EXHIBIT 99.1
OPTION AGREEMENT
This Agreement is entered into this the 11th day of August, 1996 by and
among James C. Flores ("Flores"), Cherie Hair Flores, residents of Baton Rouge,
Louisiana, William W. Rucks, IV., individually ("Rucks"), Catherine May Rucks,
residents of Lafayette, Louisiana, and William W. Rucks, IV. and Catherine May
Rucks as sole general partners of the Rucks Family Limited Partnership
("Partnership"), a Texas limited partnership.
RECITALS
A. Flores is Chairman of the Board of Directors and Chief Executive
Officer of Flores & Rucks, Inc., a Delaware corporation ("Company"). Rucks is
Vice-Chairman of the Board of Directors and President of the Company. Flores,
members of his immediate family and his family limited partnership are record
owners collectively of not fewer than 3,000,000 shares of the Company's common
stock, par value 0.01 per share ("Company's Stock"). Rucks and the Partnership
are currently the record owners of not fewer than 3,450,000 shares in the
aggregate of the Company's Stock. B. Rucks wishes to sell 1,650,000 shares of
the Company's Stock in a public sale ("Public Sale") on/or before December 31,
1996, and the Company has agreed, subject to certain conditions, to prepare and
file a registration statement covering the sale of the
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aforesaid 1,650,000 shares. Rucks, Flores and the Company believe that if Rucks
completes the Public Sale, it will be in the best interest of the Company and
its stockholders for Flores to have the right to acquire from Rucks and the
Partnership 1,600,000 shares of the Company's Stock in order to facilitate the
Public Sale, prevent the occurrence of a change in control event under the
Company's existing debt instruments and to assure continuity of management and
the balanced, timely and appropriate redistribution of the Company's Stock.
Accordingly, Rucks and the Partnership have agreed to grant Flores an option
(the "Option") to acquire 1,600,000 shares ("Option Shares") of the Company's
Stock of which Rucks and the Partnership are currently the record owners under
terms and conditions hereinafter specified.
Now, therefore, in consideration of the recitals, the mutual promises
of the parties hereto and other good and valid consideration the receipt and
sufficiency of which is acknowledged, the parties hereby agree as follows:
1. DEFINITIONS.
As used herein the following terms shall have the following
meanings (such definitions to be equally applicable to the singular and plural
and to the masculine and feminine forms of the defined terms):
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1.1 CLOSING means the meeting(s) to be held at the Company's
principal offices in Baton Rouge, Louisiana for the purpose of completing the
purchase(s) and sale(s) of Option Shares purchased by Flores pursuant to the
exercise(s) of the Option.
1.2 COMPANY means Flores & Rucks, Inc., a Delaware
Corporation, with principal offices located at 8440 Jefferson Highway, Suite
420, Baton Rouge, Louisiana.
1.3 COMPANY'S STOCK means the common stock, par value 0.01
cent per share, of Flores & Rucks, Inc.
1.4 DEMAND Registration Rights means the contractual right of
Rucks and the Partnership to demand that the Company cause the Option Shares to
be registered following the Option Expiration Date in the event that Flores does
not exercise the Option to acquire the Option Shares as evidenced by a separate
agreement contemporaneously entered into between Rucks, the Partnership and the
Company.
1.5 EFFECTIVE DATE means the date on which the funding occurs
of the sales proceeds to Rucks from the public sale of 1,650,000 shares of the
Company's Stock; if the aforesaid funding does not occur prior to January 1,
1997 there shall be no Effective Date.
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1.6 EXERCISE NOTICE means a written notice from Flores to
Rucks notifying Rucks and the Partnership of Flores' exercise of the Option; the
Exercise Notice may be given from time to time during the Option Exercise Period
and shall specify the number of Option Shares which Flores elects to purchase
pursuant to this Option Agreement; the Exercise Notice shall be delivered in
accordance with the provisions of Section 7.4 below.
1.7 EXTENDED PERIOD means the one-year period which will
commence on the first day following the second annual anniversary of the
Effective Date and, shall terminate on the Option Expiration Date.
1.8 IRREVOCABLE PROXY means Flores' right to vote the Option
Shares throughout the Option Exercise Period as evidenced by that certain
document entitled "Irrevocable Proxy Coupled With An Interest" substantially in
the form of Annex A to this Option Agreement and which shall be delivered by
Rucks and the Partnership to Flores on the Effective Date.
