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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Flores & Rucks, Inc.
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
34039C 10 7
------------------------------------------------------
(CUSIP Number)
James C. Flores
c/o Robert K. Reeves
500 Dover Blvd., Suite 300
Lafayette, Louisiana 70503
(318)989-5900
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
September 25, 1996
------------------------------------------------------
(Date of Event which Requires Filing of this
Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / / . (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 6 pages
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SCHEDULE 13D
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CUSIP No. 34039C 10 7 Page 2 of 6 pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
James C. Flores ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
NUMBER OF 3,848,351
SHARES -------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,412,400
EACH -------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 2,248,351
WITH -------------------------------------------
10 SHARED DISPOSITIVE POWER
3,012,400
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,260,751
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.7%
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14 TYPE OF REPORTING PERSON
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 2 of 6 pages
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Page 3 of 6 pages
ITEM 1. SECURITY AND ISSUER
This statement relates to the shares (the "Shares") of common stock, par
value $0.01 per share (the "Common Stock"), of Flores & Rucks, Inc., a Delaware
corporation (the "Company"), which has its principal executive offices at 8440
Jefferson Highway, Suite 420, Baton Rouge, Louisiana 70809.
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed by James C. Flores, whose principal business
address is 8440 Jefferson Highway, Suite 420, Baton Rouge, Louisiana 70809. Mr.
Flores is Chairman of the Board of Directors and Chief Executive Officer of the
Company. Mr. Flores is a citizen of the United States.
The remaining sub-items of Item 2 are not applicable to Mr. Flores.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On August 11, 1996, Mr. Flores entered into an Option Agreement (the "Option
Agreement") pursuant to which Mr. Flores was granted an option (the "Option")
effective September 25, 1996 to purchase 1,600,000 shares (the "Option Shares")
of Common Stock. The Option was granted by William W. Rucks, IV, a member of the
Board of Directors of the Company, formerly Vice Chairman of the Board of
Directors and President of the Company and, together with Mr. Flores, a
co-founder of the Company, and by the Rucks Family Limited Partnership, a Texas
limited partnership of which Mr. Rucks is a General Partner (the "Rucks
Partnership"). The term of the Option is two years, and may be extended for an
additional year (the "Extension Period") upon payment of an extension fee of
$1,000,000. In connection with the grant of the Option, Mr. Rucks and the Rucks
Partnership also granted Mr. Flores an irrevocable proxy (the "Proxy") to vote
the Option Shares for the term of the Option. Each of the Option Agreement and
the Proxy is filed as an exhibit to this Schedule 13D and is incorporated herein
by reference. The Option and the Proxy were granted by Mr. Rucks and the Rucks
Partnership in connection with the sale by Mr. Rucks on September 25, 1996 of
1,550,000 shares of Common Stock in a registered public offering, and no funds
were expended by Mr. Flores in consideration of the Option or the Proxy. The
exercise price of the Option is initially $30 per share, increasing to $35 per
share after one year and increasing to $37.63 per share during the Extension
Period. The Option is exercisable in minimum increments of 300,000 shares during
the initial term but must be exercised in full for any remaining Option Shares
if exercised during the Extension Period. It is not currently known how Mr.
Flores will fund a future exercise of the Option, if any.
ITEM 4. PURPOSE OF TRANSACTION
Mr. Flores acquired the Option and the Proxy for the primary purpose of
maintaining continuity of ownership of a significant portion of the Company
among its founders. In the event that Mr. Flores exercises the Option, the
purpose of the acquisition of the Option Shares will likely also be to maintain
continuity of ownership of the Company, as well as for Mr. Flores' personal
investment purposes. Mr. Flores does not have any plans, nor has he made any
proposals, which relate to or would result in any of the events enumerated in
paragraphs (a) through (j) of Item 4 to Schedule 13D. However, Mr. Flores
reserves the right to acquire additional shares, to dispose of shares or to
formulate other purposes, plans or proposals to the extent he deems advisable in
light of his personal investment needs, market conditions and other factors.
<PAGE>
Page 4 of 6 pages
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Mr. Flores directly beneficially owns an aggregate of 2,123,104 shares of
Common Stock, constituting approximately 10.9% of the outstanding shares of
Common Stock. Mr. Flores has sole power to dispose of and vote such shares. Mr.
Flores is deemed to directly beneficially own an aggregate of 125,000 shares of
Common Stock subject to options previously granted by the Company that are
currently exercisable or will become exercisable within 60 days of the date of
the filing of this Schedule 13D. Such shares represent approximately 0.6% of the
outstanding shares of Common Stock. In the event that Mr. Flores exercises such
options, he will have sole power to vote and dispose of the shares issued upon
such exercise. Mr. Flores may also be deemed to indirectly beneficially own
1,412,400 shares of Common Stock owned by the Flores Family Limited Partnership,
a Texas limited partnership (the "Flores Partnership"). Mr. Flores and his wife,
Cherie H. Flores, are each a general partner of the Flores Partnership and in
such capacity share the power to vote and dispose of the shares of Common Stock
owned by the Flores Partnership. The shares of Common Stock owned by the Flores
Partnership represent approximately 7.2% of the outstanding shares of Common
Stock. In addition, Mr. Flores may be deemed to indirectly beneficially own the
1,600,000 Option Shares by virtue of the Option or the Proxy. The Option Shares
represent approximately 8.2% of the outstanding shares of Common Stock. Pursuant
to the Proxy, Mr. Flores has sole power to vote the Option Shares during the
term of the Option. Mr. Flores does not have sole power to dispose of the Option
Shares unless and until he exercises the Option, and Mr. Rucks and the Rucks
Partnership cannot dispose of the Option Shares during the term of the Option
except in accordance with the terms of the Option. Until the Option is
exercised, Mr. Rucks and the Rucks Partnership retain the power to receive or
direct the receipt of dividends from the Option Shares, if any. Also, Mr. Flores
may be deemed to indirectly beneficially own 247 shares of Common Stock held on
his behalf by the Company's 401(k) plan as of December 31, 1995. Mr. Flores has
sole power to dispose of and vote such shares. Such shares represent an
insignificant percentage of the outstanding shares of Common Stock.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
The responses to Items 2, 3 and 4, the Option and the Proxy are incorporated
herein by reference.
In addition, the Company, Mr. Flores and the Flores Partnership have entered
into a Registration Rights Agreement, dated August 11, 1996 (the "Registration
Rights Agreement"). Pursuant to the Registration Rights Agreement, Mr. Flores,
the Flores Partnership or certain permitted transferees (each a "Holder") may
require the Company to effect up to two "demand" registrations of the Option
Shares under the Securities Act of 1933, as amended (the "Securities Act").
