UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Section 240.14a-11(c) or Section
240.14a-12
BLUE DOLPHIN ENERGY COMPANY
(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 the
transaction applies:
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applies:
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(3) Per unit price or other underlying value of the
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):
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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:_______________________________________
(2) Form, Schedule or Registration Statement:_____________________
(3) Filing Party:_________________________________________________
(4) Date Filed:___________________________________________________
BLUE DOLPHIN ENERGY COMPANY
801 TRAVIS, SUITE 2100
HOUSTON, TEXAS 77002
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 17, 2006
To the Stockholders of Blue Dolphin Energy Company:
You are cordially invited to attend the annual meeting of stockholders
(the "Annual Meeting") of Blue Dolphin Energy Company (the "Company"), to be
held Wednesday, May 17, 2006, at 2:00 p.m., Houston time, at the Houston Club in
the Magnolia Room on the 9th floor, located at 811 Rusk, Houston, Texas, 77002
for the following purposes:
1. To elect six directors to serve until the next annual meeting of
stockholders or until their successors are duly elected and
qualified, or until their earlier resignation or removal;
2. To amend the Company's 2000 Stock Incentive Plan to increase the
number of shares of common stock reserved for issuance pursuant to
the Plan from 650,000 shares to 800,000 shares; and
3. To transact any other business that may properly come before the
Annual Meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on April 13, 2006,
are entitled to notice of, and to vote at, the Annual Meeting and any
adjournment or postponement thereof. Your vote is important. Because many
stockholders are not able to attend the Annual Meeting, we have enclosed a proxy
card for your use. You may vote on the matters to be acted upon at the Annual
Meeting by completing and returning the proxy card promptly in the enclosed
postage paid return envelope.
For the Board of Directors
/s/ Ivar Siem
----------------------------------------------
IVAR SIEM,
Chairman and Chief Executive Officer
Houston, Texas
April 27, 2006
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE ENCOURAGED TO
INDICATE YOUR VOTE AS TO THE MATTERS TO BE ACTED UPON ON THE ENCLOSED PROXY CARD
AND RETURN THE PROXY CARD PROMPTLY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY
CHANGE YOUR VOTE AT THAT TIME.
BLUE DOLPHIN ENERGY COMPANY
801 Travis, Suite 2100
Houston, Texas 77002
(713) 227-7660
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 17, 2006
This proxy statement, the accompanying notice and form of proxy are first
being mailed to stockholders on or about April 27, 2006. These proxy materials
are being furnished to the stockholders of Blue Dolphin Energy Company, a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the annual meeting
of stockholders (the "Annual Meeting") and any adjournment or postponement
thereof. The Annual Meeting will be held on Wednesday, May 17, 2006, at 2:00
p.m., Houston time, at the Houston Club in the Magnolia Room on the 9th floor,
located at 811 Rusk, Houston, Texas, 77002.
At the Annual Meeting, stockholders will be asked (i) to elect six
directors to serve until the next annual meeting of stockholders or until their
successors are duly elected and qualified, or until their earlier resignation or
removal; (ii) to consider and vote upon the proposal to approve an amendment to
the Blue Dolphin Energy Company 2000 Stock Incentive Plan to increase the number
of authorized shares reserved for issuance thereunder from 650,000 shares to
800,000 shares; and (iii) to transact any other business that may properly come
before the Annual Meeting or any adjournment or postponement thereof.
The Company will bear all costs of this solicitation. Proxies will be
solicited primarily by mail, but directors, officers and other employees of the
Company may also solicit proxies in person or by telephone in the ordinary
course of business for which they will not receive additional compensation. The
Company has requested that brokerage houses, nominees, fiduciaries and other
custodians send proxy materials to the beneficial owners of the Company's common
stock, par value $.01 per share (the "Common Stock"), for which the Company will
reimburse them for their reasonable out-of-pocket expenses.
RECORD DATE; QUORUM
The Board of Directors has fixed the close of business on April 13, 2006,
as the record date (the "Record Date") for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting. A complete list of
stockholders entitled to vote at the Annual Meeting will be open for examination
by any stockholder during normal business hours for a period of ten days prior
to the Annual Meeting at the Company's principal executive offices, 801 Travis,
Suite 2100, Houston, Texas. At the close of business on April 13, 2006, there
were outstanding 11,140,734 shares of Common Stock. Stockholders are entitled to
one vote per share of Common Stock held of record on the Record Date on each
matter presented at the Annual Meeting. The holders of a majority of the total
shares of Common Stock issued and outstanding, whether present in person or
represented by proxies, will constitute a quorum for the transaction of business
at the Annual Meeting. Abstentions and broker non-votes (i.e. shares held by
brokers and other nominees as to which they have not received voting
instructions from the beneficial owners and lack the discretionary authority to
vote on a particular matter) are counted as present for purposes of determining
whether a quorum is present.
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VOTING; REVOCATION OF PROXY
All shares of Common Stock represented at the Annual Meeting by properly
executed proxies will be voted in accordance with the instructions indicated on
the proxies. If no instructions are indicated with respect to any shares for
which properly executed proxies have been received, such proxies will be voted
"FOR" election of all nominees to the Board of Directors, "FOR" approval of the
amendment to the 2000 Stock Incentive Plan, and in the discretion of the proxy
holder on any other matters properly brought before the Annual Meeting.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by any of the
following actions:
- by providing written notice of revocation to the Company;
- delivering to the Company a signed proxy of a later date; or
- by voting in person at the Annual Meeting.
Any written notice revoking a proxy should be sent to the Secretary of the
Company at the Company's principal executive offices, 801 Travis, Suite 2100,
Houston, Texas 77002.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
NOMINEES
Messrs. Laurence N. Benz, Michael S. Chadwick, Harris A. Kaffie, Erik
Ostbye, F. Gardner Parker and Ivar Siem (each a "Nominee" and collectively, the
"Nominees") have been nominated by the Board of Directors, to serve as directors
until the next annual meeting of stockholders, or in each case, until their
successors have been duly elected and qualified, or until their earlier
resignation or removal. All of the Nominees have previously been elected by the
stockholders, except Mr. Ostbye. Mr. Trimble, who is a Director, was not
nominated for reelection by the Board of Directors. Each Nominee has consented
to be nominated and has expressed his intention to serve if elected. The Board
of Directors has no reason to believe that any of the Nominees will be unable or
unwilling to serve if elected. However, should any Nominee become unable or
unwilling to serve as a director at the time of the Annual Meeting, the person
or persons exercising the proxies will vote for the election of a substitute
nominee designated by the Board of Directors.
