<PAGE>
SCHEDULE 14A/A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Flores & Rucks, Inc.
------------------------------------------------
(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.
[ ] 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:
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(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:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
FLORES & RUCKS, INC.
8440 JEFFERSON HIGHWAY
SUITE 420
BATON ROUGE, LOUISIANA 70809
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 17, 1997
The Annual Meeting of the Stockholders of Flores & Rucks, Inc., a Delaware
corporation (the "Company"), will be held at the Baton Rouge Hilton, 5500 Hilton
Avenue, Baton Rouge, Louisiana, on June 17, 1997 at 9:00 a.m., Central Daylight
Savings Time, for the following purposes:
1. To elect two Class II directors to serve until the annual
stockholders' meeting in 2000 or until their successors have been elected and
qualified;
2. To ratify and approve the appointment of Arthur Andersen LLP as the
Company's independent auditors for the 1997 fiscal year;
3. To ratify and approve the Flores & Rucks, Inc. 1996 Long-Term
Incentive Plan; and
4. To approve an amendment to the certificate of incorporation to change
the name of the Company; and
5. To act upon such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record at the close of business on April 25, 1997 are
entitled to notice of, and to vote at, the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING OF
STOCKHOLDERS REGARDLESS OF WHETHER YOU PLAN TO ATTEND. THEREFORE, PLEASE MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY. IF YOU ARE PRESENT AT THE
MEETING, AND WISH TO DO SO, YOU MAY REVOKE THE PROXY AND VOTE IN PERSON.
By Order of the Board of Directors
Robert K. Reeves
Senior Vice President,
General Counsel and Secretary
May 13, 1997
Baton Rouge, Louisiana
<PAGE>
FLORES & RUCKS, INC.
8440 JEFFERSON HIGHWAY
SUITE 420
BATON ROUGE, LOUISIANA 70809
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Flores &
Rucks, Inc., a Delaware corporation (the "Company"), for use at the 1997 Annual
Meeting of Stockholders to be held on June 17, 1997, and at any adjournments
thereof. The Annual Meeting of Stockholders will be held at 9:00 a.m., Central
Daylight Savings Time, at the Baton Rouge Hilton, 5500 Hilton Avenue, Baton
Rouge, Louisiana. If the accompanying proxy is properly executed and returned,
the shares it represents will be voted at the meeting in accordance with the
directions noted thereon or, if no direction is indicated, it will be voted in
favor of the proposals described in this Proxy Statement. In addition, the
proxy confers discretionary authority to the persons named in the proxy
authorizing those persons to vote, in their discretion, on any other matters
properly presented at the Annual Meeting of Stockholders. The Board of
Directors is not currently aware of any such other matters. Any stockholder
giving a proxy has the power to revoke it by oral or written notice to the
Secretary of the Company at any time before it is voted.
The Company will bear the cost of preparing and mailing proxy materials as
well as the cost of soliciting proxies. The Company will reimburse banks,
brokerage firms, custodians, nominees and fiduciaries for their expenses in
sending proxy materials to the beneficial owners of common stock of the Company.
The Company has retained Corporate Communications Center, Inc. ("Corporate
Communications") to assist in the solicitation of proxies and will pay
approximately $500 for certain brokerage searches and proxy solicitations
performed by Corporate Communications. In addition to solicitation by mail,
certain directors, officers and regular employees of the Company and Corporate
Communications may solicit proxies by fax, telex, telephone and personal
interview.
The approximate date on which this Proxy Statement and the accompanying
proxy will first be sent to stockholders is May 13, 1997.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At the close of business on April 25, 1997, the record date for the
determination of stockholders of the Company entitled to receive notice of, and
to vote at, the Annual Meeting of Stockholders or any adjournments thereof,
19,645,256 shares of the Company's common stock, par value $0.01 per share (the
"Common Stock"), were outstanding. Each share of Common Stock is entitled to
one vote upon each of the matters to be voted on at the meeting. The presence,
in person or by proxy, of at least a majority of the outstanding shares of
Common Stock is required for a quorum. Shares not voted on matters, including
broker non-votes, will not be treated as votes cast with respect to those
matters, and therefore will not affect the outcome of any such matter. Shares
abstaining from voting will be treated as votes cast with respect to those
matters, and therefore will have the effect of votes against any such matter.
The table below sets forth, as of April 25, 1997, certain information with
respect to the shares of Common Stock beneficially owned by (i) each person
known by the Company to own beneficially five percent or more of the Common
Stock, (ii) each director and director nominee of the Company, (iii) each of the
executive officers of the Company named below under "Election of Directors-
Executive Compensation," and (iv) all directors, director nominees and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name of Beneficial Owner Ownership /(1)/ of Class
------------------------ ---------------- ---------
<S> <C> <C>
James C. Flores 5,262,666 /(2)/ 26.79%
8440 Jefferson Highway, Suite 420
Baton Rouge, Louisiana 70809
FMR Corp. 2,936,400 /(3)/ 14.95%
82 Devonshire Street
Boston, Massachusetts 02109
Strong Capital Management, Inc. 1,409,760 /(4)/ 7.18%
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
Robert L. Belk 55,309 /(5)/ *
Donald W. Clayton 10,999 /(6)/ *
Charles F. Mitchell 1,999 /(6)/ *
William W. Rucks, IV 234,867 /(7)/ 1.20%
Milton J. Womack 6,864 /(6)/ *
Richard G. Zepernick, Jr. 178,981 /(8)/ *
Robert K. Reeves 46,607/(9)/ *
David J. Morgan 49,066/(10)/ *
All directors, director nominees and executive 5,849,082/(11)/ 29.77%
officers as a group (13 persons)
</TABLE>
- --------------
* Represents less than 1 %.
(1) Unless otherwise indicated, each of the stockholders designated above has
sole voting and investment power with respect to the securities shown to be
owned by such stockholder.
(2) Does not include 7,246 shares of Common Stock beneficially owned by
certain trusts for children of James C. Flores, for which Mr. Flores
disclaims beneficial ownership. John V. Flores, the brother of James C.
Flores, has sole voting and investment power
-2-
<PAGE>
with respect to such trusts. Includes 125,000 shares subject to currently
exercisable stock options granted by the Company. Includes 1,600,000 shares
subject to a currently exercisable call option and irrevocable proxy from
Mr. Rucks.
(3) The following information is based on a Schedule 13G dated February 14,
1997 with respect to beneficial ownership as of December 31, 1996. FMR
Corp. is the parent holding company of Fidelity Management & Research
Company ("Fidelity") and Fidelity Management Trust Company ("FMTC"). Edward
C. Johnson 3d is Chairman of FMR Corp. FMR Corp. has sole voting power with
respect to 557,900 shares and sole dispositive power with respect to
2,936,400 shares. Of such shares, Fidelity is the beneficial owner of
2,187,100 shares as a result of acting as investment adviser to several
investment companies (the "Funds"). Mr. Johnson, FMR Corp., through its
control of Fidelity, and the Funds each has sole power to dispose of the
2,187,100 shares owned by the Funds. Neither FMR Corp. nor Mr. Johnson has
voting power of the shares owned directly by the Funds, which power resides
with the Funds' boards of trustees. In addition, FMTC is the beneficial
owner of 749,300 shares as a result of its serving as investment manager of
institutional account(s), and Mr. Johnson and FMR Corp. have sole
dispositive power over such shares through their control of FMTC. Mr.
Johnson and FMR Corp. have sole voting power over 557,900 shares and no
voting power over 191,400 shares through their control of FMTC. Members of
Mr. Johnson's family are the predominant owners of the voting stock of FMR
Corp., representing approximately 49% of the FMR Corp. voting power. Mr.
Johnson owns 12% and Abigail Johnson owns 24.5% of the aggregate
outstanding voting stock of FMR Corp. Through their ownership of voting
stock and the execution of a shareholders' voting agreement with other
holders of the voting stock, members of the Johnson family may be deemed,
under the Investment Company Act of 1940, to form a controlling group with
respect to FMR Corp.
(4) The following information is based on a Schedule 13G dated February 13,
1997 with respect to beneficial ownership as of December 31, 1996. Strong
Capital Management, Inc. ("SCM") is an investment advisor registered under
Section 203 of the Investment Advisers Act of 1940. Richard S. Strong is
Chairman of the Board and the principal shareholder of SCM. SCM has sole
voting power with respect to 1,194,850 shares and sole dispositive power
with respect to 1,409,760 shares. SCM has been granted discretionary
dispositive power over its clients securities and in some instances has
voting power over such securities. Any and all discretionary authority
which has been delegated to SCM may be revoked in whole or in part at any
time. Mr. Strong reports beneficial ownership of the same securities
beneficially owned by SCM as a result of his position and stock ownership
in SCM.
(5) Includes 1,000 shares owned by Mr. Belk's children under the Uniform Gifts
to Minor Act for which Mr. Belk disclaims beneficial ownership and 53,334
shares subject to currently exercisable stock options granted by the
Company.
(6) Includes 999 shares subject to currently exercisable stock options granted
by the Company.
(7) Does not include 1,600,000 shares subject to a currently exercisable call
option and irrevocable proxy held by Mr. Flores.
(8) Includes 178,166 shares subject to currently exercisable stock options
granted by the Company.
(9) Includes 45,000 shares subject to currently exercisable stock options
granted by the Company.
(10) Includes 41,666 shares subject to currently exercisable stock options
granted by the Company.
(11) Includes 536,161 shares subject to currently exercisable stock options
granted by the Company.