1.9 MINIMUM SHARE PURCHASES means not fewer than 300,000
Option Shares with respect to each purchase which occurs on/or before the second
annual anniversary of the Effective Date and means all of the remaining Option
Shares with respect to purchases which occur during the Extended Period.
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1.10 OPTION means the right of Flores under this Option
Agreement to purchase the Option Shares.
1.11 OPTION AGREEMENT means this Agreement.
1.12 OPTION EXERCISE PERIOD means the period which commences
on the Effective Date and ends on the Option Expiration Date.
1.13 OPTION EXPIRATION DATE means that date which is the
earliest to occur of:
(a) the third annual anniversary date of the Effective
Date except that if the Option Expiration Period is not
extended for an additional year by Flores' payment to Rucks
and the Partnership of the Option Extension Payment, the
Option Expiration Date shall occur on the second annual
anniversary date of the Effective Date, or
(b) the date upon which any of the following events
occur:
(i) January 1, 1997 unless the Effective Date shall
have occurred on/or before December 31, 1996; (ii)
The date that Flores ceases to be a beneficial owner
of at least 2,250,000 shares of the Company's Stock
as adjusted for stock splits, stock dividends
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or similar corporate reorganizational events which
occur after the date of the Option Agreement; (iii)
The date that Flores ceases to be either an officer
or director of the Company.
1.14 OPTION EXTENSION PAYMENT means the nonrefundable payment
of One Million Dollars ($1,000,000) which at Flores' option may be made to Rucks
and the Partnership on or before the second annual anniversary of the Effective
Date and which, if made, shall subject to the provisions of Section 1.13 extend
the Option Exercise Period until the third annual anniversary of the Effective
Date. Sixty-two and one half percent (62.5%) of the Option Extension Payment
shall be allocated to the Partnership and the remaining thirty-seven and one
half percent(37.5%) shall be allocated to Rucks. The Option Extension Payment
shall be applied toward the Purchase Price of the Option Shares if the Option is
exercised during the Extended Period.
1.15 OPTION SHARES means in the aggregate 1,600,000 shares of
the Company's Stock, 1,000,000 shares of which are currently owned of record by
the Partnership and 600,000 shares of which are currently owned of record by
Rucks; the Option Shares are represented by the Certificates identified on Annex
B to this Agreement.
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1.16 PURCHASE PRICE means the price per share which Flores
shall pay Rucks and Partnership for the Option Shares at the Closing(s) of
Purchase(s)of Option Shares following the Exercise(s) of the Option.
2. THE OPTION-EXERCISE.
2.1 OPTION. Rucks and the Partnership hereby grant to Flores a
right to purchase the Option Shares for the Purchase Price specified in Section
3.1 hereof subject to the terms and conditions specified in this Option
Agreement. The Option with respect to sixty-two and one half percent(62.5%) of
the Option Shares is granted by the Partnership and the Option with respect to
thirty-seven and one half percent (37.5%) of the Option Shares is granted by
Rucks.
2.2 EXERCISE. The Option shall become exercisable by Flores on
the Effective Date and shall be exercisable by him throughout the Option
Exercise Period for one or more Minimum Share Purchases by delivering to Rucks
and the Partnership an Exercise Notice in the manner specified in Section 7.4
hereof.
3. PURCHASE PRICE-CLOSING.
3.1 PURCHASE PRICE. The purchase price for the Option
Shares shall be as follows:
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(a) The Purchase Price for Option Shares purchased
upon the exercise of the Option on/or before the first annual
anniversary date of the Effective Date, shall be $30.00 per
share; and
(b) The Purchase Price for Option Shares purchased
upon the exercise of the Option on/or before the second annual
anniversary of the Effective Date shall be $35.00 per share;
and
(c) The Purchase Price for Option Shares purchased
upon the exercise of the Option during the Extended Period
shall be $37.625 per share. The Option Extension Payment shall
be applied toward the Purchase Price for Option Shares
purchased upon the exercise of the Option during the Extended
Period.