VOTE REQUIRED
A plurality of the votes cast by the stockholders present and entitled to
vote at the Annual Meeting, in person or by proxy, is necessary for the election
of directors. Accordingly, abstentions and broker non-votes will have no effect
on the election of directors.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF EACH OF THE NOMINEES.
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NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The following table provides certain information with respect to the
Nominees, directors and executive officers of the Company.
NAME AGE POSITION POSITION HELD SINCE
------------------- --- -------------------------------------- -------------------
Ivar Siem 59 Chairman of the Board, Chief Executive 1989
Officer and Director
Laurence N. Benz 44 Director 2004
Michael S. Chadwick 54 Director 1992
Harris A. Kaffie 56 Director 1989
F. Gardner Parker 64 Director 2004
James M. Trimble 57 Director 2002
Erik Ostbye 54 Nominee -
Michael J. Jacobson 59 President and Secretary 1990
Gregory W. Starks 41 Treasurer 2005
The following is a brief description of the background and principal
occupation of each Nominee and executive officer:
DIRECTORS AND NOMINEES
Ivar Siem - Chairman of the Board of Directors and Chief Executive Officer
- Mr. Siem has served as Chairman of the Board of Directors since 1989 and was
appointed as the Chief Executive Officer of the Company in April, 2004. Since
September 2000, Mr. Siem has served as Chairman and President of Drillmar, Inc.
a well construction and intervention company. From 1995 to 2000, Mr. Siem served
on the Board of Directors of Grey Wolf, Inc., during which time he served as
Chairman from 1995 to 1998 and as interim President in 1995 during its
restructuring. Since 1985, he has been an international consultant in energy,
technology and finance. He has served as a Director of Business Development for
Norwegian Petroleum Consultants and as an independent consultant to the oil and
gas exploration and production industry based in London, England. Mr. Siem holds
a Bachelor of Science Degree in Mechanical Engineering from the University of
California, Berkeley, and has completed an executive MBA program at Amos Tuck
School of Business, Dartmouth University.
Dr. Laurence N. Benz - Director - Dr. Benz was appointed as a Director in
September 2004, as one of two Directors named by the investors in the Purchase
Agreement. From 1987 to the present, he has served as the President of Kentucky
Orthopedic Rehabilitation LLC, which he founded. Dr. Benz is the founder and
organizer of multiple private companies representing health care, banking,
telecommunications, real estate, and consulting services. From 1984 through
1989, he served in the U.S. Army as a Captain in the Army Medical Specialists
Corps. He serves as a director for multiple private company Boards. Dr. Benz
received a Masters degree in Physical Therapy from Baylor University, a Masters
in Business Administration from The Ohio State University and a Doctorate in
Physical Therapy from MGHIHP located in Boston, Massachusetts.
Michael S. Chadwick - Director - Mr. Chadwick has been engaged in the
commercial and investment banking businesses since 1975. In 1994, Mr. Chadwick
joined Sanders Morris Harris Group, Inc., an investment banking and financial
advisory firm, as Senior Vice President and a Managing Director in the Corporate
Finance Group, a position he continues to hold today. He currently serves on the
boards of directors of Landry's Restaurants, Inc. and Home Solutions of America,
Inc., as well as numerous privately held companies. Mr. Chadwick holds a
Bachelor of Arts Degree in Economics from the University of Texas at Austin and
a Master of Business Administration Degree from Southern Methodist University.
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Harris A. Kaffie - Director - Mr. Kaffie has served as a Director of the
Company since 1989. Mr. Kaffie's current business activities are in various
segments of the energy industry, venture capital investments, finance and real
estate development. Mr. Kaffie manages family investments in farming, ranching
and minerals. Mr. Kaffie received a BBA from Southern Methodist University in
1972.
F. Gardner Parker - Director - Mr. Parker was appointed as a Director in
September 2004, as one of two Directors named by the investors in the Purchase
Agreement. Mr. Parker is lead managing trustee with Camden Property Trust and
serves on the Corporate Governance Committee. He also serves as a director of
Carrizo Oil and Gas, Inc., Crown Resources Corp., Hercules Offshore Drilling,
and Sharps Compliance, Inc. and serves on and/or chairs their respective Audit
Committees and Compensation Committees. Mr. Parker is also a director of several
private companies including Gillman Auto Dealerships, Net Near U.
Communications, Camp Longhorn, Norton Ditto, Inc., Pinnacle Gas, Sherwood
Nursing Home and Butler Online. Mr. Parker is a Certified Public Accountant and
was employed by Ernst & Young (formerly Ernst & Ernst) for fourteen years, seven
of which he served as a partner. Mr. Parker is a graduate of the University of
Texas.
James M. Trimble - Director - Mr. Trimble has served as a Director of the
Company since 2002. Mr. Trimble is CEO of Grand Gulf Energy LLC, a privately
held oil and gas exploration and production company. Previously he served as
President and CEO of TexCal Energy (GP) LLC, formerly known as Tri-Union
Development Corporation, a privately held oil and gas company, from July 2002
through November 2004. Prior to TexCal, he served as President of Elysium
Energy, L.L.C., from July 2000 until the contribution of its properties to a
public oil and gas company in November 2001. Prior to Elysium, Mr. Trimble
served at Cabot Oil & Gas Corporation from May 1983 to May 2000 in several
managerial and senior level executive positions. Before joining Cabot, Mr.
Trimble served as President of Volvo Petroleum, Inc. a Houston based, private
domestic and international exploration and production company. Mr. Trimble
graduated from Mississippi State University where he majored in Petroleum
Engineering for undergraduate and graduate studies.
Erik Ostbye - Nominee - Mr. Ostbye is Vice President of Finance and CFO of
Blystad Shipping (USA) Inc., where he has been employed since 1988. He serves on
the Board of Directors for Arvak Insurance of Bermuda, Norwegian American
Chamber of Commerce, Norwegian Crew Management AS and several Blystad-controlled
companies. From 1983-1988 Mr. Ostbye served as Financial Manager at Arne Blystad
AS. For eleven years prior Mr. Ostbye served in various corporate accounting
functions for Stolt-Nielsen, Inc., Nopal Caribe Lines, Inc. and Oivind Lorentzen
AS. Mr. Ostbye holds a Sivilokonom/MBA from Norwegian School of Management (BI).