Holders are also entitled to include the Option Shares in certain registrations
initiated by the Company. The Company is obligated to pay the expenses of any
such registration with the exception of any underwriting expenses related to the
Option Shares. The Registration Rights Agreement terminates with respect to any
Holder in the event that such Holder becomes eligible to sell all of its Option
Shares in reliance upon Rule 144(k) of the Securities Act. The Registration
Rights Agreement includes certain limitations on the rights of Holders
thereunder and contains other customary provisions. The Registration Rights
Agreement is filed as an exhibit to this Schedule 13D and is incorporated herein
by reference.
<PAGE>
Page 5 of 6 pages
Item 7. Material Filed as Exhibits
The following are filed as exhibits to this Schedule 13D:
A. Option Agreement, dated August 11, 1996, by and among James C. Flores,
Cherie Hair Flores and William W. Rucks, IV and Catherine May Rucks
(both individually and as sole general partners of the Rucks Family
Limited Partnership).
B. Irrevocable Proxy, dated September 25, 1996, in favor of James C.
Flores.
C. Registration Rights Agreement, dated August 11, 1996, by and among
Flores & Rucks, Inc., James C. Flores and the Flores Family Limited
Partnership.
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Page 6 of 6 pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: October 7, 1996
/s/James C. Flores
----------------------------------
James C. Flores
OPTION AGREEMENT
This Agreement is entered into this the 11th day of August, 1996 by and
among James C. Flores ("Flores"), Cherie Hair Flores, residents of Baton Rouge,
Louisiana, William W. Rucks, IV., individually ("Rucks"), Catherine May Rucks,
residents of Lafayette, Louisiana, and William W. Rucks, IV. and Catherine May
Rucks as sole general partners of the Rucks Family Limited Partnership
("Partnership"), a Texas limited partnership.
RECITALS
A. Flores is Chairman of the Board of Directors and Chief Executive
Officer of Flores & Rucks, Inc., a Delaware corporation ("Company"). Rucks is
Vice-Chairman of the Board of Directors and President of the Company. Flores,
members of his immediate family and his family limited partnership are record
owners collectively of not fewer than 3,000,000 shares of the Company's common
stock, par value 0.01 per share ("Company's Stock"). Rucks and the Partnership
are currently the record owners of not fewer than 3,450,000 shares in the
aggregate of the Company's Stock. B. Rucks wishes to sell 1,650,000 shares of
the Company's Stock in a public sale ("Public Sale") on/or before December 31,
1996, and the Company has agreed, subject to certain conditions, to prepare and
file a registration statement covering the sale of the
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aforesaid 1,650,000 shares. Rucks, Flores and the Company believe that if Rucks
completes the Public Sale, it will be in the best interest of the Company and
its stockholders for Flores to have the right to acquire from Rucks and the
Partnership 1,600,000 shares of the Company's Stock in order to facilitate the
Public Sale, prevent the occurrence of a change in control event under the
Company's existing debt instruments and to assure continuity of management and
the balanced, timely and appropriate redistribution of the Company's Stock.
Accordingly, Rucks and the Partnership have agreed to grant Flores an option
(the "Option") to acquire 1,600,000 shares ("Option Shares") of the Company's
Stock of which Rucks and the Partnership are currently the record owners under
terms and conditions hereinafter specified.
Now, therefore, in consideration of the recitals, the mutual promises
of the parties hereto and other good and valid consideration the receipt and
sufficiency of which is acknowledged, the parties hereby agree as follows:
1. DEFINITIONS.
As used herein the following terms shall have the following
meanings (such definitions to be equally applicable to the singular and plural
and to the masculine and feminine forms of the defined terms):
2
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1.1 CLOSING means the meeting(s) to be held at the Company's
principal offices in Baton Rouge, Louisiana for the purpose of completing the
purchase(s) and sale(s) of Option Shares purchased by Flores pursuant to the
exercise(s) of the Option.
1.2 COMPANY means Flores & Rucks, Inc., a Delaware
Corporation, with principal offices located at 8440 Jefferson Highway, Suite
420, Baton Rouge, Louisiana.
1.3 COMPANY'S STOCK means the common stock, par value 0.01
cent per share, of Flores & Rucks, Inc.
1.4 DEMAND Registration Rights means the contractual right of
Rucks and the Partnership to demand that the Company cause the Option Shares to
be registered following the Option Expiration Date in the event that Flores does
not exercise the Option to acquire the Option Shares as evidenced by a separate
agreement contemporaneously entered into between Rucks, the Partnership and the
Company.
1.5 EFFECTIVE DATE means the date on which the funding occurs
of the sales proceeds to Rucks from the public sale of 1,650,000 shares of the
Company's Stock; if the aforesaid funding does not occur prior to January 1,
1997 there shall be no Effective Date.
3
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1.6 EXERCISE NOTICE means a written notice from Flores to
Rucks notifying Rucks and the Partnership of Flores' exercise of the Option; the
Exercise Notice may be given from time to time during the Option Exercise Period
and shall specify the number of Option Shares which Flores elects to purchase
pursuant to this Option Agreement; the Exercise Notice shall be delivered in
accordance with the provisions of Section 7.4 below.
1.7 EXTENDED PERIOD means the one-year period which will
commence on the first day following the second annual anniversary of the
Effective Date and, shall terminate on the Option Expiration Date.
1.8 IRREVOCABLE PROXY means Flores' right to vote the Option
Shares throughout the Option Exercise Period as evidenced by that certain
document entitled "Irrevocable Proxy Coupled With An Interest" substantially in
the form of Annex A to this Option Agreement and which shall be delivered by
Rucks and the Partnership to Flores on the Effective Date.
1.9 MINIMUM SHARE PURCHASES means not fewer than 300,000
Option Shares with respect to each purchase which occurs on/or before the second
annual anniversary of the Effective Date and means all of the remaining Option
Shares with respect to purchases which occur during the Extended Period.
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1.10 OPTION means the right of Flores under this Option
Agreement to purchase the Option Shares.
1.11 OPTION AGREEMENT means this Agreement.
1.12 OPTION EXERCISE PERIOD means the period which
commences on the Effective Date and ends on the Option Expiration
Date.