Sixty-two and one half percent (62.5%) of the aggregate amount of the Purchase
Price of the Option Shares shall be allocated to the Partnership and
thirty-seven and one half percent (37.5%) of the Purchase Price shall be
allocated to Rucks.
3.2 CLOSING. At Closing(s) of the exercise(s) of the Option,
Flores shall by immediately available funds pay the full amount of the Purchase
Price for the Option Shares purchased pursuant to the exercise of the Option and
Rucks and the
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Partnership shall deliver to Flores against such payment certificates for the
number of Option Shares being purchased together with stock transfer powers duly
endorsed evidencing the transfer of such shares to Flores. Closing(s) shall be
held in accordance with Section 1.1 hereof on the fifth (5th) business day
following the date of the Exercise Notice or such earlier date as shall be
specified in the Exercise Notice.
4. IRREVOCABLE PROXY.
On the Effective Date, Rucks and the Partnership shall execute and
deliver to Flores an Irrevocable Proxy substantially in the form of Annex A
hereof. Promptly following the Option Expiration Date, Flores shall redeliver to
Rucks and the Partnership the Irrevocable Proxy.
5. STOCK CERTIFICATE LEGEND.
A legend shall be placed upon the certificates representing the Option
Shares in substantially the following form:
"The shares represented by this certificate are subject to an
option in favor of James C. Flores pursuant to that certain
Option Agreement dated as of August 11, 1996 by and between
James C. Flores, Cherie Hair Flores, William W. Rucks, IV.,
individually, Catherine May Rucks, individually, William W.
Rucks, IV. and Catherine May
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Rucks, as sole general partners of the Rucks Family Limited
Partnership ("Partnership"), a copy of which is on file with
the Secretary of the Corporation at its principal offices in
Baton Rouge, Louisiana and may only be transferred in
accordance with the terms of such option. In addition, in
accordance with the aforesaid Option Agreement, William W.
Rucks, IV., Catherine May Rucks and the Partnership have also
granted to James C. Flores an Irrevocable Proxy coupled with
an interest empowering Flores to vote the shares represented
by this Certificate at any Stockholders Meeting or other vote
which occurs during the term of the Option Exercise Period as
that term is defined in the Option Agreement.
Promptly following the Option Expiration Date, Flores, Rucks and the
Partnership shall jointly cause the aforesaid legend to be removed from
the Certificates which represent the Option Shares.
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6. RUCKS' AND THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES.
Rucks, Catherine May Rucks and the Partnership represent, warrant and
covenant to Flores as follows:
(a) Rucks and the Partnership each are the sole owner
of all of the Option Shares of which such party is the owner
of record as reflected by Annex B free and clear of all liens,
claims, charges, restrictions, equities and encumbrances of
any kind subject, however, to restrictions imposed by
applicable securities laws. Now and at the time of Closing(s)
Rucks and the Partnership have and will have full power and
legal right to sell, assign, transfer and deliver to Flores
the Option Shares free and clear of all liens, claims,
charges, restrictions, equities and encumbrances of any kind
subject, however, to restrictions imposed by applicable
securities laws. Rucks and the Partnership agree during the
Option Exercise Period not to, directly or indirectly, sell,
assign, transfer or deliver, or grant any proxies (other than
the Irrevocable Proxy) or enter into any voting agreement with
respect to any of the Option Shares; and
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(b) Rucks and the Partnership have all necessary
power and authority to execute, deliver and perform this
Option Agreement and the Irrevocable Proxy and to consummate
the sale of the Option Shares and the other transactions
contemplated by this Option Agreement. This Option Agreement
has been and the Irrevocable Proxy when delivered in
accordance with Section 4 will have been duly executed by
Rucks and the Partnership and when executed will constitute
the legal, valid and binding obligation of each of them
enforceable against them in accordance with their terms.
Neither the execution and delivery of this Agreement or the
Irrevocable Proxy, nor the performance of the transactions
contemplated hereby or thereby will conflict with or result in
a breach, default or violation of or require any consents
under the organization documents or partnership agreement of
the Partnership or any contract, lien, instrument or agreement
to which Rucks or the Partnership is bound or subject to.
Rucks and the Partnership have the full right, power and
authority to direct the vote of the Option Shares and have not
granted any proxies or entered into any voting agreements with
respect thereto.