-3-
<PAGE>
PROPOSAL NUMBER 1:
ELECTION OF DIRECTORS
GENERAL
The Company's Certificate of Incorporation and Bylaws provide that the
number of directors on the Board shall be fixed from time to time by the Board
of Directors but shall not be less than two nor more than fifteen persons. The
Certificate of Incorporation divides the Board of Directors into three (3)
classes, designated as Class I, Class II and Class III. Each class of directors
is to be elected to serve a three-year term and is to consist, so far as
possible, of one-third of the number of directors required at the time to
constitute a full Board. If the number of directors is not evenly divided into
thirds, the Board of Directors shall determine which class or classes shall have
one extra director. The Board of Directors presently consists of seven
directors, three in Class I, two in Class II and two in Class III, whose terms
of office expire with the 1999, 1997 and 1998 annual meetings, respectively, and
until their successors are elected and qualified.
The term of office of each of the current Class II Directors expires at the
time of the 1997 Annual Meeting of Stockholders, or as soon thereafter as their
successors are elected and qualified. Messrs. Rucks and Womack have been
nominated to serve an additional three-year term as Class II Directors. Each of
the nominees has consented to be named in this Proxy Statement and to serve as a
director if elected.
It is the intention of the persons named in the accompanying proxy card to
vote for the election of all two nominees named below unless a stockholder has
withheld such authority. The affirmative vote of holders of a plurality of the
Common Stock present in person or by proxy at the 1997 Annual Meeting of
Stockholders and entitled to vote is required for election of the nominees.
If, at the time of or prior to the 1997 Annual Meeting of Stockholders, any
of the nominees should be unable or decline to serve, the discretionary
authority provided in the proxy may be used to vote for a substitute or
substitutes designated by the Board of Director. The Board of Directors has no
reason to believe that any substitute nominee or nominees will be required. No
proxy will be voted for a greater number of persons than the number of nominees
named herein.
NOMINEES - CLASS II DIRECTORS (TERMS EXPIRING AT THE 2000 ANNUAL MEETING)
Name Age Position
---- --- --------
William W. Rucks, IV 39 Director
Milton J. Womack 70 Director
William W. Rucks, IV has served as a Director of the Company since its
inception. Mr. Rucks is a private venture capital investor. He served as
President and Vice Chairman of the Board of Directors from July 1995 until
September 1996 and as President, Chief Executive Officer and a Director of the
Company from its inception in 1992 until July 1995. From 1985 to 1992, Mr.
Rucks served as President of FloRuxco, Inc. Prior thereto, Mr. Rucks worked as
a petroleum landman with Union Oil Company of California in its Southwest
Louisiana District, serving as Area Land Manager from 1981 to 1984.
Milton J. Womack has owned and operated a general contracting firm in
Baton Rouge, Louisiana since 1955. Mr. Womack is Chairman of the Board of Union
Planters Bank of Louisiana, serves as a member of the Louisiana State University
Board of Supervisors and is a director of Union Planters Corporation. Mr.
Womack became a director of the Company in January 1995.
-4-
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION
OF EACH OF THE ABOVE-NAMED NOMINEES.
DIRECTORS REMAINING IN OFFICE
<TABLE>
<CAPTION>
Director
Name Age Position Class
---- --- -------- --------
<S> <C> <C> <C>
Richard G. Zepernick, Jr. 36 Executive Vice President, Chief
Operating Officer and Director I
Robert L. Belk 48 Senior Vice President, Chief Financial I
Officer, Treasurer and Director
Charles F. Mitchell, M.D. 48 Director I
James C. Flores 37 Chairman of the Board of Directors III
and Chief Executive Officer
Donald W. Clayton 60 Director III
</TABLE>
Richard G. Zepernick, Jr. has been with the Company since its inception,
presently serving as Executive Vice President and Chief Operating Officer. Mr.
Zepernick became a director of the Company in September 1994. From June 1992
until May 1993, Mr. Zepernick served as Senior Vice President and Secretary of
Flores & Rucks, Inc. From 1985 to 1992, Mr. Zepernick served as General Manager
of FloRuxco, Inc.
Robert L. Belk has served as Senior Vice President, Chief Financial Officer
and Treasurer of the Company since 1993. Mr. Belk became a director of the
Company in September 1994. Prior to joining the Company, Mr. Belk worked in
public accounting for H.J. Lowe & Company from 1988 to 1993. Mr. Belk is a
Certified Public Accountant.
Charles F. Mitchell, M.D. is a otolaryngologist and plastic surgeon who has
operated a private practice in Baton Rouge, Louisiana since 1978. He is also a
Clinical Assistant Professor at the Louisiana State University Medical School in
New Orleans and Clinical Instructor at the University Medical Center in
Lafayette, Louisiana. Dr. Mitchell became a director of the Company in January
1995.
James C. Flores has served as Chairman of the Board of the Company since
its inception in 1992 and as Chief Executive Officer since July 1995. From 1985
to 1992, Mr. Flores served as Vice President of FloRuxco, Inc., an oil and gas
exploration company.
Donald W. Clayton has served as President and Director of Voyager Energy
Corp. since 1993. From 1992 to 1993 he served as President and Director of
Burlington Resources, Inc. and was the President and Chief Executive Officer of
Meridian Oil Company from 1987 to 1993. Mr. Clayton serves on the Louisiana
State University Petroleum Engineering Industry Advisory Board. Mr. Clayton
became a director of the Company in January 1995.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has three standing committees, the
membership and functions of which are described below:
Audit Committee. The members of the Audit Committee are Messrs. Womack and
Mitchell. The Audit Committee's functions include making recommendations
concerning the engagement of independent auditors, reviewing
-5-
<PAGE>
with the independent auditors the plan and results of the auditing engagement,
approving professional services provided by the independent auditors and
reviewing the adequacy of the Company's internal accounting controls.
Compensation Committee. The members of the Compensation Committee are
Messrs. Womack and Mitchell. The Compensation Committee's functions include a
general review of the Company's compensation and benefit plans to ensure that
they meet corporate objectives. In addition, the Compensation Committee reviews
the Chief Executive Officer's recommendations on (i) compensation of all
officers of the Company, (ii) granting of awards under the Company's stock
option and other benefit plans, and (iii) adopting and changing major Company
compensation policies and practices. The Compensation Committee reports its
recommendations to the whole Board of Directors for approval. The Compensation
Committee also administers the Company's 1994 Long-Term Incentive Plan and will
administer the Company's 1996 Long-Term Incentive Plan, if approved.
Nominating Committee. The members of the Nominating Committee are Messrs.
Womack and Mitchell. The Nominating Committee investigates and studies the
qualifications of potential nominees for directors of the Company and makes
recommendations to the Board of Directors with respect to the nomination of
persons to serve as directors of the Company. The Nominating Committee will
consider suggestions from stockholders of the Company for nominees to serve as
directors, provided such proposals are submitted in writing to the Secretary of
the Company at 500 Dover Blvd., Suite 300, Lafayette, Louisiana 70503.
INFORMATION REGARDING MEETINGS
During 1996, the Audit Committee had two meetings, the Compensation
Committee had one meeting, the Nominating Committee had no meetings and the
Board of Directors had four meetings. During 1996, each member of the Board of
Directors attended 75% or more of the meetings of the Board of Directors and the
committees of which he was a member.
DIRECTOR COMPENSATION
Directors of the Company who are not employees of the Company were paid an
annual retainer of $20,000 and $800 for each Board of Directors or committee
meeting attended, plus reasonable travel and related expenses incurred to attend
such meetings during 1996. Effective January 1, 1997, these amounts have been
increased to $40,000 and $1,500, respectively. Employee directors receive no
additional compensation for attending Board of Directors or committee meetings.
Pursuant to the 1994 Long-Term Incentive Plan, each non-employee director is
awarded, at the time of election or reelection as a director, options to
purchase 1,000 shares of Common Stock at the fair market value on the date of
such grant, if available. The 1996 Long-Term Incentive Plan, if approved, will
provide for the award of options to purchase 2,000 shares of Common Stock at the
fair market value on the date of such grant to a non-employee director upon
their first being elected or appointed to the Board. Each director in office
immediately following each annual meeting of shareholders, not otherwise
entitled to receive an option pursuant to the discretionary provisions of the
1996 Long-Term Incentive Plan, will receive options to purchase 2,000 shares of
Common Stock.
-6-
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes certain information regarding aggregate cash
compensation, stock option and restricted stock awards and other compensation
earned by the Company's Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company for services rendered in
all capacities to the Company during 1994, 1995 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- --------------
OTHER SECURITIES
ANNUAL UNDERLYING
NAME AND FISCAL COMPEN- OPTIONS ALL OTHER
RINCIPAL POSITION YEAR SALARY BONUS SATION/(1)/ (NUMBER) COMPENSATION
- ------------------ ------ ------ ------- ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
James C. Flores
Chairman of the Board and 1996 $450,000 $405,375 -- -- $ 9,500/(2)/
Chief Executive Officer 1995 $450,000 $252,185 -- 75,000 $ 9,240/(2)/
1994 $882,780 $ -- -- 150,000 $509,240/(3)/
Richard G. Zepernick, Jr. 1996 $250,000 $350,000 $125,625/(4)/ 220,000 $ 9,500/(2)/
Executive Vice President 1995 $250,000 $242,602 $ 55,271/(5)/ 160,000 $ 7,782/(2)/
and Chief Operating Officer 1994 $213,937 $100,000 -- 120,000 $ 9,062/(2)/
Robert L. Belk 1996 $200,000 $209,438 -- 50,000 $ 9,500/(2)/
Senior Vice President, 1995 $200,000 $111,950 -- 40,000 $ 9,240/(2)/
Chief Financial Officer 1994 $180,824 $ 50,000 -- 50,000 $ 9,240/(2)/
and Treasurer
Robert K. Reeves 1996 $200,000 $202,745 -- 25,000 $ 9,500/(2)/
Senior Vice President, 1995 $200,000 $106,697 -- 40,000 $ 9,240/(2)/
General Counsel and 1994 $175,199 $ 50,000 -- 50,000 $ 8,604/(2)/
Secretary
David J. Morgan 1996 $180,000 $200,000 -- 25,000 $ 9,500/(2)/
Senior Vice President, 1995 $130,000 $ 60,000 -- 50,000 $ 5,790/(2)/
Geology 1994 $120,000 $ 30,000 -- 25,000 $ 5,790/(2)/
</TABLE>
- -------------------
(1) During the years ended December 31, 1994, 1995 and 1996, perquisites for
each individual named in the Summary Compensation Table, except for the
amounts set forth for Mr. Zepernick for the years ended December 31, 1995
and 1996, aggregated less than 10% of the total annual salary and bonus
reported for such individual in the Summary Compensation Table, or $50,000,
if lower.
