing a later date, with the Secretary of the Company at our
principal executive offices. The powers of the proxy holders will be suspended
if you are present at the meeting and elect to vote in person. If your proxy is
neither revoked nor suspended, it will be voted by the proxy holders.
Only stockholders of record at the close of business on April 24, 2000 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 31, 2000, there were 40,000,000 shares authorized, of which 16,349,531
shares were issued and 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. The by-laws of
the Company provide for a Board of Directors of not less than three members, 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 is currently set at seven,
with three vacancies which the board has elected to leave unfilled at present.
Two directors previously elected by the stockholders who are standing for
re-election in 2000 and the two directors whose terms do not expire in 1999 are
listed on the following pages.
VOTING RIGHTS
Each stockholder is entitled to one vote for each share held of record on the
record date on all matters being voted on at the annual meeting. Stockholders
will not be entitled to cumulative voting in the election of directors at this
meeting. Directors will be elected by a simple majority vote of the shares
present and voting at the meeting.
If your 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 has been informed that these nominees are willing to serve, but if
either or both should decline or be unable to act as a director, the proxy
holders will vote for the election of another person or persons as they, in
their discretion, may choose. The board has no reason to believe that either
nominee will be unable or unwilling to serve. Certain information regarding the
nominees and the continuing directors is set forth in the following table:
2
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL POSITIONS WITH THE COMPANY SINCE
- ------------------------ --- ----------------------------------------------- --------
<S> <C> <C>
NOMINEES FOR DIRECTOR FOR TERMS TO EXPIRE IN 2003
Tyrone J. Fairbanks..... 43 President, Chief Executive Officer and Director 1991
Dean W. Drulias......... 53 Executive Vice President, General Counsel,
Corporate Secretary and Director 1990
CONTINUING DIRECTOR WHOSE TERM EXPIRES IN 2001
Daniel R. Shaughnessy... 50 Director 1997
CONTINUING DIRECTOR WHOSE TERM EXPIRES IN 2002
Barry Feiner............ 66 Director 1995
</TABLE>
Mr. Fairbanks currently serves as President and Executive Officer of the
Company, having previously served as Vice President and Chief Financial Officer
from January 1991 to June 1994. 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, the assets of which were acquired by Fortune in 1991. Mr. Fairbanks
co-founded Fairbanks & Haas, Inc. and served in the capacity of Director and
Executive Vice President from February 1987 to January 1990.
Mr. Drulias joined the Company in October 1996 as Executive Vice President
and General Counsel. Prior to that time, he was a stockholder of and a
practicing attorney at the law firm of Burris, Drulias & Gartenberg, a
Professional Corporation, which served as counsel to the Company from 1987
through 1996. He practiced law in the Los Angeles area since 1977, specializing
in the areas of energy, environmental and real property law. Mr. Drulias is a
member of the State Bars of California and Texas and serves on the Company's
Compensation Committee.
Mr. Shaughnessy is a geologist and geophysicist. He is the founder and
president of Interpretation3, a company that specializes in interpretation of 2D
and 3D seismic data. His firm provides consultation services to Fortune. For the
period from 1980 through 1993, he worked for Mobil Oil, most recently as
Exploration Supervisor in Louisiana. Prior to that he worked at the Woods Hole
Oceanographic Institute for the multi-channel seismic group of the geology
department. Mr. Shaughnessy is chairman of the Company's Audit Committee.
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 New York since 1965. His practice
concentrates on the areas of corporate and securities law. Mr. Feiner is
chairman of the Company's Compensation Committee.
3
<PAGE>
The Company is not aware of any family relationship between any directors or
executive officers of the Company. The Board of Directors met eight times during
1999. No director attended fewer than 75% of the meetings of the Board. The
Compensation Committee of the Board met twice and the Audit Committee of the
Board met once in 1999; all current board members were in attendance at each of
the meetings of their respective committees.
Section 16 of the Securities Exchange Act of 1934, as amended, requires the
Company's officers and directors and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and to
furnish the Company with copies of all such forms which they file. Mr. Barry
Blank, a beneficial owner of more than 10% of the shares of the Company's
outstanding common stock, failed to make a timely filing of one such report.
That required report has since been filed.