EXECUTIVE OFFICERS
Michael J. Jacobson - President - Mr. Jacobson has been associated with
the energy industry since 1968, serving in various senior management capacities
since 1980. He served as Senior Vice President and Chief Financial and
Administrative Officer for Creole International, Inc. and its subsidiaries,
international providers of engineering and technical services to the energy
sector, as well as Vice President of Operations for the parent holding company,
from 1985 until joining the Company in January 1990. He has also served as Vice
President and Chief Financial Officer of Volvo Petroleum, Inc., and for certain
Fred. Olsen oil and gas interests. Mr. Jacobson began his career with Shell Oil
Company, where he served in various analytical and management capacities in the
exploration and production organization during the period 1968 through 1974. Mr.
Jacobson holds a Bachelor of Science Degree in Finance from the University of
Colorado.
Gregory W. Starks - Treasurer - Mr. Starks joined Blue Dolphin Energy
Company in 2000 and served as its Accounting Manager from April 2003 until his
appointment as Treasurer in July 2005. He served in various corporate accounting
roles at PanEnergy Corp. and Duke Energy Corp. for ten years prior to joining
the Company. Mr. Starks is a Certified Public Accountant and holds a Bachelor of
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Business Administration Degree from the University of Texas at Austin and a
Master of Business Administration Degree from the University of Houston.
There are no family relationships between any director, Nominee or
executive officer.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During 2005, the Board of Directors held four regular meetings and six
special meetings. Each director attended at least 75% of the total number of
meetings of the Board of Directors and committees on which he served. The Board
of Directors has two standing committees, an Audit Committee and a Compensation
Committee.
AUDIT COMMITTEE
At the beginning of 2005, the Audit Committee consisted of Messrs. Benz,
Chadwick and Trimble. In July 2005, the Board of Directors appointed Messrs.
Benz, Kaffie, and Trimble to serve as the Audit Committee, with Dr. Benz elected
to continue as Chairman of the Audit Committee. The Board of Directors has
determined that Dr. Benz qualifies as an "audit committee financial expert" as
that term is defined in Item 401(e) of Regulation S-B promulgated by the SEC.
The Audit Committee's duties include overseeing the financial reporting and
internal control functions. The Audit Committee met five times during the last
fiscal year.
COMPENSATION COMMITTEE
At the beginning of 2005, the Compensation Committee consisted of Messrs.
Siem, Kaffie and Parker. In July 2005, the Board of Directors elected Messers.
Kaffie, Parker and Trimble to serve as the Compensation Committee. The
Compensation Committee's duties are to oversee and set the Company's
compensation policy and to administer its stock option plan. The Compensation
Committee met twice during the last fiscal year.
NOMINATION PROCEDURES
The Board of Directors currently does not have a standing nominating
committee and consequently has no nominating committee charter. However, in July
2005, the Board of Directors adopted Nomination Procedures, in compliance with
NASDAQ corporate governance requirements, to be followed by the independent
members of the Board of Directors when choosing nominees to stand for election.
The Board of Directors believes that it is appropriate under existing
circumstances for the Company not to have a nominating committee because the
Board is comprised of only six members, a majority of whom are independent as
defined under the NASDAQ Stock Market listing standards.
The Board of Directors will consider for possible nomination qualified
nominees recommended by stockholders. Generally speaking, as addressed in the
Board of Director Nomination Procedures, the manner in which the independent
directors evaluate nominees for director recommended by a stock holder will be
the same as that for nominees from other sources. Stockholders who wish to
propose a qualified candidate for consideration should submit complete
information as to the identity and qualifications of that person to the
Secretary of the Company at 801 Travis, Suite 2100, Houston, Texas 77002 before
February 17, 2007, for the 2007 Annual Meeting. See "Nominations and Proposals
by Stockholders for the 2007 Annual Meeting."
The Board of Directors will continue to nominate qualified incumbent
directors whom the Board believes will continue to make important contributions
to the Board and the Company. The Board of Directors generally requires that
nominees be persons of sound ethical character, be able to represent all
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stockholders fairly, have demonstrated professional achievement, have meaningful
experience and have a general appreciation of the major business issues facing
the Company.
COMMUNICATING WITH BOARD OF DIRECTORS
Any stockholder who desires to contact the Board of Directors or specific
members of the Board of Directors may do so by writing to: Board of Directors,
Blue Dolphin Energy Company, 801 Travis, Suite 2100, Houston, Texas 77002,
Attention: Corporate Secretary.
DIRECTOR ATTENDANCE AT ANNUAL MEETING
The Board of Director's policy regarding director attendance at the Annual
Meeting of Stockholders is that they are welcome to attend, and that the Company
will make all appropriate arrangements for directors that choose to attend. In
2005, all of the Company's directors attended the Annual Meeting. It is unknown
if all Nominees will attend the 2006 Annual Meeting.
REPORT OF THE AUDIT COMMITTEE
The duties and responsibilities of the Audit Committee are set forth in a
written charter adopted by the Board of Directors. The Audit Committee of the
Board of Directors consists entirely of directors who meet the independence and
experience requirements of NASDAQ Stock Market, Inc. currently applicable to the
Company, as determined by the Board of Directors. The Audit Committee reviews
and reassesses the charter annually and recommends any changes to the Board of
Directors for approval. The Audit Committee has reviewed the relevant
requirements of the Sarbanes-Oxley Act of 2002, the rules, proposed and adopted,
of the Securities and Exchange Commission and the new listing standards of the
NASDAQ Small Cap Market regarding audit committee procedures and
responsibilities. The Audit Committee charter was last amended by the Board of
Directors in January 2005. No changes were made to the charter for this year.
The Audit Committee's primary duties and responsibilities are to:
- assess the integrity of the Company's financial reporting process
and systems of internal control regarding accounting;
- assess the independence and performance of the Company's independent
registered public accounting firm; and
- provide an avenue of communication among the Company's independent
registered public accounting firm, management and the Board of
Directors.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent registered public accounting firm
is responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with standards of the Public Company
Accounting Oversight Board (United States) and to issue a report thereon. The
Audit Committee's responsibility is to monitor and oversee these processes.
At the beginning of 2005, the Audit Committee consisted of Messrs. Benz,
Chadwick and Trimble. In July 2005, the Board of Directors elected Messrs. Benz,
Trimble, and Kaffie to serve as the Audit Committee, with Dr. Benz again elected
as Chairman of the Audit Committee. The Board of Directors has determined that
Dr. Benz qualifies as an "audit committee financial expert" as that term is
defined in Item 401(e) of Regulation S-B promulgated by the SEC.