(2) Represents the Company's matching contributions under the Company's
Retirement Savings Plan.
(3) Represents $500,000 of indebtedness forgiven by the Company prior to the
Company's initial public offering and $9,240 in matching contributions under
the Company's Retirement Savings Plan.
(4) Includes $43,683 in moving expenses paid by the Company and a $64,668
reimbursement during the fiscal year for the payment of taxes.
(5) Includes $46,247 in moving expenses paid by the Company.
-7-
<PAGE>
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options under the Company's 1994 Long-Term Incentive Plan to the executive
officers named in the Summary Compensation Table during fiscal 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------
PERCENTAGE
OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM/(1)/
OPTIONS IN PRICE PER EXPIRATION ----------------------------
NAME GRANTED FISCAL 1996 SHARE DATE 5% 10%
---- ----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James C. Flores -0- -- -- -- $ -- $ --
Richard G. Zepernick, Jr. 60,000 (2) 8.7% $19.375 5/7/06 731,090 1,852,726
160,000 (3) 23.1% 32.375 9/5/06 3,257,674 8,255,586
Robert L. Belk 50,000 (2) 7.2% 19.375 5/7/06 609,242 1,543,938
Robert K. Reeves 25,000 (2) 3.6% 19.375 5/7/06 304,621 771,969
David J. Morgan 25,000 (2) 3.6% 19.375 5/7/06 304,621 771,969
</TABLE>
- --------------
(1) The Securities and Exchange Commission requires disclosure of the potential
realizable value or present value of each grant. The disclosure assumes
the options will be held for the full ten-year term prior to exercise.
Such options may be exercised prior to the end of such ten-year term. The
actual value, if any, an executive officer may realize will depend upon the
excess of the stock price over the exercise price on the date the option is
exercised. There is no assurance that the stock price will appreciate at
the rates shown in the table.
(2) Represents options to purchase the respective number of shares of Common
Stock which become exercisable in equal increments on May 7, 1997, 1998 and
1999.
(3) Represents options to purchase the respective number of shares of Common
Stock which become exercisable in equal increments on September 5, 1997,
1998 and 1999.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning option exercises and
the value of unexercised options held by the executive officers of the Company
named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN 1996
AND OPTION VALUES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN THE MONEY
OPTIONS HELD AT OPTIONS HELD AT
SHARES DECEMBER 31, 1996 DECEMBER 31, 1996/(1)/
ACQUIRED VALUE -------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------ ----------- -------- ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James C. Flores -- $ -- 125,000 100,000 $5,268,750 $4,143,750
Richard G. Zepernick, Jr. 8,500 258,188 158,166 333,334 6,577,660 9,912,527
Robert L. Belk 10,000 415,000 36,667 93,333 1,531,278 3,446,222
Robert K. Reeves 10,000 377,500 36,667 68,333 1,531,265 2,614,985
David J. Morgan -- -- 33,333 66,667 1,381,235 2,528,140
</TABLE>
- ---------------
(1) Computed based on the difference between aggregate fair market and
aggregate exercise price. The fair market value of the Company's Stock on
December 31, 1996 was $52.625 based on the average of the high and low
sales prices on the New York Stock Exchange on such date.
-8-
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors of the Company
currently consists of Messrs. Womack and Mitchell, neither of whom are officers
or employees of the Company. The Compensation Committee was formed on January
18, 1995. The committee is responsible for evaluating the performance of
management, determining the compensation for certain executive officers of the
Company, and administering the Company's 1994 Long-Term Incentive Plan, as well
as the Company's 1996 Long-Term Incentive Plan if it is approved by the
shareholders, under which stock-related grants and awards may be made to
employees of the Company. The Compensation Committee has furnished the following
report on executive compensation for 1996.
The Company has developed a compensation policy which is designed to
attract and retain key executives responsible for the success of the Company and
motivate management to enhance long-term stockholder value. The annual
compensation package of executive officers primarily consists of (i) a cash
salary which reflects the responsibilities relating to the position and
individual performance, (ii) variable performance awards payable in cash or
stock and tied to the individual's or the Company's achievement of certain goals
or milestones, and (iii) long-term stock based incentive awards which strengthen
the mutuality of interest between the executive officers and the Company's
stockholders.
In determining the level and position of compensation for each of the
Company's executive officers, the Committee took into account various
qualitative and quantitative indicators of corporate and individual performance.
Although no specific target has been established, the Committee generally seeks
to set salaries at the median to high end of the range in comparison to peer
group companies. In setting such salaries, the Compensation Committee considers
its peer group to be certain companies in the exploration and production
industry with market capitalizations similar to that of the Company. In order to
assist the Committee in making compensation decisions, in 1995 the Company
retained a national compensation consulting firm. The consulting firm prepared a
national compensation report which the Committee utilized in determining
salaries and bonuses. In addition, in evaluating the performance of management,
the Committee also takes into consideration such factors as successful
acquisitions, implementation of capitalization goals, drilling results,
production and operating costs. In addition, the Compensation Committee
recognizes performance and achievements that are more difficult to quantify,
such as the successful supervision of major corporate projects, demonstrated
leadership ability, and contributions to the industry and community development.
Base compensation is established by the Board of Directors and reviewed
annually. When establishing or reviewing base compensation levels for each
executive officer, the Board, in accordance with its general compensation
policy, considers numerous factors, including the responsibilities relating to
the position, the qualifications of the executive, and the relevant experience
the individual brings to the Company, strategic goals for which the executive
has responsibility and compensation levels of comparable companies. No
predetermined weights are given to any one of such factors. The salaries for
each of the executive officers in 1996, including the Chairman of the Board and
Chief Executive Officer, were determined based upon the foregoing factors.
In addition to each executive officer's base compensation, the Board may
award cash bonuses and/or grant awards under the Company's stock option plan to
chosen executive officers depending on the extent to which certain personal and
corporate performance goals are achieved. Such goals are the same as discussed
above. As a result of the levels of increases in production, reserves, cash
flow, net earnings and the Common Stock price, the Committee authorized cash
bonuses to each of the executive officers, including the Chairman of the Board
and Chief Executive Officer, and made stock option grants to certain of the
executive officers.
Since the Company has not yet exceeded the $1,000,000 compensation
threshold, the Compensation Committee has not yet adopted a policy with respect
to the limitation under the Internal Revenue Code of 1986, as amended, (the
"Code") that generally limits the Company's ability to deduct compensation in
excess of $1,000,000 to a particular executive officer in any year. The
Committee, in consultation with the Board of Directors, may adopt a policy if
the Company exceeds such amount.
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<PAGE>
This report shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The foregoing report is given by the following members of the Compensation
Committee of the Board of Directors:
Milton J. Womack
Charles F. Mitchell, M.D.
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<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of the Common Stock to
the NYSE Market Index, the NASDAQ Market Index and a peer group index consisting
of public companies with a Standard Industrial Classification ("SIC") Code for
Crude Petroleum and Natural Gas (1311), the Company's SIC Code, for the period
beginning December 1, 1994 and ending December 31, 1996. The SIC Code for Crude
Petroleum and Natural Gas includes approximately 180 issuers, such as Apache
Corporation, Louisiana Land & Exploration, Newfield Exploration, United Meridian
Corp., Noble Affiliates, Inc. and Pogo Producing. The graph assumes that the
value of the investment in the Common Stock and each index was $100 at December
1, 1994 and that all dividends were reinvested. The Common Stock began trading
on the Nasdaq National Market on December 1, 1994, and was moved to the New York
Stock Exchange on March 25, 1996. Prior to December 1, 1994, there was no
market in the Company's stock and, accordingly, five year data is unavailable.
COMPARISON OF TWENTY-FIVE MONTH CUMULATIVE TOTAL RETURN
AMONG FLORES & RUCKS, INC., NYSE MARKET INDEX,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
12/01/94 12/31/94 12/31/95 12/31/96
- --------------------------------------------------------------
Flores & Rucks, Inc. 100.00 105.00 145.00 532.50
- --------------------------------------------------------------
NYSE Market Index 100.00 100.19 129.91 156.49
- --------------------------------------------------------------
NASDAQ Market Index 100.00 100.09 129.83 161.33
- --------------------------------------------------------------
SIC Code 1311 100.00 99.54 109.47 145.56
- --------------------------------------------------------------
</TABLE>
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<PAGE>
The foregoing stock price performance comparisons shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this graph by reference, and
shall not otherwise be deemed filed under such acts.