PRINCIPAL STOCKHOLDERS
The following table contains information, as of March 31, 2000, relating to
the beneficial ownership of common stock and securities convertible into common
stock of the Company by each person known to the Company to be the beneficial
owner of more than five percent of the outstanding shares of such common stock
and securities, by each officer and director, and by all officers and directors
as a group.
<TABLE>
<CAPTION>
Amount and Nature Percent
Name of Beneficial Ownership of Class
- ----------------------------------------------------------- ---------------------- --------
<S> <C> <C>
Barry Blank
5353 N. 16th St., Phoenix, AZ (1) 2,670,888 14.2%
Renaissance Capital Growth
8080 N. Central Expressway, #210, Dallas, TX 75206 (2) 1,522,394 9.2%
Renaissance US Growth and Income
8080 N. Central Expressway, #210, Dallas, TX 75206 (2) 1,522,394 9.2%
J. E. McConnaughy, Jr.
1011 Highridge Road, Stanford, CT 06905 (3) 1,366,667 7.7%
Tyrone J. Fairbanks (Director, President and CEO)
515 W. Greens Rd., Houston, TX (4) 614,045 3.6%
J. Michael Urban (Vice President and CFO)
515 W. Greens Rd., Houston, TX (4) 611,748 3.6%
Dean W. Drulias (Director, Executive Vice President,
General Counsel and Corporate Secretary)
515 W. Greens Rd., Houston, TX (4) 601,688 3.6%
Barry Feiner (Director)
515 W. Greens Rd., Houston, TX (4)(5) 363,673 2.2%
Daniel R. Shaughnessy (Director)
515 W. Greens Rd., Houston, TX (4) 166,714 1.0%
All Officers and Directors
as a group of five (5) persons 2,357,868 12.8%
========= ====
</TABLE>
4
<PAGE>
(1) Includes 862,787 shares of common stock which underlie 600,200
stock-purchase warrants exercisable at $3.75 per warrant; 936,334 shares
of common stock underlying an equal number of stock-purchase warrants,
exercisable at prices of from $1.00 to $3.60 per share; and 666,667 shares
of common stock into which Mr. Blank's 12% Convertible Subordinated Note
issued by the Company is convertible. Please refer to the Company's 1999
filing on Form 10-K for temporary adjustments to the terms of Mr. Blank's
warrants.
(2) The holdings of each Renaissance fund includes 200,000 shares of common
stock underlying and equal number of stock-purchase warrants, one-half
exercisable at $1.50 and one-half at $2.25.
(3) Includes 666,667 shares of common stock underlying stock purchase
warrants, exercisable at $1.00 each, 33,333 warrants to purchase common
stock exercisable at $4.75 each, and 666,667 shares of common stock into
which his 12% Convertible Subordinated Note issued by the Company is
convertible.
(4) Includes 570,000 shares issuable to Mr. Fairbanks upon the exercise of
stock options granted to him under the Company's various stock option
plans, exercisable at prices of from $1.16 to $3.13 per share, and 20,603
shares held by the trustees of the Company's 401(k) Plan for the benefit
of Mr. Fairbanks; an aggregate of 1,366,050 shares issuable upon exercise
of stock options granted to other officers and directors under the
Company's various stock option plans, exercisable at prices of from $1.16
to $3.13 per share; 35,000 shares issuable upon the exercise of common
stock purchase warrants (at $2.56 per share) issued to J. Michael Urban on
March 11, 1996 and 21,748 shares held by the trustees of the Company's
401(k) Plan for the benefit of Mr. Urban; and 20,000 shares issuable upon
the exercise of common stock purchase warrants (at $2.75 per share) issued
to Dean W. Drulias on October 16, 1996 and 20,647 shares held by the
trustees of the Company's 401(k) Plan for the benefit of Mr. Drulias.