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The Audit Committee reviewed and discussed the audited financial
statements of the Company for the fiscal year ended December 31, 2005 with the
Company's management and management represented to the Audit Committee that the
Company's financial statements were prepared in accordance with accounting
principles generally accepted in the United States of America. The Audit
Committee discussed with UHY Mann Frankfort Stein & Lipp CPAs, LLP ("UHY"), the
Company's independent registered public accounting firm, the matters required to
be discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees), and related amendments.
The Audit Committee received the written disclosures and the letter from
UHY required by Independence Standards Board Standard No. 1 (Independence
Discussion with Audit Committees), and the Audit Committee discussed with UHY
their independence from the Company. The Audit Committee considered the
non-audit services provided by UHY and determined that the services provided are
compatible with maintaining UHY's independence. The Audit Committee must
pre-approve all audit and non-audit services provided to the Company by its
independent accountants.
The fees paid to UHY in fiscal years 2005 and 2004 by the Company are as
follows:
2005 2004
----------- ------------
Audit Fees.............................. $ 93,439 $ 70,196
Audit-Related Fees...................... 11,783 -
Tax Fees................................ 43,672 51,593
All other Fees.......................... - 7,131
----------- ------------
Total................................... $ 148,894 $ 128,920
=========== ============
Audit Fees include fees related to the audit of our consolidated financial
statements and review of our quarterly reports filed with the SEC. Audit related
fees include fees related to consultation concerning financial accounting and
reporting standards for disposition of assets, share based payments to employees
and non-employees, modification of debt terms, and revenue recognition. Tax Fees
were primarily for preparation of federal and state income tax returns, and tax
planning services.
Based on the Audit Committee's discussions with management and UHY, and
the Audit Committee's review of the representation of management and the report
of UHY to the Audit Committee, the Audit Committee recommended to the Board of
Directors that the Company's audited financial statements be included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
2005, for filing with the Securities and Exchange Commission.
The Audit Committee:
Laurence N. Benz, Chairman
Harris A. Kaffie
James M. Trimble
COMPENSATION OF DIRECTORS
In fiscal year 2005, the Company paid to non-employee members of the Board
of Directors an annual retainer of $12,000, payable 50% in cash and 50% in
Common Stock. The Audit Committee chairman receives an additional annual
retainer of $3,000 and other Audit Committee members receive an additional
annual retainer of $1,500. No additional remuneration is paid to directors for
committee meetings attended, except that directors are entitled to be reimbursed
for expenses related to attendance at board or committee meetings. No additional
compensation is paid to directors serving on the Compensation Committee.
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EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to the Company's
Chief Executive Officer and each of the executive officers whose annual salary
exceeded $100,000 in fiscal 2005 (collectively, the "Named Executive Officers")
for services rendered to the Company.
SUMMARY COMPENSATION TABLE*
LONG-TERM
COMPENSATION
SECURITIES
ANNUAL COMPENSATION UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (1)
------------------------------ ---- ---------- ------ -----------
Ivar Siem 2005 $ 60,690 - 11,250
Chairman of the Board and 2004 $ 73,333 - -
Chief Executive Officer 2003 $ 80,000 - 30,000
Michael J. Jacobson 2005 $ 159,333 25,000 27,938
President 2004 $ 135,000 - -
2003 $ 125,000 - 30,000
______________
* Excludes certain personal benefits, the aggregate value of which do not
exceed 10% of the Annual Compensation shown for each person.
(1) In fiscal year 2004, no options were granted to the Named Executive
Officers.
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OF
OPTIONS EMPLOYEES IN BASE PRICE* EXPIRATION
NAME GRANTED FISCAL YEAR ($SH) DATE
------------------- ---------- ------------- ----------- ----------
Ivar Siem 11,250 12% 0.80 2/3/2015
Michael J. Jacobson 27,938 31% 0.80 2/3/2015
(*) The per share market price, as reported by the NASDAQ Smallcap Market on
February 4, 2005, the date of grant, was $0.80.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
SHARES
ACQUIRED NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
ON UNEXERCISED MONEY OPTIONS
EXERCISE VALUE OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END (*)
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------- -------- --------- ------------ ---------------- ----------- ---------------
Ivar Siem 42,237 $ 158,999 8,000 - $ - $ -
Michael J. Jacobson 33,156 $ 21,276 33,938 - $ 37,996 $ -
___________
(*) Based on the difference between the closing market price on December 30,
2005 (the last trading day of 2005) which was $2.16 per share and the
exercise price of options.
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The Company's stock option plan provides that upon a change of control,
the Compensation Committee may accelerate the vesting of options, cancel options
and make payments in respect thereof in cash in accordance with the terms of the
stock option plan, adjust the outstanding options as appropriate to reflect such
change of control, or provide that each option shall thereafter be exercisable
for the number and class of securities or property that the optionee would have
been entitled to receive had the option been exercised. The stock option plan
provides that a change of control occurs if any person, entity or group acquires
or gains ownership or control of more than 50% of the outstanding Common Stock
or, if after certain enumerated transactions, the persons who were directors
before such transactions cease to constitute a majority of the Board of
Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 20, 2006, certain information
with respect to the beneficial ownership of shares of Common Stock (the
Company's only class of voting security issued and outstanding) as to (i) all
persons known by us to be beneficial owners of 5% or more of the outstanding
shares of Common Stock, (ii) each director and nominee, (iii) each Named
Executive Officer; and (iv) all executive officers and directors, as a group.
Unless otherwise indicated, each of the following persons has sole voting and
dispositive power with respect to such shares.
SHARES OWNED BENEFICIALLY
NAME OF BENEFICIAL OWNER NUMBER PERCENT (1)
------------------------------------------------------------ --------- -------------
Colombus Petroleum Limited, Inc. (2) 911,712 8.2
Ivar Siem (3) 635,145 5.7
Harris A. Kaffie (3) 811,676 7.2
F. Gardner Parker (3) 146,482 1.3
Laurence N. Benz (3) 49,109 0.4
Michael S. Chadwick (3) 7,669 0.1
James M. Trimble 4,669 0.0
Erik Ostbye 0 0.0
Michael J. Jacobson (3) 92,742 0.7
Gregory W. Starks (3) 36,247 0.3
Executive Officers and Directors, as a group (8 persons) (3) 1,759,125 15.6
_________________
(1) Based upon 11,140,734 shares of Common Stock outstanding on April 20, 2006.