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will not make or endorse any predictions as to future stock
performance.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, no executive officer of the Company served as (i) a
member of the compensation committee (or other board committee performing
equivalent functions or, in the absence of any such committee, the entire board
of directors) of another entity, one of whose executive officers served on the
Board of Directors of the Company, or (ii) a director of another entity, one of
whose executive officers served on the Board of Directors of the Company or its
subsidiaries.
During fiscal 1996, no member of the compensation committee (or board
committee performing equivalent functions) (i) was an officer or employee of the
Company, (ii) was formerly an officer of the Company or (iii) had any business
relationship or conducted any transactions with the Company, other than the
relationship disclosed under "Certain Relationships and Other Transactions"
involving Mr. Womack's position as Chairman of the Board of UPB.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than 10%
of the Common Stock, to file initial reports of ownership and reports of changes
in ownership (Forms 3, 4, and 5) of Common Stock with the Securities and
Exchange Commission (the "SEC") and the New York Stock Exchange. Officers,
directors and greater than 10% stockholders are required by SEC regulation to
furnish the Company with copies of all such forms that they file.
To the Company's knowledge, based solely on the Company's review of the
copies of such reports received by the Company and on written representations by
certain reporting persons that no reports on Form 5 were required, the Company
believes that during the fiscal year ended December 31, 1996, all Section 16(a)
filing requirements applicable to its officers, directors and 10% stockholders
were complied with.
EMPLOYMENT AGREEMENTS
The Company has entered into employment contracts with each of Messrs.
Zepernick, Belk, Reeves, Morgan and others. The contracts with Messrs.
Zepernick, Belk, Reeves and Morgan are for continuous three-year terms and
provide for annual salaries of $250,000, $200,000, $200,000 and $200,000
respectively, plus other employee benefits. In the event of a change of control
of the Company, such employees may be entitled to the then remaining benefits
under the agreements.
CERTAIN RELATIONSHIPS AND OTHER TRANSACTIONS
Simultaneously with the Company's acquisition of its Main Pass 69, South
Pass 24 and South Pass 27 fields, and in consideration of its efforts in
consummating the acquisition of such fields, Sable Minerals, Inc. ("Sable"), was
granted a non-cost bearing overriding royalty averaging 0.9% net revenue
interest in the fields by the owner of a minority interest in such fields. Sable
is a corporation owned by James C. Flores as a holding company with other Flores
family oil and gas, security and ranching assets. The royalty interest was
reserved out of and burdens only such minority interest, which was acquired by
the Company in December 1994. During 1996, $1,430,089 was paid to Sable with
respect to such interest.
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<PAGE>
During 1996, the Company purchased a working interest ownership in a field
where the Company had an existing working interest from David J. Morgan for
$188,026.
During 1996, the Company paid the father of Mr. Flores $110,565 for various
geological consulting services.
During 1994, the Company obtained a loan from Union Planters Bank ("UPB")
in connection with the purchase of a seaplane. During 1995, Mr. Flores was named
a member of the UPB Board of Directors and Mr. Womack, who is Chairman of the
UPB Board of Directors, was named a member of the Board of Directors of the
Company. The loan was made to the Company for the amount of $132,500, bearing
interest at the Wall Street Prime rate. The outstanding principal balance plus
accrued interest at December 31, 1996, was $92,133. In addition, UPB is a lender
under the syndicate under the Company's revolving credit facility. Effective
December 31, 1996, Mr. Flores resigned as a member of the Board of Directors of
Union Planters Bank. On February 10, 1997, the balance of the loan was repaid in
full.
PROPOSAL NUMBER 2:
APPROVAL OF AUDITORS
The Board of Directors has appointed the firm of Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year ending December 31,
1997, subject to ratification by the Company's stockholders. Arthur Andersen
LLP has served as the Company's independent public accountants since November
1993. Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting of Stockholders and will have an opportunity to make a statement,
if they desire to do so, and to respond to appropriate questions from those
attending the meeting.
The affirmative vote of holders of a majority of the shares of Common Stock
entitled to vote in person or by proxy at the 1997 Annual Meeting of
Stockholders is required to ratify the appointment of Arthur Andersen LLP as the
Company's independent public accountants for fiscal 1997.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF ARTHUR ANDERSEN LLP'S APPOINTMENT, AND PROXIES EXECUTED AND RETURNED WILL BE
SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
PROPOSAL NO. 3:
APPROVAL OF 1996 LONG-TERM INCENTIVE PLAN
On December 4, 1996, the Compensation Committee of the Board of Directors
of the Company adopted, subject to approval of the shareholders of the Company,
the Flores & Rucks, Inc. 1996 Long-Term Incentive Plan (the "Plan"). The purpose
of the Plan is to promote the interest of the Company by encouraging employees
of the Company, its subsidiaries and affiliated entities and directors to
acquire or increase their equity interest in the Company and to provide a means
whereby employees may develop a sense of proprietorship and personal involvement
in the development and financial success of the Company, and to encourage them
to remain with and devote their best efforts to the business of the Company,
thereby advancing the interest of the Company and its stockholders. The Plan is
also contemplated to enhance the ability of the Company, its subsidiaries and
affiliated entities to attract and retain the services of individuals who are
essential for the growth and profitability of the Company. The terms of the Plan
are described below, and the Plan is set forth in its entirety as Appendix A
hereto.
The Plan provides for the grant of stock options (the "Options") to
purchase 2,000 shares of the Company's Common Stock (the "Common Stock") to each
person who is a non-employee director who is elected or appointed to
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<PAGE>
the board for the first time after the effective date of the Plan, as of the
date of his or her election or appointment and without the exercise of the
discretion of any person or persons. As of the date of the annual meeting of
the stockholders of the Company (the "Annual Meeting") in each year that the
Plan is in effect, each director who is in office immediately after such meeting
and who is not then entitled to receive an option pursuant to the discretionary
provisions of the Plan shall receive, without the exercise of the discretion of
any person or persons, Options exercisable for 2,000 shares of the Common Stock.
The Options granted to non-employee directors under the Plan shall become
exercisable for 33-1/3% of the shares covered thereby on the first annual
meeting following the date of the grant, and thereafter for an additional
33-1/3% of the shares covered thereby on each of the second and third annual
meetings following the date of grant. The purchase price of shares covered under
an Option granted to a non-employee director shall be the fair market value of a
share on the date of grant. To the extent that the right to exercise an Option
has accrued and is in effect, the Option may be exercised in full and at one
time or in part from time to time by giving written notice, signed by the
optionee exercising the Option, to the Company, stating the number of shares
with respect to which the Option is being exercised, accompanied by payment in
full for such shares, which payment may be in cash, already owned shares, a
"cashless-broker" exercise (through procedures approved by the Company) or any
combination thereof, having a fair market value on the exercise date equal to
the relevant exercise price in which payment of the exercise price with respect
thereto may be made or deemed to have been made; provided, however, that (i) no
Option shall be exercisable after 10 years from the date on which it was
granted, and (ii) there shall be no such exercise at any one time for fewer than
100 shares or for all of the remaining shares then purchasable by the optionee
exercising the option, if fewer than 100 shares. Each Option shall expire 10
years from the date of grant thereof, subject to earlier termination as follows:
Options, to the extent exercisable as of the date the director optionee ceases
to serve as director of the Company, must be exercised within 3 months of such
date unless such event results from death, disability or retirement, in which
case all outstanding Options held by such director may be exercised in full by
the optionee, the optionee's legal representative, heir, or devisee, as the case
may be, within 2 years from the date of death, disability or retirement;
provided, however, that no such event shall extend the normal expiration date of
such Options. Options not exercisable on termination as provided above shall
automatically be cancelled on termination.
Other than awards granted to non-employee directors pursuant to the Plan,
any employee of the Company shall be eligible to be designated as a Plan
participant. However, no employee may receive Options and/or stock appreciation
rights during the term of the Plan that, in the aggregate, are with respect to
more than 33-1/3% of all shares that may be made subject to awards under the
Plan.
Subject to the provisions of the Plan, the Compensation Committee of the
board of directors shall have the authority to determine the employees to whom
Options, Stock Appreciation Rights, Restricted Stock, Performance Awards, Bonus
Shares, Phantom Shares, or Cash Awards shall be granted, the number of shares to
be covered by each Option or Stock Appreciation Right Award, the number of
restricted shares to be granted, the amount of a Performance Award or Cash
Award, and all other terms, conditions, and limitations related to each type of
award.
The Plan is administered by the Compensation Committee of the Board. All
decisions as to interpretation and application of the Plan, or as to Options
granted thereunder, are subject to determination by the Board, which
determination is final and binding.
The Board may amend, alter, suspend, discontinue or terminate the Plan
without the consent of any stockholder, participant, other holder or beneficiary
of an award, or other person; provided, however, notwithstanding any other
provision of the Plan or any award agreement, without the approval of the
stockholders of the Company. No such amendment, alteration, suspension,
discontinuation, or termination shall be made that would increase the total
number of shares available for awards under the Plan. Unless the term of the
Plan has been extended or earlier terminated, the Plan will terminate on
November 6, 2006.
Other than the automatic annual Option grants to non-employee directors
described above (which are subject to the limitation of the number of shares of
Common Stock available under the Plan), it is not possible to determine at
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<PAGE>
this time the number of shares of Common Stock covered by awards that may be
granted in the future to any employee, director or group thereof.