(5) All shares shown, except those which underlie stock purchase options
granted to Mr. Feiner by virtue of his service as a director, are owned by
his wife, Janet Portelly. Mr. Feiner disclaims beneficial ownership of all
such securities owned by Mrs. Portelly. The number shown includes 14,375
shares issuable upon exercise of 10,000 stock purchase warrants (at $3.75
per warrant), 66,667 shares of common stock underlying stock purchase
warrants exercisable at $1.00 each, and 66,667 shares of common stock into
which Mrs. Portelly's 12% notes issued by the Company are convertible.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table lists the total compensation paid by the Company to
persons who served in the capacity of chief executive officer and to other
executive officers who received annual compensation in excess of $100,000 (or at
a rate in excess of $100,000) during the periods indicated:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
--------------------------- ----------------------
Securities Underlying All Other
Name and Principal Salary Bonus Other1 Options/Warrants Compensation
Position Year ($) ($) ($) (#) ($)
- ------------------------ ---- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Tyrone J. Fairbanks 1999 169,367 - 20,855 120,000 4,113
President and CEO 1998 164,667 17,500 20,885 100,000 5,000
1997 155,833 17,500 35,309 120,000 4,748
Dean W. Drulias 1999 124,100 - - 120,000 5,000
Executive Vice President 1998 125,000 - - 150,000 5,000
1997 125,000 3,000 - 75,000 4,750
J. Michael Urban 1999 120,000 - - 120,000 5,000
Chief Financial Officer 1998 120,000 - - 150,000 5,000
1997 120,000 5,000 - 100,000 4,750
</TABLE>
(1) Amounts include automobile expenses and loan forgiveness associated with
relocation expense, but are shown only if such amounts exceed 10% of the
total annual salary and bonus.
The following table lists the outstanding options held on December 31, 1999
by the Company's executive officers under the Company's Stock Option Plans:
AGGREGATE OPTION EXERCISE IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options/ in-the-Money Options/
Warrants at FY-End Warrants at FY-End
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized ($) Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Tyrone J. Fairbanks - - 525,599 / 0 -
J. Michael Urban - - 425,000 / 0 -
Dean W. Drulias - - 419,800 / 0 -
</TABLE>
6
<PAGE>
EMPLOYMENT AGREEMENT
The Company has entered into an employment agreement with Tyrone J.
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 two years following a change in control (which for purposes of
his agreement means a change in more than one-third of the Board of Directors
following certain special events), Mr. Fairbanks is entitled to receive a single
payment equal to two year's compensation and all shares of common stock subject
to stock options then held by him without payment of the exercise price
therefor. 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' employment
agreement currently provides for an annual salary of $176,000 and additional
compensation, in an amount not to exceed his annual salary, based upon the
increase in the value of the Company's stock. Mr. Fairbanks' employment contract
is evergreen, expiring six months following notice that the contract will not be
extended further. As part of the relocation of the Company's headquarters to
Houston, Fortune provided Mr. Fairbanks with an incentive relocation package to
facilitate his move. The package consisted of a payment by the Company of Mr.
Fairbanks' moving expenses, a nonrecourse, unsecured loan in the amount of
$80,000 bearing interest at the rate of 6% per annum, with $20,000 of such loan
forgiven in each of four consecutive years beginning in 1996, and a secured
recourse loan in the amount of $70,000 also bearing interest at the rate of 6%
per annum, payable interest only for two years with a $35,000 principal payment
due on each of the second and third anniversary dates of the loan. The
nonrecourse loan has been entirely forgiven and the recourse loan has been
repaid in full.
STOCK OPTIONS
Fortune has two Stock Option Plans. Both plans cover officers, employees and
directors of the Company. Awards are made by the Board of Directors upon
recommendations of its Compensation Committee. There is no performance formula
or measure for determining the grant of options. All options granted must be
exercised within five years of the date of grant or they are forfeited.
Options have been granted as follows: (1) under the 1993 plan, options to
purchase 450,000 shares at $3.125 per share in 1996, and options to purchase
615,000 shares at from $1.88 to $3.00 per share in 1997 and (2) under the 1998
plan, options to purchase 727,500 shares in 1998 and 600,000 shares in 1999,
each at $1.56 per share, and options to purchase 750,000 shares at $1.16 per
share in 2000.
The following table shows the grants of stock options during 1999 to each of
the executives named in the Summary Compensation Table.
OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------------------
Number of % of Total Potential Realizable Value At
Securities Options Assumed Annual Rates Of
Underlying Granted to Stock Price Appreciation
Options Employees in Exercise or Base Expiration For Option Term
Name Granted Fiscal Year Price ($/Sh) Date 5% 10%
- ------------------- --------- ------------ ---------------- ----------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Tyrone J. Fairbanks (1) 120,000 28.6% 1.56 March 24, 2004 None None
Dean W. Drulias (1) 120,000 28.6% 1.56 March 24, 2004 None None
J. Michael Urban (1) 120,000 28.6% 1.56 March 24, 2004 None None
</TABLE>
(1) Each individual was also granted, on January 27, 2000, options to purchase
150,000 shares of the Company's common stock at an exercise price of $1.16
per share.
In the event of a change in control of the Company which is not approved by
the board of directors, the shares of common stock subject to options granted to
all officers, directors, and employees under the Company's stock option plans
will be issued to them upon payment of the par value of such shares.
7
<PAGE>
On January 12, 1995 Fortune reduced the exercise price of all options granted
in 1991, 1993, 1994 and 1995 that were held by employees and directors on that
date. The repricing included options held by one executive officer as follows:
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
Length
Securities original
underlying option term
number of Market price of Exercise New remaining
options stock at time of price at time exercise at date of
Name and Position Date repriced repricing of repricing price repricing
- -------------------- ------- ----------- ---------------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
President and CEO -
Tyrone J. Fairbanks 1/12/95 10,000 $1.75 $6.00 $2.75 2.1 years
Tyrone J. Fairbanks 1/12/95 22,500 $1.75 $5.00 $2.75 4.1 years
Tyrone J. Fairbanks 1/12/95 78,900 $1.75 $5.48 $2.75 4.1 years
Tyrone J. Fairbanks 1/12/95 105,599 $1.75 $6.03 $2.75 5.0 years
</TABLE>
During the ten-year period ended December 31, 1999, no other options held by
executive officers were repriced or amended.
RETIREMENT PLAN
During 1996, the Company adopted the Fortune Natural Resources Corporation
401(k) Profit Sharing Plan for its eligible employees. Under the plan, all
employees who have attained age 21 and three months of service are permitted to
make salary deferrals up to the lesser of 15% of their annual compensation or
the maximum allowable by law. Salary deferrals will be matched 50% by the
Company; matching contributions are 100% vested after two years of service with
the Company. Salary deferrals are 100% vested at all times. The Company does not
make profit-sharing contributions to the plan. Messrs. Drulias and Urban are the
trustees of the plan.
For 1999, the Company's matching contribution was $19,000, all of which was
paid in shares of common stock. The amounts to be contributed to the plan as
matching contributions for executives of the Company are shown in the Summary
Compensation Table set forth above.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Fortune's Executive Compensation Program is administered by the Compensation
Committee of the Board of Directors. The committee is comprised of one
independent, nonemployee director and one director who is an officer of the
Company. The committee strives to set an executive compensation program which
emphasizes both business performance and shareholder value. It attempts to do
this by attracting, rewarding, and retaining qualified and productive
individuals, tying compensation to both Company and individual performance,
ensuring competitive and equitable compensation levels, and fostering executive
stock ownership. The committee also relies on recommendations from the Company's
management regarding executive compensation levels.
8
<PAGE>
The committee reviews each management employee's salary annually. In
determining an appropriate salary level, the committee considers the level and
scope of responsibility, experience, individual performance, an evaluation of
the Company's performance, and pay practices among similar companies in the
industry. There are no specific performance or other criteria assigned to any of
these measurements.
Fortune does not currently implement any annual incentive compensation plan
but, as discussed below, has adopted incentives as a component of the
compensation of its Chief Executive Officer. The Company's long term incentive
philosophy is that compensation should be related to an improvement in
shareholder value, thereby creating a mutuality of interest with the Company's
stockholders. In furtherance of this objective, the Company awards its executive
officers stock options, the objective being to provide a competitive total
long-term incentive opportunity.
The committee believes that the Company's stock option plan is compatible
with shareholder interest in that it encourages executives to maintain a
long-term equity interest in the Company. The provisions of the plan are also
consistent with prevailing practices in the oil and gas industry. The committee
is currently reviewing ways in which both the award of options and their
exercise may be tied more closely to the performance of the Company's stock.