1.13 OPTION EXPIRATION DATE means that date which is the
earliest to occur of:
(a) the third annual anniversary date of the
Effective Date except that if the Option Expiration Period is
not extended for an additional year by Flores' payment to
Rucks and the Partnership of the Option Extension Payment, the
Option Expiration Date shall occur on the second annual
anniversary date of the Effective Date, or
(b) the date upon which any of the following events
occur:
(i) January 1, 1997 unless the Effective Date shall
have occurred on/or before December 31, 1996; (ii)
The date that Flores ceases to be a beneficial owner
of at least 2,250,000 shares of the Company's Stock
as adjusted for stock splits, stock dividends
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or similar corporate reorganizational events which
occur after the date of the Option Agreement; (iii)
The date that Flores ceases to be either an officer
or director of the Company.
1.14 OPTION EXTENSION PAYMENT means the nonrefundable payment
of One Million Dollars ($1,000,000) which at Flores' option may be made to Rucks
and the Partnership on or before the second annual anniversary of the Effective
Date and which, if made, shall subject to the provisions of Section 1.13 extend
the Option Exercise Period until the third annual anniversary of the Effective
Date. Sixty-two and one half percent (62.5%) of the Option Extension Payment
shall be allocated to the Partnership and the remaining thirty-seven and one
half percent(37.5%) shall be allocated to Rucks. The Option Extension Payment
shall be applied toward the Purchase Price of the Option Shares if the Option is
exercised during the Extended Period.
1.15 OPTION SHARES means in the aggregate 1,600,000 shares of
the Company's Stock, 1,000,000 shares of which are currently owned of record by
the Partnership and 600,000 shares of which are currently owned of record by
Rucks; the Option Shares are represented by the Certificates identified on Annex
B to this Agreement.
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1.16 PURCHASE PRICE means the price per share which Flores
shall pay Rucks and Partnership for the Option Shares at the Closing(s) of
Purchase(s)of Option Shares following the Exercise(s) of the Option.
2. THE OPTION-EXERCISE.
2.1 OPTION. Rucks and the Partnership hereby grant to Flores a
right to purchase the Option Shares for the Purchase Price specified in Section
3.1 hereof subject to the terms and conditions specified in this Option
Agreement. The Option with respect to sixty-two and one half percent(62.5%) of
the Option Shares is granted by the Partnership and the Option with respect to
thirty-seven and one half percent (37.5%) of the Option Shares is granted by
Rucks.
2.2 EXERCISE. The Option shall become exercisable by Flores on
the Effective Date and shall be exercisable by him throughout the Option
Exercise Period for one or more Minimum Share Purchases by delivering to Rucks
and the Partnership an Exercise Notice in the manner specified in Section 7.4
hereof.
3. PURCHASE PRICE-CLOSING.
3.1 PURCHASE PRICE. The purchase price for the Option
Shares shall be as follows:
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(a) The Purchase Price for Option Shares purchased
upon the exercise of the Option on/or before the first annual
anniversary date of the Effective Date, shall be $30.00 per
share; and
(b) The Purchase Price for Option Shares purchased
upon the exercise of the Option on/or before the second annual
anniversary of the Effective Date shall be $35.00 per share;
and
(c) The Purchase Price for Option Shares purchased
upon the exercise of the Option during the Extended Period
shall be $37.625 per share. The Option Extension Payment shall
be applied toward the Purchase Price for Option Shares
purchased upon the exercise of the Option during the Extended
Period.
Sixty-two and one half percent (62.5%) of the aggregate amount of the Purchase
Price of the Option Shares shall be allocated to the Partnership and
thirty-seven and one half percent (37.5%) of the Purchase Price shall be
allocated to Rucks.
3.2 CLOSING. At Closing(s) of the exercise(s) of the Option,
Flores shall by immediately available funds pay the full amount of the Purchase
Price for the Option Shares purchased pursuant to the exercise of the Option and
Rucks and the
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Partnership shall deliver to Flores against such payment certificates for the
number of Option Shares being purchased together with stock transfer powers duly
endorsed evidencing the transfer of such shares to Flores. Closing(s) shall be
held in accordance with Section 1.1 hereof on the fifth (5th) business day
following the date of the Exercise Notice or such earlier date as shall be
specified in the Exercise Notice.
4. IRREVOCABLE PROXY.
On the Effective Date, Rucks and the Partnership shall execute and
deliver to Flores an Irrevocable Proxy substantially in the form of Annex A
hereof. Promptly following the Option Expiration Date, Flores shall redeliver to
Rucks and the Partnership the Irrevocable Proxy.
5. STOCK CERTIFICATE LEGEND.
A legend shall be placed upon the certificates representing the Option
Shares in substantially the following form:
"The shares represented by this certificate are subject to an
option in favor of James C. Flores pursuant to that certain
Option Agreement dated as of August 11, 1996 by and between
James C. Flores, Cherie Hair Flores, William W. Rucks, IV.,
individually, Catherine May Rucks, individually, William W.
Rucks, IV. and Catherine May
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Rucks, as sole general partners of the Rucks Family Limited
Partnership ("Partnership"), a copy of which is on file with
the Secretary of the Corporation at its principal offices in
Baton Rouge, Louisiana and may only be transferred in
accordance with the terms of such option. In addition, in
accordance with the aforesaid Option Agreement, William W.
Rucks, IV., Catherine May Rucks and the Partnership have also
granted to James C. Flores an Irrevocable Proxy coupled with
an interest empowering Flores to vote the shares represented
by this Certificate at any Stockholders Meeting or other vote
which occurs during the term of the Option Exercise Period as
that term is defined in the Option Agreement.
Promptly following the Option Expiration Date, Flores, Rucks and the
Partnership shall jointly cause the aforesaid legend to be removed from
the Certificates which represent the Option Shares.
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6. RUCKS' AND THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES.
Rucks, Catherine May Rucks and the Partnership represent, warrant and
covenant to Flores as follows:
(a) Rucks and the Partnership each are the sole owner
of all of the Option Shares of which such party is the owner
of record as reflected by Annex B free and clear of all liens,
claims, charges, restrictions, equities and encumbrances of
any kind subject, however, to restrictions imposed by
applicable securities laws. Now and at the time of Closing(s)
Rucks and the Partnership have and will have full power and
legal right to sell, assign, transfer and deliver to Flores
the Option Shares free and clear of all liens, claims,
charges, restrictions, equities and encumbrances of any kind
subject, however, to restrictions imposed by applicable
securities laws. Rucks and the Partnership agree during the
Option Exercise Period not to, directly or indirectly, sell,
assign, transfer or deliver, or grant any proxies (other than
the Irrevocable Proxy) or enter into any voting agreement with
respect to any of the Option Shares; and
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(b) Rucks and the Partnership have all necessary
power and authority to execute, deliver and perform this
Option Agreement and the Irrevocable Proxy and to consummate
the sale of the Option Shares and the other transactions
contemplated by this Option Agreement. This Option Agreement
has been and the Irrevocable Proxy when delivered in
accordance with Section 4 will have been duly executed by
Rucks and the Partnership and when executed will constitute
the legal, valid and binding obligation of each of them
enforceable against them in accordance with their terms.