FEDERAL INCOME TAX CONSEQUENCES WITH RESPECT TO OPTIONS
The following summary is based on the applicable provisions of the Code as
currently in effect and the income tax regulations and proposed income tax
regulations thereunder. The Plan is not qualified under Section 401(a) of the
Code.
Nonqualified Options. No federal income tax is imposed on the Optionee
upon the grant of a Nonqualified Option. Upon the exercise of a Nonqualified
Option, the Optionee will generally be treated as receiving compensation taxable
as ordinary income in the year of exercise, in an amount equal to the excess of
the fair market value of the shares of Common Stock at the time of exercise over
the exercise price paid for such shares of Common Stock. Upon a subsequent
disposition of the shares of Common Stock received upon exercise of a
Nonqualified Option, any difference between the fair market value of the shares
of Common Stock at the time of exercise and the amount realized on the
disposition would be treated as long-term or short-term capital gain or loss,
depending on the holding period of the shares. Upon an Optionee's exercise of a
Nonqualified Option, the Company may claim a deduction for compensation paid at
the same time and in the same amount as income is recognized by the Optionee, if
and to the extent that the amount is an ordinary expense and satisfies the test
of reasonable compensation.
Incentive Stock Options. No federal income tax is imposed on the Optionee
upon the grant of an Incentive Stock Option. If the Optionee does not dispose of
shares acquired pursuant to his exercise of an Incentive Stock Option within two
years from the date the Option was granted or within one year after the shares
were transferred to him (the "Holding Period"), except for the item of tax
adjustment described below under "Alternative Minimum Tax," no income would be
recognized by the Optionee by reason of his exercise of the Option, and the
difference between the Option price and the amount realized upon a subsequent
disposition of the shares of Common Stock would be treated as a long-term
capital gain or loss. In such event, the Company would not be entitled to any
deduction in connection with the grant or exercise of the Option or the
disposition of the shares of Common Stock so acquired.
If, however, an Optionee disposes of shares of Common Stock acquired
pursuant to his exercise of an Incentive Stock Option before the Holding Period
has expired, the Optionee would be treated as having received, at the time of
disposition, compensation taxable as ordinary income. In such event the Company
may claim a deduction for compensation paid at the same time and in the same
amount as compensation is treated as being received by the Optionee. The amount
treated as compensation is the excess of the fair market value of the shares of
Common Stock at the time of exercise (or, in the case of a sale in which a loss,
if sustained, would be recognized, the amount realized on the sale, if less)
over the Option price; any amount realized in excess of the fair market value of
the shares of Common Stock at the time of exercise would be treated as long-term
or short-term capital gain, depending on the holding period of the shares of
Common Stock.
Alternative Minimum Tax. The excess of the fair market value of shares of
Common Stock acquired upon exercise of an Incentive Stock Option over the
exercise price paid for such shares is an adjustment to alternative minimum
taxable income for the Optionee's taxable year in which such exercise occurs
(unless the shares of Common Stock are disposed of in the same taxable year).
Payment of Option Price in Shares. In the case of a Nonqualified Option,
if the Option price is paid by the delivery of shares of Common Stock previously
acquired by the Optionee having a fair market value equal to the Option price
("Previously Acquired Shares"), gain or loss would not be recognized on the
exchange of the Previously Acquired Shares for a like number of shares of Common
Stock pursuant to such an exercise of the Option, and the Optionee's basis in
the number of shares of Common Stock received equal to the Previously Acquired
Shares would be the same as his basis in the Previously Acquired Shares. In
addition, the Optionee would be treated as receiving compensation taxable as
ordinary income equal to fair market value at the time of exercise of the shares
of Common Stock received
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<PAGE>
in excess of the number of Previously Acquired Shares, and the Optionee's basis
in such excess shares of Common Stock would generally be equal to their fair
market value at the time of exercise.
In the case of an Incentive Stock Option, the federal income tax
consequences to the Optionee of the payment of the Option price with Previously
Acquired Shares will depend on the nature of the Previously Acquired Shares. If
the Previously Acquired Shares were acquired through the exercise of a qualified
stock option, an Incentive Stock Option or an option granted under an employee
stock purchase plan ("Statutory Option") and if such Previously Acquired Shares
are being transferred prior to the expiration of the applicable minimum
statutory holding period, the transfer would be treated as a disqualifying
disposition of the Previously Acquired Shares. If the Previously Acquired Shares
were acquired other than pursuant to the exercise of a Statutory Option, or were
acquired pursuant to the exercise of a Statutory Option but have been held for
the applicable minimum statutory holding period, no gain or loss should be
recognized on the exchange of the Previously Acquired Shares. In either case,
(i) the Optionee's basis in the number of shares of Common Stock acquired equal
to the number of Previously Acquired Shares would be the same as his basis in
the Previously Acquired Shares, increased by any income recognized to the
Optionee upon the disqualifying disposition of the Previously Acquired Shares,
(ii) the Optionee's basis in the shares of Common Stock acquired in excess of
the number of Previously Acquired shares would be zero and (iii) the other
incentive stock option rules would apply. Upon a subsequent disqualifying
disposition of the shares of Common Stock so received, the shares of Common
Stock with the lowest basis would be treated as disposed of first.
Additional Tax Consequences. In the event that the acceleration of vesting
or any payment, distribution or issuance of stock is subject to the golden
parachute 20% excise tax pursuant to Section 4999(a) of the Code, the
participant whose benefit is subject to such tax is entitled to receive a gross-
up payment from the Company so that the amount of the "net" benefit received by
such participant shall equal the amount of the benefit that would have been
received in the absence of a golden parachute tax. Section 280G of the Code
prevents the deductibility by the Company of amounts subject to the excise tax
under Code Section 4999.
The affirmative vote of holders of a majority of the shares of Common Stock
entitled to vote in person or by proxy at the 1997 Annual Meeting of
Stockholders is required to ratify and approve the 1996 Long-Term Incentive
Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
AND APPROVAL OF THE 1996 LONG-TERM INCENTIVE PLAN, AND PROXIES EXECUTED AND
RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
PROPOSAL NUMBER 4:
AMENDMENT OF THE CERTIFICATE OF
INCORPORATION TO CHANGE THE CORPORATE NAME
The Board of Directors of the Company has adopted, and is recommending to
the stockholders for their approval at the Annual Meeting, a resolution to amend
Article 1 of the Company's Certificate of Incorporation to change the corporate
name. The applicable text of the Board's resolution is as follows:
"RESOLVED, that Article 1 of the Company's Certificate of
Incorporation be amended, effective as soon as practicable after the
1997 Annual Meeting of Stockholders, to read in its entirety as follows:
1. The name of the Corporation is Ocean Energy, Inc."
In the judgment of the Board of Directors, the change of corporate name is
desirable in view of the change in the ownership structure of the Company to a
more widely held corporation and the fact that Mr. Rucks is no longer involved
in the day-to-day operations of the Company.
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<PAGE>
If the amendment is adopted, stockholders will not be required to exchange
outstanding stock certificates for new certificates.
The affirmative vote of a majority of the shares of Common Stock entitled
to vote in person or by proxy at the 1997 Annual Meeting of Stockholders is
required to approve the amendment of the Certificate of Incorporation to change
the corporate name. If approved by the stockholders, the amendment to Article I
will become effective upon the filing of a Certificate of Amendment to the
Company's Certificate of Incorporation with the Secretary of State of the State
of Delaware, which filing is expected to take place shortly after the 1997
Annual Meeting of Stockholders. However, the Board of Directors will be
authorized, without a further vote of the stockholders, to abandon the name
change and determine not to file the Certificate of Amendment if the Board
concludes that such action would be in the best interest of the Company and its
stockholders. If this proposal is not approved by the stockholders, then the
Certificate of Amendment will not be filed.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE
CORPORATE NAME, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS
CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
PROPOSALS OF STOCKHOLDERS
Any proposal of a stockholder intended to be presented at the 1998 Annual
Meeting must be received at the Company's principal executive offices no later
than January 13, 1998, if the proposal is to be considered for inclusion in the
Company's proxy statement relating to such meeting. In addition, the Company
has adopted Bylaw provisions which require that nominations of persons for
election to the Board of Directors and the proposal of business by stockholders
at an annual meeting of stockholders must fulfill certain requirements which
include the requirement that notice of such nominations or proposals must be
delivered to the Secretary of the Company not less than 80 days prior to the
annual meeting of stockholders; provided, however, that in the event that less
than 90 days' notice or prior public disclosure of the date of the meeting is
given or made to stockholders of the Company, notice by the stockholder of the
nomination or proposal to be timely must be so received not later than the close
of business on the tenth day following the date on which such notice of the date
of the annual meeting of stockholders was mailed or such public disclosure made.
17
<PAGE>
FINANCIAL INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING ANY FINANCIAL
STATEMENTS AND SCHEDULES AND EXHIBITS THERETO, MAY BE OBTAINED WITHOUT CHARGE BY
WRITTEN REQUEST TO ROBERT L. BELK, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER, FLORES & RUCKS, INC., 8440 JEFFERSON HIGHWAY, SUITE 420, BATON ROUGE,
LOUISIANA 70809.
By Order of the Board of Directors
Robert K. Reeves
Senior Vice President,
General Counsel and Secretary
May 13, 1997
Baton Rouge, Louisiana
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<PAGE>
APPENDIX A
FLORES & RUCKS, INC.
1996 LONG-TERM INCENTIVE PLAN
SECTION 1. Purpose of the Plan.
