<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 29, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OCEAN ENERGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 72-1277752
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
8440 JEFFERSON HIGHWAY
SUITE 420
BATON ROUGE, LOUISIANA 70809
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
OCEAN ENERGY, INC.
1996 LONG-TERM INCENTIVE PLAN
(FULL TITLE OF THE PLAN)
ROBERT K. REEVES
EXECUTIVE VICE PRESIDENT - ADMINISTRATION,
GENERAL COUNSEL AND SECRETARY
3861 AMBASSADOR CAFFERY PARKWAY
SUITE 500
LAFAYETTE, LOUISIANA 70503
(318) 993-4300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------------------------
copy to:
JOHN F. WOMBWELL
ANDREWS & KURTH L.L.P.
4200 TEXAS COMMERCE TOWER
HOUSTON, TEXAS 77002
(713) 220-4200
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE FEE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock, par value $0.01 per share 1,000,000 Shares $44.22(2) $44,220,000(2) $13,045(2)
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</TABLE>
(1) The number of Shares of Common Stock registered herein is subject to
adjustment to prevent dilution resulting from stock splits, stock dividends
or similar transactions.
(2) Estimated solely for the purpose of calculating the registration fee, based
upon the average of the high and low sales prices of a share of the
Company's Common Stock on the New York Stock Exchange on January 23,
1998 pursuant to Rule 457(h).
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<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Ocean Energy, Inc. (the "Company") incorporates herein by reference
the following documents, or portions of documents, as of their respective dates
as filed with the Securities and Exchange Commission (the "Commission"):
(a) The Company's Annual Report on Form 10-K for the year
ended December 31, 1996;
(b) The Company's Quarterly Report on Form 10-Q for the
three months ended March 31, 1997;
(c) The Company's Quarterly Report on Form 10-Q for the
period ended June 30, 1997;
(d) The Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1997; and
(e) The description of the Company's common stock, par
value $0.01 per share (the "Common Stock"), contained in the Company's
Registration Statement on Form 8-A filed with the Commission on March 8, 1996
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act after the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
The information required by Item 4 is not applicable to this
Registration Statement since the class of securities to be offered is
registered under Section 12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The information required by Item 5 is not applicable to this
Registration Statement.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, inter alia,
empowers a Delaware corporation to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding (other than an action by or in the right of the
corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he
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reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Similar indemnity is
authorized for such persons against expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement
of any such threatened, pending or completed action or suit if such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and provided further that
(unless a court of competent jurisdiction otherwise provides) such person shall
not have been adjudged liable to the corporation. Any such indemnification may
be made only as authorized in each specific case upon a determination by the
stockholders or disinterested directors or by independent legal counsel in a
written opinion that indemnification is proper because the indemnitee has met
the applicable standard of conduct.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
enterprise, against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would otherwise have the power to indemnify him under Section 145.
The Company maintains policies insuring its officers and directors against
certain liabilities for actions taken in such capacities, including liabilities
under the Securities Act of 1933.
Article IX of the Company's Bylaws provides for indemnification of the
directors and officers of the Company to the full extent permitted by law, as
now in effect or later amended.
Section 7(c) of the Company's Certificate of Incorporation provides
that the Company shall, to the maximum extent permitted under Delaware law,
indemnify and upon request shall advance expenses to any person who is or was a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, proceeding or claim, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was or has
agreed to be a director or officer of the Company or while a director or
officer is or was serving at the request of the Company as a director, officer,
partner, trustee, employee or agent of any corporation, partnership, joint
venture, trust or other enterprise, against expenses, judgments, fines,
penalties and amounts paid in settlement or incurred in connection with the
investigation, preparation to defend or defense of such action, suit,
proceeding, claim or counterclaim initiated by or on behalf of such person.
Section 7(d) of the Company's Certificate of Incorporation limits
under certain circumstances the liability of the Company's directors for a
breach of their fiduciary duty as directors. These provisions do not eliminate
the liability of a director (i) for a breach of the director's duty of loyalty
to the Company or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law (relating to
the declaration of dividends and purchase or redemption of shares in violation
of the Delaware General Corporation Law) or (iv) for any transaction from which
the director derived an improper personal benefit.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The information required by Item 7 is not applicable to this
Registration Statement.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
5 .1 Opinion of Andrews & Kurth L.L.P., as to the legality of the securities being registered
23.1 Consent of Counsel (included in the opinion filed as Exhibit 5.1 to this Registration Statement)
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (set forth on the signature page contained in Part II of this Registration
Statement).
99.1 Ocean Energy, Inc. 1996 Long-Term Incentive Plan.
</TABLE>
II-2
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in this Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(h) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
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<PAGE> 4
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Baton Rouge, State of Louisiana, on
the 26th day of January, 1998.
OCEAN ENERGY, INC.