Neither the execution and delivery of this Agreement or the
Irrevocable Proxy, nor the performance of the transactions
contemplated hereby or thereby will conflict with or result in
a breach, default or violation of or require any consents
under the organization documents or partnership agreement of
the Partnership or any contract, lien, instrument or agreement
to which Rucks or the Partnership is bound or subject to.
Rucks and the Partnership have the full right, power and
authority to direct the vote of the Option Shares and have not
granted any proxies or entered into any voting agreements with
respect thereto.
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7. MISCELLANEOUS.
7.1 ASSURANCE OF FURTHER ACTION. From time to time after the
Closing and without further consideration, each of the parties to this Option
Agreement shall execute and deliver, or cause to be executed and delivered, such
further instruments and agreements, and shall take such other actions, as the
other party may reasonably request in order to more effectively effectuate the
transactions contemplated by this Option Agreement.
7.2 EXPENSES. Whether or not the Closing is consummated, each
of the parties will pay all of his, her, or its own legal and accounting fees
and other expenses incurred in the preparation of this Option Agreement and the
performance of the terms and provisions of this Option Agreement.
7.3 WAIVER. The parties to this Option Agreement may by
written agreement executed by all such parties (i) extend the time for or waive
or modify the performance of any of the obligations or other acts of the parties
to this Option Agreement or (ii) waive any inaccuracies in the representations
and warranties contained in this Option Agreement or in any document delivered
pursuant to this Option Agreement.
7.4 NOTICES. All notices, requests or other communications
under this Option Agreement shall be in writing and
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shall be deemed to have been duly given if delivered by hand or mailed by
overnight courier, addressed as follows:
(a) IF TO FLORES, TO JAMES C. FLORES
8440 Jefferson Highway
Suite 420
Baton Rouge, Louisiana 70809
(b) IF TO RUCKS, TO WILLIAM W. RUCKS, IV.
120 Shannon Road
Lafayette, Louisiana 70503
(c) IF TO THE PARTNERSHIP, TO WILLIAM W. RUCKS, IV.
120 Shannon Road
Lafayette, Louisiana 70503
or to such other address as may have been furnished in writing to the party
giving the notice by the party to whom notice is to be given.
7.5 ENTIRE AGREEMENT. This Option Agreement embodies the
entire Option Agreement among the parties and there have been and are no
agreements, representations or warranties, oral or written, among the parties
other than those set forth or provided for in this Option Agreement. This Option
Agreement may not be modified or changed, in whole or in part, except by a
supplemental agreement signed by each of the parties.
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7.6 RIGHTS UNDER THIS AGREEMENT. This Option Agreement shall
bind and inure to the benefit of the parties to this Option Agreement and their
respective heirs, legal representatives, successors and permitted assigns, but
shall not be otherwise assignable by any party without the prior written consent
of the other party. Nothing contained in this Option Agreement is intended to
confer upon any person, other than the parties to this Option Agreement and
their respective heirs, legal representatives, successors and permitted assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Option Agreement. The Option created by this Option Agreement is nonassignable
and nontransferable; provided, however, Flores may transfer this Option to his
wife or children, or any family trust, partnership, corporation or similar
entity for the benefit of, or controlled by, any of the foregoing.
7.7 GOVERNING LAW. This Option Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
reference to the conflicts of laws principles of that State.
7.8 HEADINGS; REFERENCES TO SECTIONS AND ANNEXES. The
headings of the Sections, paragraphs and subparagraphs of this Option Agreement
are solely for convenience of reference and shall
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not limit or otherwise affect the meaning of any of the terms or provisions of
this Option Agreement. The references in this Option Agreement to sections and
annexes, unless otherwise indicate, are references to sections of and annexes to
this Option Agreement.
7.9 COUNTERPARTS. This Option Agreement may be executed in
counterparts, each of which shall be an original, but which together constitute
one and the same instrument.
7.10 TERM. The term of this Option Agreement commenced on the
date first set forth above and shall terminate on the Option Expiration Date.
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IN WITNESS, the parties have duly executed this Option Agreement on
August 11, 1996 as of the date first above written.
/s/ James C. Flores
---------------------------
JAMES C. FLORES
/s/ Cherie Hair Flores
---------------------------
CHERIE HAIR FLORES
/s/ William W. Rucks, IV
---------------------------
WILLIAM W. RUCKS, IV.
/s/ Catherine May Rucks
---------------------------
CATHERINE MAY RUCKS
RUCKS FAMILY LIMITED PARTNERSHIP
By:/s/ William W. Rucks, IV
---------------------------
WILLIAM W. RUCKS, IV.
General Partner
By:/s/ Catherine May Rucks
---------------------------
CATHERINE MAY RUCKS
General Partner
17
IRREVOCABLE PROXY
The undersigned (the "Stockholders"), stockholders of Flores & Rucks,
Inc., a Delaware corporation (the "Corporation"), hereby revoke all proxies
bearing a date prior to the date hereof and appoint James C. Flores (the "Proxy
Holder"), with full power of substitution, their true and lawful proxy and
attorney-in-fact to vote and otherwise represent an aggregate of 1,600,000
shares of the common stock of the Corporation, $.01 par value, which are
identified on Schedule A, held of record by the Stockholders, at any special or
annual meeting or other vote of the stockholders of the Corporation called after
the date hereof . This Irrevocable Proxy entitles the Proxy Holder to vote the
Stockholders' shares of common stock in whatever manner he chooses at the
stockholders' meetings of the Corporation.
The Stockholders acknowledge that the proxy and all other power and
authority intended to be granted hereby is coupled with an interest sufficient
in law to support an irrevocable power, shall not be revokable or terminated by
any act of the Stockholders, or any of them, by lack of appropriate power or
authority or by the occurrence of any other event or events, and is otherwise
irrevocable to the fullest extent permitted by law. This Irrevocable Proxy is
being executed in conjunction with the Option Agreement between Stockholders and
Proxy Holder dated August 11, 1996, and shall remain irrevocable so long as the
Option Agreement remains in full force and effect. In the event the Option
Agreement ceases and terminates on its own terms or by operation of law, then
this Irrevocable Proxy shall terminate; but until such time, it shall remain in
full force and effect. The Stockholders specifically agree that the Proxy Holder
may transfer this Irrevocable Proxy to any permitted transferee of the option
granted under the Option Agreement.