The Flores & Rucks, Inc. 1996 Long-Term Incentive Plan (the "Plan") is intended
to promote the interests of Flores & Rucks, Inc., a Delaware corporation (the
"Company"), by encouraging employees of the Company, its subsidiaries and
affiliated entities and Directors (as defined below) to acquire or increase
their equity interest in the Company and to provide a means whereby employees
may develop a sense of proprietorship and personal involvement in the
development and financial success of the Company, and to encourage them to
remain with and devote their best efforts to the business of the Company thereby
advancing the interests of the Company and its stockholders. The Plan is also
contemplated to enhance the ability of the Company, its subsidiaries and
affiliated entities to attract and retain the services of individuals who are
essential for the growth and profitability of the Company.
SECTION 2. Definitions.
As used in the Plan, the following terms shall have the meanings set forth
below:
"Affiliate" shall mean (i) any entity that, directly or through one or more
intermediaries, is controlled by the Company and (ii) any entity in which
the Company has a significant equity interest, as determined by the
Committee.
"Award" shall mean any Option, Stock Appreciation Right, Restricted Stock,
Performance Award, Phantom Shares, Bonus Shares or Cash Award.
"Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Bonus Shares" shall mean an award of Shares granted pursuant to Section
6(e) of the Plan.
"Cash Award" shall mean an award payable in cash granted pursuant to
Section 6(g) of the Plan.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations thereunder.
"Committee" shall mean the Compensation Committee of the Board.
"Director" shall mean a member of the Board who is not also an Employee.
"Employee" shall mean any employee of the Company or an Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
<PAGE>
"Fair Market Value" shall mean, with respect to Shares, the closing price
of a Share quoted on the Composite Tape, or if the Shares are not listed on
the New York Stock Exchange, on the principal United States securities
exchange registered under the Exchange Act on which such stock is listed,
or if the Shares are not listed on any such stock exchange, the last sale
price, or if none is reported, the highest closing bid quotation on the
National Association of Securities Dealers, Inc., Automated Quotations
System or any successor system then in use on the Date of Grant, or if none
are available on such day, on the next preceding day for which are
available, or if no such quotations are available, the fair market value on
the date of grant of a Share as determined in good faith by the Board. In
the event the Shares are not publicly traded at the time a determination of
its fair market value is required to be made hereunder, the determination
of fair market value shall be made in good faith by the Committee.
"Incentive Stock Option" or "ISO" shall mean an option granted under
Section 6(a) of the Plan that is intended to qualify as an "incentive stock
option" under Section 422 of the Code or any successor provision thereto.
"Non-Qualified Stock Option" or "NQO" shall mean an option granted under
Sections 6(a) or 6(h) of the Plan that is not intended to be an Incentive
Stock Option.
"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" shall mean any individual granted an Award under the Plan.
"Performance Award" shall mean any right granted under Section 6(d) of the
Plan.
"Person" shall mean individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or
political subdivision thereof or other entity.
"Phantom Shares" shall mean an Award of the right to receive Shares issued
at the end of a Restricted Period which is granted pursuant to Section 6(f)
of the Plan.
"Restricted Period" shall mean the period established by the Committee with
respect to an Award during which the Award either remains subject to
forfeiture or is not exercisable by the Participant.
"Restricted Stock" shall mean any Share, prior to the lapse of restrictions
thereon, granted under Sections 6(c) or 6(h) of the Plan.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect from
time to time.
"SEC" shall mean the Securities and Exchange Commission, or any successor
thereto.
"Shares" or "Common Shares" or "Common Stock" shall mean the common stock
of the Company, $0.01 par value, and such other securities or property as
may become the subject of Awards of the Plan.
"Stock Appreciation Right" or "Right" shall mean any right to receive the
appreciation of Shares granted under Section 6(b) of the Plan.
"Substitute Award" shall mean Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by (i) a company
acquired by the Company or one or more of its Affiliates, or (ii) a company
with which the Company or one or more of its Affiliates combines.
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SECTION 3. Administration.
The Plan shall be administered by the Committee. A majority of the Committee
shall constitute a quorum, and the acts of the members of the Committee who are
present at any meeting thereof at which a quorum is present, or acts unanimously
approved by the members of the Committee in writing, shall be the acts of the
Committee. Subject to the terms of the Plan and applicable law, and in addition
to other express powers and authorizations conferred on the Committee by the
Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to an
eligible Employee; (iii) determine the number of Shares to be covered by, or
with respect to which payments, rights, or other matters are to be calculated in
connection with, Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, Shares, other securities, other Awards or other
property, or canceled, forfeited, or suspended and the method or methods by
which Awards may be settled, exercised canceled, forfeited, or suspended; (vi)
determine whether, to what extent, and under what circumstances cash, Shares,
other securities, other Awards, other property, and other amounts payable with
respect to an Award shall be deferred either automatically or at the election of
the holder thereof or of the Committee; (vii) interpret and administer the Plan
and any instrument or agreement relating to, or Award made under, the Plan;
(viii) establish, amend, suspend, or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (ix) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of the
Plan. Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee, may
be made at any time and shall be final, conclusive, and binding upon all
Persons, including the Company, any Affiliate, any Participant, any holder or
beneficiary of any Award, any stockholder and any Employee.
SECTION 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in Section 4(c), the
number of Shares with respect to which Awards may be granted under the Plan
shall be 1,000,000. If any Shares covered by an Award granted under the
Plan, or to which such an Award relates, are forfeited, or if an Award
otherwise terminates or is canceled without the delivery of Shares or of
other consideration, then the Shares covered by such Award, or to which
such Award relates, or the number of Shares otherwise counted against the
aggregate number of Shares with respect to which Awards may be granted, to
the extent of any such forfeiture, termination or cancellation, shall again
be, or shall become, to the extent permissible under Rule 16b-3, Shares
with respect to which Awards may be granted.
(b) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant
to an Award may consist, in whole or in part, of authorized and unissued
Shares or of treasury Shares.
(c) Adjustments. In the event that the Committee determines that any dividend
or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the
Plan, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number and type of Shares (or other securities
or property) with respect to which Awards may be granted, (ii) the
number and type of Shares (or other securities or property) subject to
outstanding Awards, and (iii) the grant or exercise price with respect to
any Award or, if deemed appropriate, make provision for a cash
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payment to the holder of an outstanding Award; provided, in each case, that
with respect to Awards of Incentive Stock Options and Awards intended to
qualify as performance based compensation under Section 162(m)(4)(C) of the
Code, no such adjustment shall be authorized to the extent that such
authority would cause the Plan to violate Section 422(b)(1) of the Code or
would cause such Award to fail to so qualify under Section 162(m) of the
Code, as the case may be, or any successor provisions thereto; and
provided, further, that the number of Shares subject to any Award
denominated in Shares shall always be a whole number.
SECTION 5. Eligibility.
Other than Awards granted to Directors pursuant to Section 6(h) of the Plan, any
Employee shall be eligible to be designated a Participant. However, no Employee
may receive Options and/or Stock Appreciation Rights during the term of the Plan
that, in the aggregate, are with respect to more than 33-1/3% of all Shares that
may be made subject to Awards under the Plan.
SECTION 6. Awards.
(a) Options. Subject to the provisions of the Plan, the Committee shall have
the authority to determine the Employees to whom Options shall be granted,
the number of Shares to be covered by each Option, the purchase price
therefor and the conditions and limitations applicable to the exercise of
the Option, including the following terms and conditions and such
additional terms and conditions, as the Committee shall determine, that are
not inconsistent with the provisions of the Plan.
(i) Exercise Price. The purchase price per Share purchasable under an
Option shall be determined by the Committee at the time each Option is
granted.
(ii) Time and Method of Exercise. The Committee shall determine the time
or times at which an Option may be exercised in whole or in part, and the
method or methods by which, and the form or forms (which may include,
without limitation, cash, already-owned Shares, outstanding Awards, Shares
that would otherwise be acquired upon exercise of the Option, a "cashless-
broker" exercise (through procedures approved by the Company), other
securities or other property, or any combination thereof, having a Fair
Market Value on the exercise date equal to the relevant exercise price) in
which payment of the exercise price with respect thereto may be made or
deemed to have been made.
(iii) Incentive Stock Options. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the provisions of
Section 422 of the Code, or any successor provision, and any regulations
promulgated thereunder. Incentive Stock Options may be granted only to
employees of the Company and its subsidiaries, within the meaning of
Section 424(f) of the Code.
(b) Stock Appreciation Rights. Subject to the provisions of the Plan, the
Committee shall have the authority to determine the Employees to whom Stock
Appreciation Rights shall be granted, the number of Shares to be covered by
each Stock Appreciation Right Award, the grant price thereof and the
conditions and limitations applicable to the exercise thereof. A Stock
Appreciation Right may be granted in tandem with another Award, in addition
to another Award, or freestanding and unrelated to another Award. A Stock
Appreciation Right granted in tandem with or in addition to another Award
may be granted either at the same time as such other Award or at a later
time.
(i) Grant Price. The grant price of a Stock Appreciation Right shall be
determined by the Committee on the date of grant.
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(ii) Other Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine, at or after the
grant of a Stock Appreciation Right, the term, methods of exercise, methods
of settlement, and any other terms and conditions of any Stock Appreciation
Right. Any such determination by the Committee may be changed by the
Committee from time to time and may govern the exercise of Stock
Appreciation Rights granted or exercised prior to such determination as
well as Stock Appreciation Rights granted or exercised thereafter. The
Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it shall deem appropriate.