(2) Based on a Schedule 13D filed with the Securities and Exchange Commission
on February 1, 1999. The address of Colombus Petroleum Limited, Inc., is
Aeulestrasse 74, FL-9490, Vaduz, Liechtenstein.
(3) Includes shares of Common Stock issuable upon exercise of options that may
be exercised within 60 days of April 20, 2006 as follows: Mr. Siem -
8,000; Mr. Kaffie - 83,571; Mr. Chadwick - 3,000; Mr. Jacobson - 33,938;
Mr. Starks - 1,000 and all directors and executive officers as a group -
129,509.
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PROPOSAL NO. 2:
TO APPROVE AMENDMENT TO THE 2000 STOCK INCENTIVE PLAN
As of April 20, 2006, 99,540 shares of Common Stock were available for
grant pursuant to the Incentive Plan. The Board of Directors does not believe
that such remaining amount under this plan is sufficient to carry out its
compensation policy. Accordingly, as part of the Company's overall effort to
increase shareholder value, on April 20, 2006, the Board of Directors
unanimously adopted an amendment to the Incentive Plan, subject to shareholder
approval, increasing the aggregate number of shares reserved for grant pursuant
to the Incentive Plan from 650,000 to 800,000. The amendment to the Incentive
Plan is intended to (i) further the Company's efforts in attracting, retaining
and motivating officers, key employees and non-employee consultants of the
Company and (ii) continue to closely align the interest of participants in the
Incentive Plan with those of stockholders by encouraging stock ownership and by
tying compensation to the performance of the Company and the Company Stock.
If approved, 249,540 shares of Common Stock will be available for future
grants pursuant to the Incentive Plan. If approved, this amendment will not
change any other material term of the Incentive Plan.
The amendment appears as Appendix A to this proxy statement.
PARTICIPATION IN THE INCENTIVE PLAN
The grant of incentive and non-qualified stock options, shares of
restricted stock and stock bonuses under the Incentive Plan to key employees,
consultants, and non-employee directors, including our Chairman, Chief Executive
Officer, and each of the other Named Executive Officers, is subject to the
discretion of the Compensation Committee. As of April 20, 2006, the fair market
value of the Common Stock was $7.15 per share, which was the closing sale price
reported by The NASDAQ Small Cap Stock Market.
Equity Compensation Plans. The following table sets forth certain
information as of December 31, 2005 with respect to shares of Common Stock that
may be issued under our Incentive Plan.
EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES
NUMBER OF REMAINING AVAILABLE FOR
SECURITIES TO BE WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
ISSUED UPON EXERCISE EXERCISE PRICE OF EQUITY COMPENSATION
OF OUTSTANDING OUTSTANDING PLANS (EXCLUDING
OPTIONS, WARRANTS OPTIONS, WARRANTS SECURITIES REFLECTED
PLAN CATEGORY AND RIGHTS AND RIGHTS IN THE FIRST COLUMN)
------------------------------------ -------------------- ------------------ -----------------------
Equity compensation plan approved by
stockholders (*) 143,997 $ 1.56 99,540
________________
(*) Represents shares of Common Stock issuable upon exercise of outstanding
options granted under the Incentive Plan.
SUMMARY DESCRIPTION OF THE PROGRAM
Shares Subject to Plan. As amended under the Plan, the Company may issue
Incentive Awards for up to 800,000 shares of Common Stock, and all of these
shares will be available for Incentive Stock Options ("ISO's). The number of
securities available under the Plan and outstanding Incentive Awards are subject
to adjustments to prevent the dilution of rights of plan participants resulting
from stock dividends, stock splits, recapitalization or similar transactions or
resulting from a change in applicable laws or other circumstances.
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Administration. The Plan is administered by the Compensation Committee of
the Board of Directors. The Compensation Committee may delegate its duties under
the Plan, except for the authority to grant Incentive Awards or take other
action on persons who are subject to Section 16 of the Exchange Act or Section
162(m) of the Internal Revenue Code. In the case of an Incentive Award to an
outside Director, the Board acts as the Compensation Committee. Subject to the
express provisions of the Plan, the Committee is authorized to, among other
things, select grantees under the Plan and determine the size, duration and
type, as well as the other terms and conditions (which need not be identical),
of each Incentive Award. The Compensation Committee also construes and
interprets the Plan and any related agreements. All determinations and decisions
of the Compensation Committee are final, conclusive and binding on all parties.
The Company will indemnify members of the Compensation Committee against any
damage, loss, liability, cost or expenses in connection with any claim by reason
of any act or failure to act under the Plan, except for an act or omission
constituting willful misconduct or gross negligence.
Eligibility. Employees, including officers (whether or not they are
directors), and consultants of the Company and non-employee directors are
eligible to participate in the Plan.
Types of Incentive Awards. Under the Plan, the Committee may grant
"Incentive Awards," which can be:
I. ISO's, as defined in Section 422 of the Internal Revenue Code;
II. "nonstatutory" stock options ("NSO's");
III. stock appreciation rights ("SAR's");
IV. shares of restricted stock;
V. performance units and performance shares; and
VI. other stock-based awards.
ISO's and NSO's together are called "Options." The terms of each Incentive Award
are reflected in an incentive agreement between the Company and the participant.
Options. Generally, Options must be exercised within 10 years of the grant
date. The exercise price of each ISO may not be less than 100% of the fair
market value of a share of Common Stock on the date of grant. The Compensation
Committee has the discretion to determine the exercise price of each NSO granted
under the Plan. To the extent the aggregate fair market value of shares of
Common Stock for which ISO's are exercisable for the first time by any employee
during any calendar year exceeds $100,000, those Options must be treated as
NSO's.
The exercise price of each Option is payable in cash or, in the
Compensation Committee's discretion, by the delivery of shares of common stock
owned by the optionee, or the withholding of shares that would otherwise be
acquired on the exercise of the Option, by "cashless exercise" through a broker,
or by any combination of the foregoing.
An employee does not recognize income for federal income tax purposes, nor
is the Company entitled to a deduction, when a NSO is granted. However, when a
NSO is exercised, the optionee recognizes ordinary income in an amount equal to
the difference between the fair market value of the shares received and the
exercise price of the NSO. The Company generally recognizes a tax deduction in
the same amount at the same time.
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This summary is not a complete statement of the relevant provisions of the
Internal Revenue Code, and does not address the effect of any state, local or
foreign taxes.