By: /s/ James C. Flores
----------------------------
James C. Flores
Chairman of the Board,
President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers
and directors of Ocean Energy, Inc. (the "Company") hereby constitutes and
appoints James C. Flores and Robert K. Reeves, and each of them (with full
power to each of them to act alone), his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and on his behalf and in his
name, place and stead, in any and all capacities, to sign, execute and file
this Registration Statement under the Securities Act of 1933, as amended, and
any or all amendments (including, without limitation, post-effective
amendments), with all exhibits and any and all documents required to be filed
with respect thereto, with the Securities and Exchange Commission or any
regulatory authority, granting unto such attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in order to effectuate the same, as
fully to all intents and purposes as he himself might or could do if personally
present, hereby ratifying and confirming all that such attorneys-in-fact and
agents, or any of them, or their substitute or substitutes, may lawfully do or
cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on Janury 26, 1998.
<TABLE>
<CAPTION>
Signature Title
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<S> <C>
/s/ James C. Flores Chairman of the Board, President and
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James C. Flores Chief Executive Officer (Principal
Executive Officer)
/s/ Robert L. Belk Executive Vice President, Chief Financial
- -------------------------------------------
Robert L. Belk Officer, Treasurer and Director
(Principal Financial and Accounting Officer)
/s/ Richard G. Zepernick, Jr. Executive Vice President - Exploration &
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Richard G. Zepernick, Jr. Production and Director
/s/ William W. Rucks, IV Director
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William W. Rucks, IV
</TABLE>
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<TABLE>
<S> <C>
/s/ Thomas D. Clark, Jr. Director
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Thomas D. Clark, Jr.
/s/ Milton J. Womack Director
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Milton J. Womack
/s/ Charles F. Mitchell Director
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Charles F. Mitchell
/s/ Lodwrick M. Cook Director
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Lodwrick M. Cook
</TABLE>
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Numbered
Number Description Pages
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<S> <C>
5.1 Opinion of Andrews & Kurth L.L.P., as to the legality of the
securities being registered
23.1 Consent of Counsel (included in the opinion filed as Exhibit
5.1 to this Registration Statement)
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (set forth on the signature page contained
in Part II of this Registration Statement).
99.1 Ocean Energy, Inc. 1996 Long-Term Incentive Plan.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
January 28, 1998
Board of Directors
Ocean Energy, Inc.
8440 Jefferson Highway
Suite 420
Baton Rouge, Louisiana 70809
Gentlemen:
We have acted as counsel to Ocean Energy, Inc. (the "Company")
in connection with the Company's Registration Statement on Form S-8 (the
"Registration Statement") relating to the registration under the Securities Act
of 1933, as amended, of the issuance of 1,000,000 shares (the "Shares") of the
Company's common stock, $0.01 par value, pursuant to the Company's 1996
Long-Term Incentive Plan (the "Plan").
In connection herewith, we have examined copies of such
statutes, regulations, corporate records and documents, certificates of public
and corporate officials and other agreements, contracts, documents and
instruments as we have deemed necessary as a basis for the opinion hereinafter
expressed. In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with the original documents of all documents submitted to us as
copies. We have also relied, to the extent we deem such reliance proper, upon
information supplied by officers and employees of the Company with respect to
various factual matters material to our opinion.
Based upon the foregoing and having due regard for such legal
considerations as we deem relevant, we are of the opinion that the Shares have
been duly authorized, and that such Shares will, when issued in accordance with
the terms of the Plan, be legally issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to
the Registration Statement.
Very truly yours,
/s/ Andrews & Kurth L.L.P.
1249/2325/2700
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the Registration Statement (Form S-8) for the registration of
1,000,000 shares of Common Stock pertaining to the Ocean Energy, Inc. 1996
Long-Term Incentive Plan of our report dated February 24, 1997 with respect to
the consolidated financial statements of Ocean Energy, Inc. (formerly Flores &
Rucks, Inc.) and subsidiaries included in its Annual Report (Form 10-K) for the
ended December 31, 1996 filed with the Securities and Exchange Commission.
/s/ ARTHUR ANDERSEN LLP
January 26, 1998
<PAGE> 1
EXHIBIT 99.1
OCEAN ENERGY, INC.
1996 LONG-TERM INCENTIVE PLAN,
AS AMENDED
SECTION 1. Purpose of the Plan.
The Ocean Energy, Inc. 1996 Long-Term Incentive Plan (the "Plan") is intended
to promote the interests of Ocean Energy, 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.
<PAGE> 2
"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.
"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.
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<PAGE> 3
"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.
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
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<PAGE> 4
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
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<PAGE> 5
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 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
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<PAGE> 6
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.
(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
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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
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.
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(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
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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):
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)
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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 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
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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.
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<PAGE> 12
(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 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:
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(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: (i) increase
the total number of Shares available for Awards under the Plan, except
as provided in Section 4(c) of the Plan; (ii) increase the class of
eligible Participants; or (iii) amend the eligibility requirements for
Awards under 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 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:
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<PAGE> 14
(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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<PAGE> 15
(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.
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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.
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