(c) Restricted Stock. Subject to the provisions of the Plan, the Committee
shall have the authority to determine the Employees to whom Restricted
Stock shall be granted, the number of Shares of Restricted Stock to be
granted to each such Participant, the duration of the Restricted Period
during which, and the conditions, including performance criteria, if any,
under which, the Restricted Stock may be forfeited to the Company, and the
other terms and conditions of such Awards.
(i) Dividends. Dividends paid on Restricted Stock may be paid directly to
the Participant, may be subject to risk of forfeiture and/or transfer
restrictions during any period established by the Committee or sequestered
and held in a bookkeeping cash account (with or without interest) or
reinvested on an immediate or deferred basis in additional shares of Common
Stock, which credit or shares may be subject to the same restrictions as
the underlying Award or such other restrictions, all as determined by the
Committee in its discretion.
(ii) Registration. Any Restricted Stock may be evidenced in such manner as
the Committee shall deem appropriate, including, without limitation, book-
entry registration or issuance of a stock certificate or certificates. In
the event any stock certificate is issued in respect of Restricted Stock
granted under the Plan, such certificate shall be registered in the name of
the Participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted Stock.
(iii) Forfeiture and Restrictions Lapse. Except as otherwise determined
by the Committee or the terms of the Award that granted the Restricted
Stock, upon termination of a Participant's employment (as determined under
criteria established by the Committee) for any reason during the applicable
Restricted Period, all Restricted Stock shall be forfeited by the
Participant and re-acquired by the Company. The Committee may, when it
finds that a waiver would be in the best interests of the Company and not
cause such Award, if it is intended to qualify as performance based
compensation under Section 162(m) of the Code, to fail to so qualify under
Section 162(m) of the Code, waive in whole or in part any or all remaining
restrictions with respect to such Participant's Restricted Stock.
Unrestricted Shares, evidenced in such manner as the Committee shall deem
appropriate, shall be issued to the holder of Restricted Stock promptly
after the applicable restrictions have lapsed or otherwise been satisfied.
(iv) Transfer Restrictions. During the Restricted Period, Restricted Stock
will be subject to the limitations on transfer as provided in Section
6(i)(iii).
(d) Performance Awards. The Committee shall have the authority to determine
the Employees who shall receive a Performance Award, which shall be
denominated as a cash amount at the time of grant and confer on the
Participant the right to receive payment of such Award, in whole or in
part, upon the achievement of such performance goals during such
performance periods as the Committee shall establish with respect to the
Award.
(i) Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the performance
goals to be achieved during any performance period, the
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length of any performance period, the amount of any Performance Award and
the amount of any payment or transfer to be made pursuant to any
Performance Award.
(ii) Payment of Performance Awards. Performance Awards may be paid (in cash
and/or in Shares, in the sole discretion of the Committee) in a lump sum or
in installments following the close of the performance period, in
accordance with procedures established by the Committee with respect to
such Award.
(e) Bonus Shares. The Committee shall have the authority, in its discretion,
to grant Bonus Shares to eligible Employees. Each Bonus Share shall
constitute a transfer of an unrestricted Share to the Participant, without
other payment therefor, as additional compensation for the Participant's
services to the Company.
(f) Phantom Shares. The Committee shall have the authority to grant Awards of
Phantom Shares to eligible Employees upon such terms and conditions as the
Committee may determine.
(i) Terms and Conditions. Each Phantom Share Award shall constitute an
agreement by the Company to issue or transfer a specified number of Shares
or pay an amount of cash equal to a specified number of Shares, or a
combination thereof to the Participant in the future, subject to the
fulfillment during the Restricted Period of such conditions, including
performance objectives, if any, as the Committee may specify at the date of
grant. During the Restricted Period, the Participant shall not have any
right to transfer any rights under the subject Award, shall not have any
rights of ownership in the Phantom Shares and shall not have any right to
vote such shares.
(ii) Dividends. Any Phantom Share award may provide that any or all
dividends or other distributions paid on Shares during the Restricted
Period be credited in a cash bookkeeping account (without interest) or that
equivalent additional Phantom Shares be awarded, which account or shares
may be subject to the same restrictions as the underlying Award or such
other restrictions as the Committee may determine.
(g) Cash Awards. The Committee shall have the authority to determine the
Employees to whom Cash Awards shall be granted, the amount, and the terms
or conditions, if any, as additional compensation for the Employee's
services to the Company or its Affiliates. A Cash Award may be granted
(simultaneously or subsequently) separately or in tandem with another Award
and may entitle a Participant to receive a specified amount of cash from
the Company upon such other Award becoming taxable to the Participant,
which cash amount may be based on a formula relating to the anticipated
taxable income associated with such other Award and the payment of the Cash
Award.
(h) Granting of Options to Directors. Each Non-employee Director who is
elected or appointed to the Board for the first time after the effective
date of the Plan shall receive, as of the date of his or her election or
appointment and without the exercise of the discretion of any person or
persons, a Non-Qualified Stock Option exercisable for 2,000 Shares (subject
to adjustment in the same manner as provided in Section 7 hereof with
respect to Shares subject to Options then outstanding). As of the date of
the annual meeting of the stockholders of the Company ("Annual Meeting") in
each year that the Plan is in effect, each Director who is in office
immediately after such meeting and who is not then entitled to receive an
Option pursuant to the preceding provisions of this Section 6(h) shall
receive, without the exercise of the discretion of any person or persons, a
Non-Qualified Stock Option exercisable for 2,000 Shares (subject to
adjustment in the same manner as provided in Section 7 hereof with respect
to shares of Stock subject to Options then outstanding).
(i) Other Terms and Conditions. The following provisions are applicable to
Options granted pursuant to this Section 6(h):
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A. Subject to the following provisions, an Option granted pursuant to
Section 6(h) shall become exercisable for 33 1/3% of the Shares covered
thereby on the first Annual Meeting following the date of grant, and
thereafter, for an additional 33 1/3% of the Shares covered thereby on each
of the second and third Annual Meetings following the date of grant.
B. The purchase price of a Share covered under an Option granted under
this Section 6(h) shall be the Fair Market Value of a Share on the date of
grant.
C. To the extent that the right to exercise an Option has accrued and is
in effect, the Option may be exercised in full at one time or in part from
time to time by giving written notice, signed by the optionee exercising
the Option, to the Company, stating the number of Shares with respect to
which the Option is being exercised, accompanied by payment in full for
such Shares, which payment may be in cash, already-owned Shares, a
"cashless-broker" exercise (through procedures approved by the Company), or
any combination thereof, having a Fair Market Value on the exercise date
equal to the relevant exercise price in which payment of the exercise price
with respect thereto may be made or deemed to have been made; provided
however, that (i) no Option shall be exercisable after ten (10) years from
the date on which it was granted, and (ii) there shall be no such exercise
at any one time for fewer than one hundred (100) Shares or for all of the
remaining Shares then purchasable by the optionee exercising the Option, if
fewer than one hundred (100) Shares.
D. Each Option shall expire ten (10) years from the date of grant thereof,
subject to earlier termination as follows: Options, to the extent
exercisable as of the date a Director optionee ceases to serve as a
director of the Company, must be exercised within three (3) months of such
date unless such event results from death, disability or retirement, in
which case all outstanding Options held by such Director may be exercised
in full by the optionee, the optionee's legal representative, heir or
devisee, as the case may be, within two (2) years from the date of death,
disability or retirement; provided, however, that no such event shall
extend the normal expiration date of such Options. Options not exercisable
on termination as provided above shall be automatically canceled on
termination.
E. Upon exercise of the Option, delivery of a certificate for fully paid
and nonassessable Shares shall be made at the corporate office of the
Company to the optionee exercising the Option either at such time during
ordinary business hours after fifteen (15) days but not more than thirty
(30) days from the date of receipt of the notice by the Company as shall be
designated in such notice, or at such time, place and manner as may be
agreed upon by the Company and the optionee exercising the Option.
(ii) Number of Available Shares. In the event that the number of Shares
available for grants under the Plan is insufficient to make all grants
provided for in this Section 6(h) hereby made on the applicable date, then
all Directors who are entitled to a grant on such date shall share ratably
in the number of Shares then available for grant under the Plan, and shall
have no right to receive a grant with respect to the deficiencies in the
number of available Shares and the grants under this Section 6(h) shall
terminate.
(i) General.
(i) Awards May Be Granted Separately or Together. Awards to Employees may,
in the discretion of the Committee, be granted either alone or in addition
to, in tandem with, or in substitution for any other Award granted under
the Plan or any award granted under any other plan of the Company or any
Affiliate. Awards granted in addition to or in tandem with other Awards or
awards granted under any other plan of the
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Company or any Affiliate may be granted either at the same time as or at a
different time from the grant of such other Awards or awards.
(ii) Forms of Payment by Company Under Awards. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise or payment of
an Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other securities,
other Awards or other property, or any combination thereof, and may be made
in a single payment or transfer, in installments, or on a deferred basis,
in each case in accordance with rules and procedures established by the
Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest on
installment or deferred payments.
(iii) Limits on Transfer of Awards.
(A) Each Award, and each right under any Award, shall be exercisable only
by the Participant during the Participant's lifetime, or, if permissible
under applicable law, by the Participant's guardian or legal representative
or by a transferee receiving such Award pursuant to a qualified domestic
relations order (a "QDRO") as determined by the Committee.
(B) No Award and no right under any such Award may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a
Participant otherwise than by will or by the laws of descent and
distribution (or, in the case of Restricted Stock, to the Company) or
pursuant to a QDRO and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Affiliate.