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7. MISCELLANEOUS.
7.1 ASSURANCE OF FURTHER ACTION. From time to time after the
Closing and without further consideration, each of the parties to this Option
Agreement shall execute and deliver, or cause to be executed and delivered, such
further instruments and agreements, and shall take such other actions, as the
other party may reasonably request in order to more effectively effectuate the
transactions contemplated by this Option Agreement.
7.2 EXPENSES. Whether or not the Closing is consummated, each
of the parties will pay all of his, her, or its own legal and accounting fees
and other expenses incurred in the preparation of this Option Agreement and the
performance of the terms and provisions of this Option Agreement.
7.3 WAIVER. The parties to this Option Agreement may by
written agreement executed by all such parties (i) extend the time for or waive
or modify the performance of any of the obligations or other acts of the parties
to this Option Agreement or (ii) waive any inaccuracies in the representations
and warranties contained in this Option Agreement or in any document delivered
pursuant to this Option Agreement.
7.4 NOTICES. All notices, requests or other communications
under this Option Agreement shall be in writing and
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shall be deemed to have been duly given if delivered by hand or mailed by
overnight courier, addressed as follows:
(a) IF TO FLORES, TO JAMES C. FLORES
8440 Jefferson Highway
Suite 420
Baton Rouge, Louisiana 70809
(b) IF TO RUCKS, TO WILLIAM W. RUCKS, IV.
120 Shannon Road
Lafayette, Louisiana 70503
(c) IF TO THE PARTNERSHIP, TO WILLIAM W. RUCKS, IV.
120 Shannon Road
Lafayette, Louisiana 70503
or to such other address as may have been furnished in writing to the party
giving the notice by the party to whom notice is to be given.
7.5 ENTIRE AGREEMENT. This Option Agreement embodies the
entire Option Agreement among the parties and there have been and are no
agreements, representations or warranties, oral or written, among the parties
other than those set forth or provided for in this Option Agreement. This Option
Agreement may not be modified or changed, in whole or in part, except by a
supplemental agreement signed by each of the parties.
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7.6 RIGHTS UNDER THIS AGREEMENT. This Option Agreement shall
bind and inure to the benefit of the parties to this Option Agreement and their
respective heirs, legal representatives, successors and permitted assigns, but
shall not be otherwise assignable by any party without the prior written consent
of the other party. Nothing contained in this Option Agreement is intended to
confer upon any person, other than the parties to this Option Agreement and
their respective heirs, legal representatives, successors and permitted assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Option Agreement. The Option created by this Option Agreement is nonassignable
and nontransferable; provided, however, Flores may transfer this Option to his
wife or children, or any family trust, partnership, corporation or similar
entity for the benefit of, or controlled by, any of the foregoing.
7.7 GOVERNING LAW. This Option Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
reference to the conflicts of laws principles of that State.
7.8 HEADINGS; REFERENCES TO SECTIONS AND ANNEXES. The
headings of the Sections, paragraphs and subparagraphs of this Option Agreement
are solely for convenience of reference and shall
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not limit or otherwise affect the meaning of any of the terms or provisions of
this Option Agreement. The references in this Option Agreement to sections and
annexes, unless otherwise indicate, are references to sections of and annexes to
this Option Agreement.
7.9 COUNTERPARTS. This Option Agreement may be executed in
counterparts, each of which shall be an original, but which together constitute
one and the same instrument.
7.10 TERM. The term of this Option Agreement commenced on the
date first set forth above and shall terminate on the Option Expiration Date.
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IN WITNESS, the parties have duly executed this Option Agreement on
August 11, 1996 as of the date first above written.
/s/ James C. Flores
---------------------------
JAMES C. FLORES
/s/ Cherie Hair Flores
---------------------------
CHERIE HAIR FLORES
/s/ William W. Rucks, IV
---------------------------
WILLIAM W. RUCKS, IV.
/s/ Catherine May Rucks
---------------------------
CATHERINE MAY RUCKS
RUCKS FAMILY LIMITED PARTNERSHIP
By:/s/ William W. Rucks, IV
---------------------------
WILLIAM W. RUCKS, IV.
General Partner
By:/s/ Catherine May Rucks
---------------------------
CATHERINE MAY RUCKS
General Partner
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