CUMULATIVE GRANTS UNDER THE INCENTIVE PLAN
The following table summarizes certain information covering cumulative options
granted, before consideration of forfeitures and exercises, pursuant to the
Incentive Plan, to:
- each executive officer;
- each nominee for election as a Director;
- each person who has received 5% of the options reserved for
issuance;
- all current executive officers as a group;
- all current Directors who are not executive officers, as a group;
and
- all current employees, including current officers who are not
executive officers, as a group in each case, from inception of the
Incentive Plan through December 31, 2005.
CUMULATIVE AVERAGE PER SHARE
NAME STATUS AWARDS GRANTED EXERCISE PRICE
------------------- ------------------------------ -------------- -----------------
Michael S.Chadwick non-executive director 83,571 $ 0.92
Harris A. Kaffie non-executive director 83,571 $ 0.92
James M. Trimble non-executive director 57,142 $ 0.33
Ivar Siem executive officer and director 59,250 $ 1.44
Michael J. Jacobson executive officer 73,938 $ 1.17
Gregory W. Starks executive officer 24,000 $ 0.99
John P. Atwood former employee 44,000 $ 1.19
Ronald B. Keller former employee/consultant 41,000 $ 1.06
All current executive officers as a group 157,188 $ 1.25
All current non-executive directors as a group 224,284 $ 0.77
All other current employees as a group 22,488 $ 0.95
SAR's. Upon the exercise of an SAR, the holder receives cash, the
aggregate value of which equals the amount by which the fair market value per
share of the Common Stock on the exercise date exceeds the exercise price of the
SAR, multiplied by the number of shares underlying the exercised portion of the
SAR. An SAR may be granted in tandem with or independently of an NSO. SAR's are
subject to such conditions and are exercisable at such times as determined by
the Compensation Committee, but the exercise price per share must be at least
the fair market value of a share of Common Stock on the date of grant.
Restricted Stock. Restricted stock may be subject to a substantial risk of
forfeiture, a restriction on transferability or rights of repurchase or first
refusal of the Company, as determined by the Compensation Committee. Unless the
Compensation Committee determines otherwise, during the period of restriction,
the grantee will have all other rights of a stockholder, including the right to
vote and receive dividends on the shares.
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Performance Units and Performance Shares. For each performance period (to
be determined by the Compensation Committee), the committee will establish
specific financial or non-financial performance objectives, the number of
performance units or performance shares and their contingent values. The values
may vary depending on the degree to which such objectives are met.
Other Stock-Based Awards. Other stock-based awards denominated or payable
in, valued in whole or in part by reference to, or otherwise related to, shares
of Common Stock. Subject to the terms of the Plan, the Compensation Committee
may determine any terms and conditions of other stock-based awards, provided
that, in general, the amount of consideration to be received by the Company
shall be either (1) no consideration other than services actually rendered or to
be rendered (in the case of the issuance of shares), or (2) in the case of an
award in the nature of a purchase right, consideration (other than services
rendered) at least equal to 50% of the fair market value of the shares covered
by such grant on the grant date.
Termination of Employment and Change in Control. Except as otherwise
provided in the applicable incentive agreement, if a participant's employment or
other service with the Company (or its subsidiaries) is terminated other than
due to his death, Disability, or for Cause (each capitalized term being defined
in the Plan), his then exercisable Options will remain exercisable until the
earlier of (a) the expiration date of such options and (b) 90 days after
termination. If his termination is due to Disability or death, his then
exercisable Options will remain exercisable until the earlier of (a) the
expiration date of such options and (b) one year following termination in the
event of death or disability. On retirement, his then exercisable Options will
remain exercisable for six months (except for ISO's, which will remain
exercisable for three months). On a termination for Cause, all his Options will
expire on the termination date.
Unless otherwise provided in the participant's incentive agreement, upon a
Change in Control of the Company, any restrictions on restricted stock and other
stock-based awards will be deemed satisfied, all outstanding Options and SAR's
may become immediately exercisable and all the performance shares and units and
any other stock-based awards may become fully vested and deemed earned in full.
These provisions could in some circumstances have the effect of an
"anti-takeover" defense because, as a result of these provisions a Change in
Control of the Company could be more difficult or costly.
Incentive Awards Transferable. Incentive Awards may not be assigned, sold
or otherwise transferred by a participant, other than by will or by the laws of
descent and distribution, or be subject to any lien, assignment or charge,
provided, however, if permitted in the participant's incentive agreement, a NSO
may be transferred to Immediate Family (as defined in the Plan).
Amendment and Termination. The Company's Board of Directors may amend or
terminate the Plan at any time. However, the Plan may not be amended, without
shareholder approval, if the amendment would have the following effects:
I. increase the number of shares of Common Stock which may be issued
under the Plan, except in connection with a recapitalization of the
Common Stock;
II. amend the eligibility requirements for employees to purchase Common
Stock under the Plan; or
III. extend the term of the Plan.
Without a participant's written consent, no termination or amendment of the Plan
shall adversely affect in any material way any outstanding Incentive Award
granted to him.
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VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the Common Stock represented in
person or by proxy and entitled to vote at the Annual Meeting is required to
approve the amendment to the Incentive Plan. Abstentions will have the same
effect as a vote "Against" this proposal. Broker non-votes will have no effect
on the approval of this proposal.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND THE
INCENTIVE PLAN.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 2004, the Company entered into the Purchase Agreement with
certain accredited investors and certain directors of the Company for the
purchase and sale of promissory notes in an aggregate principal amount of
$750,000 (the "Promissory Notes") and 2,800,000 warrants (the "Warrants") to
purchase shares of common stock at a purchase price of $0.003 per warrant. The
sale of the Promissory Notes and the first tranche of 1,250,000 Warrants (the
"Initial Warrants") closed on September 8, 2004, and the closing of the sale of
the second tranche of 1,550,000 Warrants (the "Additional Warrants") closed on
November 30, 2004, after the Company received stockholder approval at its
November 11, 2004 special stockholders' meeting. The Company received net
proceeds of $758,400 from the sale of the Promissory Notes and the Warrants.
Pursuant to the terms of the Purchase Agreement, the Company appointed
Messrs. Benz and Parker to its Board of Directors. Messrs. Benz and Parker each
purchased a Promissory Note in the principal amount of $25,000. Messrs. Benz and
Parker purchased 83,334 and 383,328 Warrants, respectively. Mr. Chadwick, an
existing director, purchased a Promissory Note in the principal amount of
$12,500 and 41,667 Warrants. In addition Messrs. Benz, Chadwick and Parker were
each granted 100,000 Warrants.