Mr. Fairbanks' salary as Chief Executive Officer was set at $150,000 shortly
after he assumed that position in June 1994. His base salary was increased to
$160,000 in June 1997, at which time the Company incorporated an annual
cost-of-living escalator and an incentive component into his employment
agreement. This incentive provides for an annual bonus based upon the increase,
if any, in the Company's stock price as determined in May of each year. Such
bonus cannot exceed the amount of Mr. Fairbanks' annual salary. No such bonus
was earned in 1999. Mr. Fairbanks' current salary is $176,000. There are no
other performance-based criteria which may be relied upon to either increase or
diminish his annual salary.
Messrs. Feiner and Drulias serve on the Company's Compensation Committee.
Each has specifically concurred in the foregoing report.
9
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of Fortune's common
stock to the AMEX Market Value Index and the S&P Oil and Gas (Exploration &
Production) Index for the five years ended December 31, 1999. The graph assumes
that the value of the investment in the common stock and each index was $100 at
December 31, 1994, and that all dividends were reinvested. Although the
Company's AMEX listing was terminated August 6, 1999, the Company's performance
is reflected in comparison to the AMEX index both to provide continuity with
prior years and in the Company's belief that such comparison remains a fair
reflection of companies with comparable market capitalizations to that of
Fortune.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN*
AMONG FORTUNE NATURAL RESOURCES CORPORATION, THE AMEX MARKET VALUE INDEX
AND THE S & P OIL & GAS (EXPLORATION & PRODUCTION) INDEX
<TABLE>
<CAPTION>
Cumulative Total Return*
--------------------------------
Symbol 12/31/94 1995 1996 1997 1998 1999
-------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Fortune Natural Resources Corporation FPXA $ 100 $260 $137 $140 $ 27 $ 33
AMEX Market Value Index IAMX 100 126 134 158 159 202
S & P Oil & Gas (Exploration & Production) Index SDOI 100 119 156 139 93 110
</TABLE>
* $100 Invested on December 31, 1994 in stock or index - including reinvestment
of dividends.
Fiscal year ending December 31.
10
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors selected KPMG LLP as the Company's independent public
accountants for the fiscal year ending December 31, 2000, and has further
directed that management submit the selection of independent public accountants
for ratification by the stockholders at the Annual Meeting. KPMG LLP has audited
the Company's financial statements since 1992. 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.
Shareholder ratification of the selection of KPMG LLP 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 LLP to the
stockholders for ratification as a matter of good corporate practice. In the
event the stockholders 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 its 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 stockholders. 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 LLP.
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, telegraph, or facsimile. Stockholder
proposals for the 2001 annual meeting of stockholders must be received no later
than January 2, 2001 at the Company's executive office, 515 West Greens Road,
Suite 720, Houston, Texas 77067, Attention: Corporate Secretary.
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
May 1, 2000
11
<PAGE>
PROXY CARD
----------
PROXY
FORTUNE NATURAL RESOURCES CORPORATION
ANNUAL MEETING OF STOCKHOLDERS -- JUNE 8, 2000
The undersigned stockholder(s) of Fortune Natural Resources 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
Natural Resources Corporation which the undersigned is entitled to vote at the
Annual Meeting of Stockholders of Fortune to be held at 8:30 a.m. on Thursday,
June 8, 2000 at the company's offices, located at 515 W. Greens Rd., Suite 720,
Houston, Texas 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. To elect two members of the Board of Directors.
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).
TYRONE J. FAIRBANKS DEAN W. DRULIAS
2. To ratify the selection of KPMG LLP as independent auditors for the fiscal
year ending December 31, 2000.
/ / FOR / / AGAINST / / ABSTAIN
3. To transact such other business as may properly come before the meeting or
any adjournment thereof
-----------------------------
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" FOR PROPOSAL 1 AND
A VOTE "FOR" PROPOSAL 2. THE PROXY CONFERS AUTHORITY TO VOTE, 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: ______________________________________
______________________________________________
(Signature of Stockholder)
______________________________________________
(Please Print Name)
______________________________________________
(Signature of Stockholder)
______________________________________________
(Please Print Name)
I/WE DO EXPECT TO ATTEND THE MEETING / /
I/WE DO NOT EXPECT TO ATTEND THE MEETING / /
<PAGE>