Dated: September 25, 1996.
STOCKHOLDERS:
/s/ WILLIAM W. RUCKS, IV
-----------------------------------
WILLIAM W. RUCKS, IV., Individually
/s/ CATHERINE MAY RUCKS
-----------------------------------
CATHERINE MAY RUCKS, Individually
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RUCKS FAMILY LIMITED PARTNERSHIP
By:/s/ WILLIAM W. RUCKS, IV
-----------------------------------
WILLIAM W. RUCKS, IV.,
General Partner
By:/s/ CATHERINE MAY RUCKS
-----------------------------------
CATHERINE MAY RUCKS,
General Partner
2
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into as of the
11th day of August, 1996 among Flores & Rucks, Inc., a Delaware corporation
("FRI" or the "Company"), James C. Flores ("Flores") and the Flores Family
Limited Partnership (the "Partnership").
W I T N E S S E T H:
WHEREAS, Flores is Chairman of the Board of Directors and
Chief Executive Officer of the Company; and
WHEREAS, Flores has entered into that certain agreement (the
"Option Agreement"), dated the date hereof, pursuant to which William W. Rucks,
IV and the Rucks Family Limited Partnership have granted Flores the option to
purchase up to 1,600,000 shares of Common Stock (as hereinafter defined)
currently owned by such Persons; and
WHEREAS, the Company believes that the execution of the Option
Agreement by Flores will benefit the Company by providing for continuity of
control by the Company's major stockholders; and
WHEREAS, in order to induce Flores to enter into the Option
Agreement, FRI has agreed to enter into this Agreement and to grant the Rights
(as hereinafter defined) contained herein to Flores and the Partnership;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
SECTION 1. CERTAIN DEFINITIONS AND TERMS.
The following terms have the meanings indicated:
"Commission" means the Securities and Exchange Commission or
any successor thereof.
"Common Stock" means the common stock, par value $.01 per
share, of FRI.
"Enron/Merrill Agreement" means that certain Registration
Rights Agreement, dated December 7, 1994, as amended, by and among FRI, Flores &
Rucks, Inc., a Louisiana corporation, Enron Finance Corp. and Merrill Lynch
Capital Markets plc.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
<PAGE>
"Holder" means Flores, the Partnership and any other Person
holding Registrable Shares; provided, that such Person acquired such Registrable
Shares in accordance with Section 7 of this Agreement.
"Option Shares" means the 1,600,000 shares of Common Stock
subject to the Option Agreement, 1,000,000 of which are currently owned of
record by the Rucks Family Limited Partnership and 600,000 of which are
currently owned of record by William W. Rucks, IV.
"Permitted Transferee" means (i) Flores, (ii) Flores' spouse,
(iii) Flores' children, (iv) Flores' estate or the estates of Flores' spouse or
children, and (v) any trust, partnership, corporation or similar entity
controlled by or for the benefit of the Persons named in clauses (i) through
(iv) hereof, including the Partnership, the James Flores Children's Trust and
the Cherie Flores Children's Trust.
"Person" means any individual, firm, corporation, trust,
association, partnership, joint venture or other entity.
"Registrable Shares" means the Option Shares.
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of
effectiveness of such registration statement.
"Rights" means all rights, remedies, powers, benefits, and
privileges granted to the Holders pursuant to this Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
SECTION 2. REGISTRATION RIGHTS.
(a) Any Holder or Holders shall hereby have the right to
request, in writing specifying that such request is made pursuant to this
Section 2(a), that FRI file a registration statement under the Securities Act
covering not less than 250,000 Registrable Shares (unless fewer Registrable
Shares are held by the Holders, in which case, covering all such Registrable
Shares). Such request shall set forth the proposed plan of distribution for the
Registrable Shares to be registered. Within thirty days of such request, or, in
the event that Form S-3 under the Securities Act is available to FRI to effect
such registration, within twenty-one days of such request, FRI shall file a
registration statement to register under the Securities Act all Registrable
Shares subject to such request; provided, however, that FRI may defer its
obligations under this Section 2(a) for a period of no more than thirty days
(which thirty days shall be in addition to the 30-day or 21-day period, as
applicable, permitted above) if FRI's Board of Directors adopts a resolution or
obtains written
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<PAGE>
advice from FRI outside securities counsel (which counsel shall be a nationally
recognized securities law firm or a law firm acceptable to the Holders) that
filing such a registration statement would require public disclosure by FRI of
any material non-public development; and provided further, that once such
information has been publicly disclosed by FRI, FRI shall promptly proceed to
fulfill its obligations under this Section 2(a).
Notwithstanding the foregoing, in the event FRI reasonably
expects to file, within 60 days of a request made pursuant to this Section 2(a),
a registration statement pertaining to securities for the account of FRI (except
a registration statement on Form S-8 or any successor form thereto) then such
request shall constitute a request made pursuant to Section 2(b) hereof to
include in such registration statement all Registrable Shares subject to such
request and FRI shall not be obligated to file a separate registration statement
for the Registrable Shares subject to such request; provided, that FRI is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective and that FRI's estimate of the date
of filing of such registration statement is made in good faith. If FRI has not
filed a registration statement pertaining to securities for the account of FRI
and the Registrable Shares during this 60 day period, then FRI shall promptly
proceed to fulfill its obligations under this Section 2(a).
FRI shall be obligated to effect only two registrations
pursuant to this Section 2(a) with respect to all Holders; provided, however,
that a registration requested pursuant to this Section 2(a) shall not be deemed
to be a "registration" for such purposes, (i) if a registration statement with
respect thereto has not been declared effective by the Commission, (ii) if after
such registration statement has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason not the
fault of a holder of Registrable Shares and the Registrable Shares covered
thereby have not been sold, or (iii) if the conditions to closing specified in
the selling agreement or underwriting agreement entered into in connection with
such registration are not satisfied or waived by the parties thereto other than
a holder of Registrable Shares.
Distribution by the Holder or Holders of the Registrable
Shares registered pursuant to this Section 2(a) may be made in any lawful
manner, including underwritten public offerings and non-underwritten "at the
market" distributions. If any such offering is to be an underwritten public
offering, the Holder or Holders of such Registrable Shares shall have the right
to select the managing underwriter or underwriters, subject to the approval of
FRI, which approval shall not be unreasonably withheld.