The Company entered into a Note Modification Agreement and a Waiver
Agreement with Western Gulf Pipeline Partners, LP ("Western Gulf") effective
April 8, 2005. Western Gulf holds a promissory note in the principal amount of
$275,000 and warrants exercisable to acquire 916,667 shares of Common Stock,
originally issued pursuant to the Purchase Agreement. The promissory note bears
interest at 12% per annum of which 4% is payable monthly and 8% is payable at
maturity. Pursuant to the terms of the Note Modification and Waiver Agreements,
the Company and Western Gulf agreed as follows:
- To amend the terms of the Promissory Note to (i) extend the
maturity date from September 8, 2005 to June 30, 2006 and (ii)
defer the payment of all interest on the promissory note until
maturity;
- To waive Western Gulf's compliance with the lock-up provisions
of the Purchase Agreement and allow it to sell shares of the
Company's common stock that it may receive upon exercise of
the warrants; and
- To accelerate the date the Company is required to file a
registration statement registering the resale of the shares of
the Company's common stock that Western Gulf may acquire upon
exercise of warrants to May 15, 2005.
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The Company has offered and expects to enter into substantially similar
arrangements with the other note and warrant holders, except those who are
Directors of the Company.
In addition to serving on the Company's Board of Directors, Mr. Chadwick
is also a Senior Vice President and Managing Director of Sanders Morris Harris
Group, Inc. ("SMH"), a financial services holding company headquartered in
Houston, Texas. The Company paid SMH a $25,000 fee in connection with the
Purchase Agreement and agreed to retain SMH to provide a fairness opinion, if
required.
The Company also entered into a consulting agreement with Mr. Parker which
has now expired. Mr. Parker's consulting agreement had a term of up to eighteen
months. The Company was obligated to pay Mr. Parker a monthly fee of $2,000 and
a bonus that accrued at the rate of $3,000 per month and would have been payable
upon consummation of a merger or acquisition by the Company.
The Company owns 0.07% of the common stock of Drillmar, Inc. The Company's
Chairman, Ivar Siem, and one of its Directors, Harris A. Kaffie, own or control
28.1%, and 18.6%, respectively, of Drillmar's common stock. Messrs. Siem and
Kaffie are both directors, and Mr. Siem is Chairman and President of Drillmar.
In 2002, the Company recorded a full impairment of its investment in
Drillmar and a full reserve for the accounts receivable amount owed to the
Company from Drillmar of approximately $200,000 due to Drillmar's working
capital deficiency and delays in securing capital funding. During 2004, the
Company collected $165,000 of the accounts receivable from Drillmar and it has
collected the remaining balance of approximately $45,000 in 2005.
In January 2003, Drillmar stockholders approved a restructuring plan
whereby Drillmar was able to issue up to $3.0 million of convertible notes that
will convert into common stock representing over 99% of Drillmar's outstanding
shares. In November 2003, the Company converted a contingent obligation due from
Drillmar for providing office space, accounting and administrative services from
May 2002 through January 2003 totaling $162,000 (9 months at $18,000 per month)
into a convertible note. In December 2005, we collected $178,555 from Drillmar
for this convertible note, including interest at 6% per annum.
The Company entered into an agreement with Drillmar effective as of
February 1, 2003, whereby it provides and charges for office space which is
currently $4,178 per month. The Company had provided professional, accounting
and administrative services to Drillmar based on hourly rates based on its cost.
However, since the Company's implementation of staff reductions in mid 2004, no
such services have been provided. The agreement can be terminated upon 30 days
notice or by the mutual agreement of the parties.
In March 2003, the Company entered into a sublease agreement expiring
December 31, 2006 for certain of its office space with TexCal Energy (GP) LLC,
formerly Tri-Union Development Corporation.
The Company's annual receipts from this sublease are approximately $78,000. One
of the Company's Directors, Mr. Trimble, was the Chairman and Chief Executive
Officer of TexCal Energy (GP) LLC until November 2004.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors, executive officers, and stockholders who own more than 10% of our
Common Stock, to file reports of stock ownership and changes in ownership with
the Securities and Exchange Commission and to furnish
15
us with copies of all such reports they file. Based solely on a review of the
copies of the Section 16(a) reports furnished to us, we believe that during
2005, all Section 16(a) filing requirements applicable to our directors,
executive officers and greater than 10% shareholders were complied with, except
for (i) one late Form 4 for each of Dr. Benz, Mr. Chadwick, Mr. Kaffie, Mr.
Parker and Mr. Trimble related to directors fees of $3,000 each paid in stock in
July 2005, and (ii) one late Form 4 for each Dr. Benz, Mr. Chadwick, Mr. Kaffie,
Mr. Parker and Mr. Trimble related to directors fees of $3,000 each paid in
stock in August 2005.
NOMINATIONS AND PROPOSALS BY STOCKHOLDERS
FOR THE 2007 ANNUAL MEETING
The Company has tentatively set its year 2007 Annual Meeting for May 18,
2007. Accordingly, stockholders should submit nominations and proposals in
accordance with the guidance set forth below.
Nominations for the year 2007 Annual Meeting. The Company's Certificate of
Incorporation provides that no person shall be eligible for nomination and
election as a director unless written notice of such nomination is received from
a stockholder of record by the Secretary of the Company 90 days before the
anniversary date of the previous year's annual meeting. Further, such written
notice is to be accompanied by the written consent of the nominee to serve, the
name, age, business and residence addresses, and principal occupation of the
nominee, the number of shares beneficially owned by the nominee, and any other
information which would be required to be furnished by law with respect to any
nominee for election to the Board of Directors. Stockholders who desire to
nominate persons to serve on the Board of Directors at the 2007 Annual Meeting
must submit nominations to the Company, at its principal executive office, so
that such notice is received by the Company no later than February 16, 2007. In
order to avoid controversy as to the date on which any such nomination is
received by the Company, it is suggested that stockholders submit their
nominations, if any, by certified mail, return receipt requested.
Proposals for the year 2007 Annual Meeting. Stockholders who desire to
present proposals, other than notices of nomination for the election of
directors, to stockholders of the Company at the year 2007 Annual Meeting, and
to have such proposals included in the Company's proxy materials, must submit
their proposals to the Company, at its principal executive office, by December
28, 2006. In order to avoid controversy as to the date on which any such
proposal is received by the Company, it is suggested that stockholders submit
their proposals, if any, by certified mail, return receipt requested.