(C) Notwithstanding anything in the Plan to the contrary, to the extent
specifically provided by the Committee with respect to a grant, an Award
other than an Incentive Stock Option may be transferred to immediate family
members or related family trusts, limited partnerships or similar entities
or on such terms and conditions as the Committee may establish.
(iv) Term of Awards. The term of each Award (other than pursuant to
Section 6(h)) shall be for such period as may be determined by the
Committee; provided, that in no event shall the term of any Award exceed a
period of ten (10) years from the date of its grant.
(v) Share Certificates. All certificates for Shares or other securities of
the Company or any Affiliate delivered under the Plan pursuant to any Award
or the exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the Plan or
the rules, regulations, and other requirements of the SEC, any stock
exchange upon which such Shares or other securities are then listed, and
any applicable Federal or state laws, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate reference
to such restrictions.
(vi) Consideration for Grants. Awards may be granted for no cash
consideration or for such consideration as the Committee determines
including, without limitation, such minimal cash consideration as may be
required by applicable law.
(vii) Delivery of Shares or other Securities and Payment by Participant of
Consideration. No Shares or other securities shall be delivered pursuant to
any Award until payment in full of any amount required to be paid pursuant
to the Plan or the applicable Award Agreement is received by the Company.
Such payment
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may be made by such method or methods and in such form or forms as the
Committee shall determine, including, without limitation, cash, Shares,
other securities, other Awards or other property, withholding of Shares,
cashless exercise with simultaneous sale, or any combination thereof;
provided that the combined value, as determined by the Committee, of all
cash and cash equivalents and the Fair Market Value of any such Shares or
other property so tendered to the Company, as of the date of such tender,
is at least equal to the full amount required to be paid pursuant to the
Plan or the applicable Award Agreement to the Company.
(viii) Performance Criteria and Payment Limits. The Committee shall
establish performance goals applicable to those Awards (other than Options
and Rights) the payment of which is intended by the Committee to qualify as
"performance-based compensation" as described in Section 162(m)(4)(C) of
the Code. Until changed by the Committee, the performance goals shall be
based upon the attainment of such target levels of net income, cash flows,
reserve additions or revisions, acquisitions, total capitalization, total
or comparative shareholder return, assets, exploration successes,
production volumes, findings and development costs, costs reductions and
savings, reportable incidents in safety or environmental matters, return on
equity, profit margin or sales, and/or earnings per share as may be
specified by the Committee. Which factor or factors to be used with
respect to any grant, and the weight to be accorded thereto if more than
one factor is used, shall be determined by the Committee at the time of
grant. The maximum amount of compensation that may be paid to any
Participant with respect to any single Performance Award or Cash Award in
any calendar year shall be $1.5 million. With respect to any Restricted
Stock Award, Phantom Stock Award, or Cash Award granted in tandem with, and
expressed as a percentage of, a Share-denominated Award, which is intended
to qualify as "performance-based compensation", the maximum payment to any
Participant with respect to such Award in any calendar year shall be an
amount (in cash and/or in Shares) equal to the Fair Market Value of the
number of Shares subject to such Award.
SECTION 7. Amendment and Termination.
Except to the extent prohibited by applicable law and unless otherwise expressly
provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan without the consent of any stockholder,
Participant, other holder or beneficiary of an Award, or other Person;
provided, however, notwithstanding any other provision of the Plan or any
Award Agreement, without the approval of the stockholders of the Company no
such amendment, alteration, suspension, discontinuation, or termination
shall be made that would increase the total number of Shares available for
Awards under the Plan, except as provided in Section 4(c) of the Plan.
(b) Amendments to Awards. The Committee may waive any conditions or rights
under, amend any terms of, or alter any Award theretofore granted (other
than Awards granted under Section 6(h)), provided no change, other than
pursuant to Section 7(c), in any Award shall reduce the benefit to
Participant without the consent of such Participant. Notwithstanding the
foregoing, with respect to any Award intended to qualify as performance-
based compensation under Section 162(m) of the Code, no adjustment shall be
authorized to the extent such adjustment would cause the Award to fail to
so qualify.
(c) Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 4(c) of the Plan) affecting the
Company, any Affiliate, or the financial statements of the Company or any
Affiliate, or of changes in applicable laws, regulations, or accounting
principles, whenever
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the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
Notwithstanding the foregoing, with respect to any Award intended to
qualify as performance-based compensation under Section 162(m) of the Code,
no adjustment shall be authorized to the extent such adjustment would cause
the Award to fail to so qualify.
SECTION 8. Change in Control.
Notwithstanding any other provision of this Plan to the contrary, in the event
of a Change in Control of the Company, all outstanding Awards granted more than
six months prior to the date of the Change in Control automatically shall become
fully vested on such Change in Control, all restrictions, if any, with respect
to such Awards shall lapse, and all performance criteria, if any, with respect
to such Awards shall be deemed to have been met in full. For purposes of this
Plan, a "Change in Control" shall be deemed to occur:
(i) if any person, other than James C. Flores, William W. Rucks, IV or their
affiliates (as such term is used in sections 13(d) and 14(d)(2) of the
Exchange Act), is or becomes the "beneficial owner" (as defined in Rule 13d-
3 of the Exchange Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities, (ii) upon the first purchase of the Company's common
stock pursuant to a tender or exchange offer (other than a tender or
exchange offer made by the Company),
(iii) upon the approval by the Company's stockholders of a merger or
consolidation, a sale or disposition of all or substantially all of the
Company's assets or a plan of liquidation or dissolution of the Company, or
(iv) if, during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election or nomination
for the election by the Company's stockholders of each new director was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period.
SECTION 9. General Provisions.
(a) No Rights to Awards. No Employee, Participant or other Person shall have
any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or
beneficiaries of Awards. The terms and conditions of Awards need not be
the same with respect to each recipient.
(b) Withholding. The Company or any Affiliate is authorized to withhold from
any Award, from any payment due or transfer made under any Award or under
the Plan or from any compensation or other amount owing to a Participant
the amount (in cash, Shares, other securities, Shares that would otherwise
be issued pursuant to such Award, other Awards or other property) of any
applicable taxes payable in respect of an Award, its exercise, the lapse of
restrictions thereon, or any payment or transfer under an Award or under
the Plan and to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for the payment of such taxes.
(c) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company
or any Affiliate. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any
Award Agreement.
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(d) Governing Law. The validity, construction, and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Delaware and applicable Federal
law.
(e) Severability. If any provision of the Plan or any Award is or becomes or
is deemed to be invalid, illegal, or unenforceable in any jurisdiction or
as to any Person or Award, or would disqualify the Plan or any Award under
any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it
cannot be construed or deemed amended without , in the determination of the
Committee, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, Person or Award and
the remainder of the Plan and any such Award shall remain in full force and
effect.
(f) Other Laws. The Committee may refuse to issue or transfer any Shares or
other consideration under an Award if, acting in its sole discretion, it
determines that the issuance of transfer or such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b) of the Exchange Act, and
any payment tendered to the Company by a Participant, other holder or
beneficiary in connection with the exercise of such Award shall be promptly
refunded to the relevant Participant, holder or beneficiary.
(g) No Trust or Fund Created. Neither the Plan nor the Award shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any
other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any general unsecured creditor of the
Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be cancelled, terminated, or otherwise
eliminated.
(i) Headings. Headings are given to the Sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 10. Effective Date of the Plan.
The Plan shall be effective as of the date of its approval by the Board,
provided the Plan is subsequently approved by the stockholders of the Company
within 12 months thereafter.
SECTION 11. Term of the Plan.
No Award shall be granted under the Plan ten (10) years after November 6, 2006.
However, unless otherwise expressly provided in the Plan or in an applicable
Award Agreement, any Award theretofore granted may, and the authority of the
Board or the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award or to waive any conditions or rights under any such
Award shall, extend beyond such date.
-11-
<PAGE>
FLORES & RUCKS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS JUNE 17, 1997
P The undersigned hereby constitutes and appoints James C. Flores and Robert
L. Belk and each or either of them, his true and lawful attorneys and
R proxies with full power of substitution, for and in the name, place and
stead of the undersigned, to attend the Annual Meeting of Stockholders of
O Flores & Rucks, Inc. to be held at the Baton Rouge Hilton, 5500 Hilton
Avenue, Baton Rouge, Louisiana on Tuesday, June 17, 1997 at 9:00 a.m.,
X Central Daylight Savings Time, and any adjournment(s) thereof, with all
powers the undersigned would possess if personally present and to vote
Y thereat, as provided on the reverse side of this card, the number of shares
the undersigned would be entitled to vote if personally present. In
accordance with their discretion, said attorneys and proxies are authorized
to vote upon such other business as may properly come before the meeting or
any adjournment thereof.
1. Election of Directors, Nominees: William W. Rucks, IV, Milton J.
Womack
Every properly signed proxy will be voted in accordance with the
specifications made on the reverse side of this card. If not otherwise
specified, this proxy will be voted for proposals 1, 2 and 3. All prior
proxies are hereby revoked.
See Reverse Side
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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FLORES & RUCKS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
[ ]
1. Election of Directors (See Reverse) For All
For Withheld Except 3. Ratification and For Against Abstain
[ ] [ ] [ ] _____________________ approval of the Flores [ ] [ ] [ ]
Nominee Exception & Rucks, Inc. 1996
2. Ratification of the appointment Long-Term Incentive Plan.
of Arthur Andersen LLP as the For Against Abstain
independent auditors of the [ ] [ ] [ ]
Company for the fiscal year 1997.
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
[_] Check if Change of Address. full title as such.
Signature _________________________________ Date _____________________, 1997
Signature _________________________________ Date _____________________, 1997
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