The Holders shall not make a request to FRI to effect any
registration pursuant to this Section 2(a) during (i) the 180-day period
beginning on the effective date of the first registration of Registrable Shares
made pursuant to this Section 2(a), (ii) the 90-day period beginning on the
effective date of any registration of Registrable Shares made pursuant to
Section 2(b) of this Agreement and (iii) the 14-day period prior to, and during
the 90-day period beginning on, the effective date of a registration statement
filed pursuant to Section 2(a) of the Enron/Merrill Agreement.
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<PAGE>
Whenever FRI shall effect a registration pursuant to this
Section 2(a), securities that may be included among the securities covered by
such registration include (i) securities subject to registration rights granted
by the Company or (ii) such other securities as the Company may desire to
include.
(b) If at any time FRI proposes to register any of its Common
Stock under the Securities Act (other than registrations on Forms S-4 or S-8 or
any successor forms thereto or registrations of securities in connection with a
Rule 145 transaction), whether of its own accord or at the request of any holder
or holders of its securities, it shall each such time promptly give written
notice to all Holders of its intention to do so.
Upon the written request of a Holder or Holders delivered to
FRI within five business days after receipt of any such notice, FRI shall use
its best efforts (subject to the provisions of this Section 2(b)) to cause all
Registrable Shares, the Holders of which shall have so requested registration
thereof, to be registered under the Securities Act, all to the extent requisite
to permit the sale or other disposition by the Holder or Holders of such
Registrable Shares; provided, however, FRI may elect not to file a registration
statement pursuant to this Section 2(b) or may withdraw any registration
statement filed pursuant to this Section 2(b) at any time prior to the effective
date thereof.
If the managing underwriter for the respective offering
advises that marketing factors require the inclusion in such registration of
some or all of the Registrable Shares sought to be registered by the Holders to
be limited or that the number of securities to be registered at the insistence
of FRI and any other selling shareholders plus the number of Registrable Shares
sought to be registered by the Holders should be limited due to marketing
factors, the number of Registrable Shares sought to be registered by each
Holder, FRI and such other selling shareholders shall be reduced pro rata, based
on the number of securities sought to be registered by each such Holder, FRI or
such other selling shareholder, to the number recommended by the managing
underwriter, provided, that in the event such registration is initiated by FRI,
the number of shares offered by FRI shall not be reduced.
(c) If and whenever FRI is required by the provisions of this
Section 2 to effect the registration of any Registrable Shares under the
Securities Act, FRI shall, as expeditiously as possible,
(1) cooperate with any underwriters for, and the
Holders of, such Registrable Shares, and shall enter into a usual and
customary underwriting agreement with respect thereto and take all such
other reasonable actions as are necessary or advisable to permit,
expedite and facilitate the disposition of such Registrable Shares in
the manner contemplated by the related registration statement,
including without limitation, the inclusion in such registration
statement of any information relating to FRI or its subsidiaries which
such holders or underwriters deem reasonably necessary to facilitate
such disposition, in each case to the same extent as if all the
securities then being offered were for the account of FRI,
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<PAGE>
and FRI shall provide to any Holder of such Registrable Shares, any
underwriter participating in any distribution thereof pursuant to a
registration statement, and any attorney, accountant or other agent
retained by any Holder or underwriter, reasonable access to appropriate
FRI officers and employees to answer questions and to supply
information reasonably requested by any such Holder, underwriter,
attorney, accountant or agent in connection with such registration
statement; provided, however, that each such party shall be required to
maintain in confidence and not disclose to any other person any
information or records reasonably designated by FRI in writing as being
confidential, until such time as (A) such information becomes a matter
of public record (whether by virtue of its inclusion in such
registration statement or otherwise), or (B) such person shall be
required so to disclose such information pursuant to the subpoena or
order of any court or other governmental agency or body having
jurisdiction over the matter (subject to the requirements of such
order, and only after such persons shall have given FRI prompt prior
written notice of such requirement), or (C) such information is
required to be set forth in such registration statement or the
prospectus included therein or in an amendment to such registration
statement or an amendment or supplement to such prospectus in order
that such registration statement, prospectus, amendment or supplement,
as the case may be, does not contain an untrue statement of a material
fact or omit to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(2) furnish or cause to be furnished to each Holder
of the Registrable Shares covered by such registration statement, on
the date that such Registrable Shares are to be delivered to the
underwriters for sale pursuant to such registration or, if such
Registrable Shares are not being sold through underwriters, on the date
the registration statement with respect to such Registrable Shares
becomes effective (i) an opinion, dated such date, of the outside
counsel representing FRI for the purposes of such registration,
addressed to the underwriters, if any, and to the Holders, stating that
such registration statement has become effective under the Securities
Act and that (A) to the knowledge of such counsel, no stop order
suspending the effectiveness of such registration statement has been
instituted or is pending or contemplated under the Securities Act; and
(B) the registration statement, the related prospectus, and each
amendment or supplement thereto, including all documents incorporated
by reference therein, comply as to form in all material respects with
the requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder (except that such counsel need
express no opinion as to financial statements or other financial or
statistical or reserve data contained or incorporated by reference
therein); and such counsel shall state in customary form that no facts
have come to the attention of such counsel that caused such counsel to
believe (with customary qualifications) that either the registration
statement or the prospectus, or any amendment or supplement thereto,
including all documents incorporated by reference therein, in light of
the circumstances under which they were made, contains any untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading (except that such counsel need express no belief as to
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<PAGE>
financial statements or other financial or statistical or reserve data
contained or incorporated by reference therein or as to any information
provided by the Holders or any underwriter for inclusion therein); and
(ii) a letter, dated such date, from the independent certified public
accountants of FRI, addressed to the underwriters, if any, and to the
Holders, stating that they are independent certified public accountants
within the meaning of the Securities Act and that in the opinion of
such accountants, the financial statements and other financial data of
FRI included in the registration statement or the prospectus, or any
amendment or supplement thereto, including all documents incorporated
by reference therein, comply as to form in all material respects with
the applicable accounting requirements of the Securities Act. Such
letter from the independent certified public accountants shall
additionally cover such other customary financial matters (including
information as to the period ending not more than five business days
prior to the date of such letter) with respect to the registration in
respect of which such letter is being given as such underwriters, if
any, or the Holders may reasonably request;
(3) prepare and file with the Commission a
registration statement with respect to such Registrable Shares and use
its best efforts to cause such registration statement to become and
remain effective for a period of not more than 180 days (or in the
event of a firm underwritten offering such longer period as may be
customary), and prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such registration
statement effective during such period and to comply with the
provisions of the Securities Act with respect to the sale or other
disposition of all securities covered by such registration statement;
provided that no such registration statement or amendment thereto shall
be filed by FRI until the Holders of the Registrable Shares included
therein and their counsel shall have had a reasonable opportunity to
review the same, to exercise their rights under clause (1) above with