Moreover, any stockholder who intends to submit a proposal for
consideration at the Company's 2007 Annual Meeting, but not for inclusion in the
Company's proxy materials, must notify the Company. Pursuant to the rules of the
U.S. Securities and Exchange Commission, such notice must (1) be received at the
Company's executive offices no later than March 13, 2007 and (2) satisfy the
rules of the U.S. Securities and Exchange Commission.
RELATIONSHIP WITH INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
UHY, has been engaged by the Company's Board of Directors as its
independent registered public accounting firm for the Company since 2002. The
Company expects that they will continue as its independent registered public
accounting firm. Representatives of UHY are expected to be present at the Annual
Meeting, with the opportunity to make a statement if they desire to do so, and
to respond to appropriate questions.
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OTHER BUSINESS
At the date of this Proxy Statement, the Board of Directors does not know
of any matter to be acted upon at the Annual Meeting other than those matters
described above and set forth in the Notice. If other business comes before the
Annual Meeting, the persons named on the proxy will vote the proxy in accordance
with their best judgment.
The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2005 is being mailed with this proxy statement.
By Order of the Board of Directors
/s/ Michael J. Jacobson
--------------------------------------------
Michael J. Jacobson
President and Secretary
Houston, Texas
April 27, 2006
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APPENDIX A
SECOND AMENDMENT TO THE
2000 STOCK INCENTIVE PLAN
Blue Dolphin Energy Company (the "Company") hereby amends the Blue
Dolphin Energy Company 2000 Stock Incentive Plan (the "2000 Plan") as follows,
effective April 20, 2006.
1. The first paragraph of Section 1.4 is amended to read as follows in its
entirety:
Subject to adjustment under Section 6.5, there shall be available for
Incentive Awards under the Plan that are granted wholly or partly in Common
Stock (including rights or Stock Options that may be exercised for or settled in
Common Stock) Eight Hundred Thousand (800,000) Shares of Common Stock. Eight
Hundred Thousand (800,000) of the Shares reserved under the Plan shall be
available for grants of Incentive Stock Options. The number of Shares of Common
Stock that are the subject of Incentive Awards under this Plan, that are
forfeited or terminated, expire unexercised, are settled in cash in lieu of
Common Stock or in a manner such that all or some of the Shares covered by an
Incentive Award are not issued to a Grantee or are exchanged for Incentive
Awards that do not involve Common Stock, shall again immediately become
available for Incentive Awards hereunder. The Committee may from time to time
adopt and observe such procedures concerning the counting of Shares against the
Plan maximum as it may deem appropriate.
During such period that the Company is a Publicly Held Corporation, then
unless and until the Committee determines that a particular Incentive Award
granted to a Covered Employee is not intended to comply with the
Performance-Based Exception, the following rules shall apply to grants of
Incentive Awards to Covered Employees:
(a) Subject to adjustment as provided in Section 6.5, the maximum
aggregate number of Shares of Common Stock (including Stock Options, Restricted
Stock, or Other Stock-Based Awards paid out in Shares) that may be granted or
that may vest, as applicable, in any calendar year pursuant to any Incentive
Award held by any individual Covered Employee shall be Five Hundred Thousand
(500,000) Shares.
(b) The maximum aggregate cash payout (including Other Stock-Based Awards
paid out in cash) with respect to Incentive Awards granted in any calendar year
which may be made to any Covered Employee shall be Five Hundred Thousand dollars
($500,000).
(c) With respect to any Stock Option granted to a Covered Employee that is
canceled or repriced, the number of Shares subject to such Stock Option shall
continue to count against the maximum number of Shares that may be the subject
of Stock Options granted to such Covered Employee hereunder and, in this regard,
such maximum number shall be determined in accordance with Section 162(m) of the
Code.
(d) The limitations of subsections (a), (b) and (c) above shall be
construed and administered so as to comply with the Performance-Based Exception.
The following officer of the Company has caused this amendment to be
executed effective as of April 20, 2006, subject to shareholder approval.
BLUE DOLPHIN ENERGY COMPANY
By:______________________________________
Name:____________________________________
Title:___________________________________
BLUE DOLPHIN ENERGY COMPANY ANNUAL MEETING OF STOCKHOLDERS MAY 17, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned acknowledges receipt of the Notice of the Annual Meeting of
Stockholders and the Proxy Statement, revokes all previous proxies, and appoints
Michael J. Jacobson and Gregory W. Starks, and each of them, the proxy of the
undersigned, with full power of substitution to vote all shares of common stock
of Blue Dolphin Energy Company (the "Company") that the undersigned is entitled
to vote, either on his or her own behalf or on behalf of any entity or entities,
at the Annual Meeting of Stockholders of the Company to be held at the Houston
Club, 9th floor, Magnolia Room, located at 811 Rusk, Houston, TX 77002 on
Wednesday, May 17, 2006 at 2:00 PM local time, and at any adjournment or
postponement thereof, with the same force and effect as the undersigned might or
could do if personally present thereat.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK:
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
1. The Election Withhold For All PLEASE CHECK BOX IF YOU
of Directors For All All Except PLAN TO ATTEND THE MEETING
[ ] [ ] [ ] [ ]
NOMINEES: LAURENCE N. BENZ, MICHAEL S. CHADWICK, HARRIS A. KAFFIE, ERIK OSTBYE,
F. GARDNER PARKER AND IVAR SIEM
INSTRUCTION: To withhold authority to vote for fewer than all of the nominees,
mark "For All Except" and write that nominee's name in the space provided here.
2. To approve the amendment to the Company's 2000 Stock Incentive Plan
[ ] For [ ] Against [ ] Abstain
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Whether or not you plan to attend the Annual Meeting and regardless of the
number of shares you own, please date, sign and return this proxy card in the
enclosed envelope (which requires no postage if mailed in the United States).
The shares represented by this proxy shall be voted in the manner set forth on
the reverse side.
IF YOU RETURN YOUR PROPERLY EXECUTED PROXY, THE PROXIES WILL VOTE YOUR
SHARES AS YOU DIRECT. IF YOU DO NOT SPECIFY ON YOUR PROXY HOW YOU WANT TO VOTE
YOUR SHARES, THE PROXIES WILL VOTE THEM "FOR" ALL NOMINEES IN PROPOSAL 1, "FOR"
PROPOSAL 2, AND IN THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
DATED: ------------------------------------
--------------------------------------------
Signature
--------------------------------------------
(Signature if held jointly)
Please sign EXACTLY as your name appears
hereon. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such. If more than one trustee, all should
sign. If shares are held jointly, both
owners must sign.