respect thereto and to approve or disapprove any portion of such
registration statement describing or referring to such Holders;
provided, further, that if, after a registration statement becomes
effective, the Company advises the Holders that the Company considers
it appropriate for the registration statement to be amended, the
Holders shall suspend any further sales of their registered shares
until the Company advises them that the registration statement has been
amended. The 180-day time period referred to herein during which the
registration statement must be kept current after its effective date
shall be extended for an additional number of business days equal to
the number of business days during which the rights to sell shares was
suspended pursuant to the preceding sentence;
(4) furnish to each Holder and to each underwriter,
if any, such numbers of copies of a summary prospectus or other
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such
Holder may reasonably request in order to facilitate the public sale or
other disposition of such Holder's Registrable Shares;
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(5) use its best efforts to register or qualify the
Registrable Shares covered by such registration statement under the
state securities of blue sky laws of such United States jurisdictions
as each Holder shall request, and do any and all other acts and things
which may be reasonably necessary or advisable to enable such Holder to
consummate the public sale or other disposition in such United States
jurisdictions of the Registrable Shares owned by such Holder, except
that FRI shall not for any such purpose be required to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not
so qualified or to file therein any general consent to service;
(6) in the event of the issuance of any stop order
suspending the effectiveness of any registration statement or of any
order suspending or preventing the use of any prospectus or suspending
the qualification of such Registrable Shares for sales in any
jurisdiction, use its reasonable efforts promptly to obtain its
withdrawal;
(7) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission in connection with
such registration and related transactions, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, beginning with
the first fiscal quarter beginning after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(8) list such securities on any securities exchange
or consolidated reporting system on which the Common Stock of FRI is
then listed, if the listing of such securities is then permitted under
the rules of such exchange or consolidated reporting system; and
(9) furnish unlegended certificates representing
ownership of the Registrable Shares being sold in such denominations as
shall be requested by each Holder or the managing underwriter, provided
such request is made at least two business days prior to the closing of
the sale of such Registrable Shares.
(d) In connection with any offering involving an underwriting
of shares being issued by FRI, FRI shall not be required to include any of the
Holders' Registrable Shares in such underwriting pursuant to Section 2(b) unless
the Holders accept the terms of the underwriting as agreed upon between FRI and
the underwriters; provided, however, that the only representations and
warranties any Holder shall be required to make in connection therewith shall be
with respect to such Holder's ownership of the Registrable Shares to be sold by
it and its ability to convey title thereto free and clear of all liens,
encumbrances or adverse claims and such other customary representations and
warranties reasonably requested by the underwriters; and provided further, that
the only indemnity any Holder shall be required to make in connection therewith
shall be to the effect of Sections 4(b) and 4(c) hereof.
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(e) The Registrable Shares proposed to be registered under any
registration statement under Section 2(b) hereof shall be offered for sale at
the same public offering price as the shares of Common Stock offered for sale by
FRI or any other selling shareholder covered thereby.
SECTION 3. EXPENSES OF REGISTRATION.
All expenses incurred in connection with the registration of
Registrable Shares pursuant to this Agreement, including without limitation (i)
the Commission registration fee, (ii) the fee payable to the National
Association of Securities Dealers, Inc., (iii) all state registration and
qualification fees, (iv) all printing, engineering and accounting fees, (v) all
fees and disbursements of counsel for FRI and (vi) all fees and disbursements of
one law firm selected by the Holders to represent all the Holders, shall be
borne by FRI; provided, however, that FRI shall not be required to pay, and the
Holders shall pay any underwriter discounts, commissions and other underwriter
compensation, to the extent such fees, discounts, commissions and compensation,
relate to the Registrable Shares.
SECTION 4. INDEMNIFICATION.
(a) In the event of any registration of Registrable Shares
under the Securities Act pursuant to this Agreement, FRI shall indemnify and
hold harmless the Holder of such Registrable Shares, such Holder's directors,
officers and partners, if any, and each other Person, if any, who controls such
Holder within the meaning of the Securities Act (a "Controlling Person"),
against any losses, claims, damages or liabilities, joint or several, to which
such Holder or any such director, officer, partner or Controlling Person may
become subject under the Securities Act or other statute or at common law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement under which such Registrable Shares were registered under the
Securities Act, or in any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or (ii) any alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse such Holder or such
director, officer, partner or Controlling Person for any legal or any other
expenses reasonably incurred by such Holder, director, officer, partner or
Controlling Person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that FRI shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon any alleged untrue statement
or alleged omission made in such registration statement, preliminary prospectus,
prospectus, or amendment or supplement in reliance upon and in conformity with
written information furnished to FRI through an instrument duly executed or
provided by such Holder or an underwriter specifically for use therein. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Holder, director, officer, partner or Controlling
Person, and shall survive the transfer of such Registrable Shares by such
Holder.
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(b) It shall be a condition to FRI's obligation to register
the Registrable Shares of any Holder that such Holder shall enter into an
agreement to indemnify and hold harmless FRI, its directors and officers and
each other Person, if any, who controls FRI against any losses, claims, damages
or liabilities, joint or several, to which FRI or any such director or officer
or any such Person may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any alleged
untrue statement or omission of any material fact contained, on the effective
date thereof, in any registration statement under which such Holder's
Registrable Shares were registered under the Securities Act, or in any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or (ii) any alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
alleged untrue statement or omission was contained in written information
furnished to FRI through an instrument duly executed or provided by such Holder
specifically for use therein, and to reimburse FRI or such director, officer or
other Person for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) Indemnification similar to that specified in (i) and (ii)
in paragraphs 4(a) and 4(b) above shall be given by FRI and each Holder (with
such modifications as shall be appropriate) to any underwriter with respect to
any required registration or other qualification of any Registrable Shares
registered under this Agreement under any federal or state law or regulation of
governmental authority. The indemnity and expense reimbursements obligations of
FRI and the Holders under (i) and (ii) in paragraphs 4(a) and 4(b) above shall
be in addition to any liability FRI and the Holders may otherwise have.
(d) Each Person (an "Indemnitor") who under the preceding
provisions of this Section 4 agrees to indemnify another Person (an
"Indemnitee") shall have the rights, subject to the provisions hereto, to
designate counsel (which counsel shall be a nationally recognized securities law
firm or a law firm acceptable to the Holders) or to defend any case or
proceeding against the Indemnitee arising in respect of any claim of liability
for which such indemnification may be claimed, to the end that duplication of
legal expense may be minimized; provided that, if the Indemnitee notifies the
Indemnitor that the former has been advised by its counsel that any single
counsel in such case or proceeding would have a conflict of interest in
representing both the Indemnitor and the Indemnitee, the Indemnitee may
designate one counsel of its own in such case or proceeding and, to the extent
so provided above in this Section 4, shall be entitled to be reimbursed for its
legal expenses reasonably incurred in connection with defending itself in such
case or proceeding.
(e) The Indemnitee shall give notice to the Indemnitor
promptly after such Indemnitee has actual knowledge of any claim as to which
indemnity may be sought, provided that the failure of any Indemnitee to give
notice as provided herein shall not relieve the Indemnitor of its obligations
hereunder except to the extent that the Indemnitor's defense of such claim is
prejudiced thereby.
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SECTION 5. CONTRIBUTION.
(a) In the event the indemnity provisions provided for in
Section 4 of this Agreement are for any reason held to be unenforceable by the
indemnified parties, FRI, the Holders and the underwriters, if any, shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity provisions incurred by FRI, the
Holders and the underwriters in proportion to the relative fault of each such
party in connection with the statements or omissions that resulted in such
losses, liabilities, claims, damages and expenses. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by one of the parties and such
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. Notwithstanding the
foregoing, no Holder shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the total price at which the Registrable
Shares sold by it exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(b) Notwithstanding the foregoing provisions of this Section
5, no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section, each person, if any, who controls an underwriter within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as such
underwriter, and each director of FRI, each officer of FRI who signed such
registration statement and each person, if any, who controls FRI or any Holder
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as FRI or such Holder, as the case may be.
SECTION 6. SALES PURSUANT TO RULE 144.
Upon written request, FRI shall deliver to any Holder a
written statement as to whether it has complied with all rules and regulations
of the Commission applicable in connection with the use of Rule 144 (or any
successor thereto), including the timely filing of all reports required to be
filed by FRI with the Commission. Upon receipt of an opinion of counsel
satisfactory to FRI, FRI shall cause any restrictive legends to be removed and
any transfer restrictions to be rescinded with respect to any sale of
Registrable Shares which is exempt from registration under the Securities Act
pursuant to Rule 144.
SECTION 7. TRANSFER OF REGISTRATION RIGHTS.
The Rights of Holders under this Agreement may be assigned or
transferred upon written notice to the Company to any Permitted Transferee in
connection with the transfer of all or a portion of the Registrable Shares. In
the event that the Rights under this Agreement are assigned or transferred by a
Holder to a Permitted Transferee in connection with the transfer of a portion of
the Registrable Shares, any registration rights exercised by such Holder or any
such Permitted
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Transferee must be exercised collectively as one Holder and, for purposes of
this Agreement, including without limitation, with respect to providing notices
and payment of any expenses, such Holder and such Permitted Transferee will be
treated as one Holder. Any transferee hereunder must acknowledge in writing its
acceptance of all terms, conditions and obligations of this Agreement.
SECTION 8. TERMINATION.
FRI shall not be obligated to take any action to effect any
registration, qualification or compliance pursuant to this Agreement, and this
Agreement shall terminate and be of no force and effect (except any obligations
of FRI under Section 6 of this Agreement), with respect to any Holder (and such
Holder only) who may sell all of such Holder's Registrable Shares in reliance
upon Rule 144(k) (or any successor rule) promulgated under the Securities Act.
SECTION 9. REMEDIES.
FRI recognizes that money damages may be inadequate to
compensate the Holders for a breach by FRI of its obligations under this
Agreement, and FRI agrees that in the event of such a breach any of the Holders
may apply for an injunction of specific performance or the granting of such
other equitable remedies as may be awarded by a court of competent jurisdiction
in order to afford the Holders the benefits of this Agreement and that FRI shall
not object to such application, entry of such injunction or granting of such
other equitable remedies on the grounds that money damages shall be sufficient
to compensate the Holders.
SECTION 10. MISCELLANEOUS.
(a) Notices.
(1) All communications under this Agreement shall be
in writing and shall be mailed by first class mail, postage prepaid, or
sent by facsimile,
(i) if to any party hereto at its address or
facsimile number for notices specified beneath its name on the
signature page hereof, or at such other address or facsimile
number as it may have furnished in writing to each other party
hereto;
(ii) if to any other person or entity who is
the registered holder of any Registrable Shares to the address
or facsimile number of such holder as it appears in the stock
ledger of FRI.
(2) Any notice shall be deemed to have been duly given and
received (i) at the time of delivery when delivered by hand, if
personally delivered, (ii) if sent by mail, two business days after
being deposited in the mail, postage prepaid and (iii) when sent by
HOU04:38327.2
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<PAGE>
facsimile so long as a duplicate of such notice is deposited in the
mail, first class postage prepaid, on the date such facsimile is sent.
(b) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the permitted successors and assigns of each of
the parties whether so expressed or not.
(c) Amendment and Waiver, etc. This Agreement may be amended,
and the observance of any term of this Agreement may be waived, but only with
the unanimous written consent of FRI and the Holders. No failure or delay on the
part of the Holders in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Holders at law or in equity or otherwise. No waiver of or
consent to any departure by FRI from any provision of this Agreement shall be
effective unless in writing and signed by the Holders.
(d) Duplicate Originals. Two or more duplicate originals of
this Agreement may be signed in counterpart by the parties, each of which shall
be an original but all of which together shall constitute one and the same
instrument.
(e) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the substantive law of Delaware without giving
effect to the principles of conflicts of law thereof.
(g) Entire Agreement. This Agreement constitutes and contains
the entire agreement of the parties and supersedes any and all prior
negotiations, correspondence, undertakings and agreements between the parties
hereto respecting the subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
FLORES & RUCKS, INC.,
a Delaware corporation
8440 Jefferson Highway, Suite 420
Baton Rouge, Louisiana 70809
Facsimile: (504) 927-1109
Attention: Chairman of the Board
By: /s/ RICHARD G. ZEPERNICK, JR.
------------------------------
Name: Richard G. Zepernick, Jr.
Title: Executive Vice President and
Chief Operating Officer
/s/ JAMES C. FLORES
------------------------------
James C. Flores
FLORES FAMILY LIMITED PARTNERSHIP,
a Texas Limited Partnership
c/o James C. Flores
8440 Jefferson Highway, Suite 420
Baton Rouge, Louisiana 70809
Facsimile: (504) 927-1109
By: /s/ JAMES C. FLORES
------------------------------
James C. Flores
General Partner
By: /s/ CHERIE H. FLORES
------------------------------
Cherie H. Flores
General Partner
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