SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TRI-VALLEY CORPORATION
- - ------------------------------------------------------------------------------
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 22, 1998
TO THE SHAREHOLDERS OF TRI-VALLEY CORPORATION:
The enclosed proxy material relating to Tri-Valley Corporation
("Tri-Valley" or the "Company") from the Board of Directors of the Company is
sent to you as the direct or beneficial owner of common stock of the Company
with the Company's sincere request that you give those materials your prompt and
thorough consideration.
(1) To elect five directors to serve for the ensuing year and until their
successors have been elected and qualified. Management proposes and nominates
the following slate for re-election:
F. LYNN BLYSTONE, EARL H. BEISTLINE, MILTON J. CARLSON, DENNIS P. LOCKHART,
AND LOREN J. MILLER.
(2) To approve Brown, Armstrong, Randall & Reyes Accountancy Corporation,
Inc. as independent accountants for the Company.
(3) To approve incentive stock option plan.
(4) To transact such other business as may properly come before the Annual
Meeting and any adjournments thereof.
The meeting will also provide an opportunity for management to give a
current report on the progress of the Company and its plans and prospects for
the future. Only persons who held Common Stock of record at the close of
business on June 24, 1998, will be entitled to vote at the Annual Meeting and
any adjournments thereof, as fixed by action of the Board of Directors.
All shareholders are urged to attend the Annual Meeting in person or by
proxy.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF
SHARES YOU MAY HOLD. WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING IN
PERSON, PLEASE COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY. IF YOU RECEIVE
MORE THAN ONE PROXY BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT NAMES OR
ADDRESSES, EACH SUCH PROXY SHOULD BE SIGNED AND RETURNED TO ASSURE THAT ALL OF
YOUR SHARES WILL BE VOTED. THE PROXY SHOULD BE SIGNED BY ALL REGISTERED HOLDERS
EXACTLY AS THE STOCK IS REGISTERED.
A Shareholder giving a proxy has the power to revoke it at any time before
it is exercised by attending the Annual Meeting and voting his shares in person
or by filing with the Secretary of the Company, prior to the meeting date,
either a written notice of revocation, or a duly executed proxy bearing a later
date.
By Order of the Board of Directors
Bakersfield, California
July 8, 1998
F. Lynn Blystone
President and CEO
Bakersfield, California
July 2, 1998
ANNUAL MEETING OF SHAREHOLDERS
_______________________
PROXY STATEMENT
_______________________
OF
TRI-VALLEY CORPORATION
230 SOUTH MONTCLAIR STREET, SUITE 101
BAKERSFIELD, CALIFORNIA 93309
SOLICITATION OF PROXIES FOR
MEETING OF STOCKHOLDERS
FOR THE ANNUAL SHAREHOLDER MEETING TO BE HELD IN THE
CONTRA COSTA ROOM OF THE EMBASSY SUITES HOTEL (AIRPORT)
150 ANZA BOULEVARD
SAN FRANCISCO, CALIFORNIA 94010
AT 9:00 A.M. (P.S.T.), ON AUGUST 22, 1998
To the Shareholders of TRI-VALLEY CORPORATION:
The enclosed proxy material relating to Tri-Valley Corporation
("Tri-Valley" or the "Company") from the Board of Directors of the Company is
sent to you as the direct or beneficial owner of common stock of the Company
with the Company's sincere request that you give those materials your prompt and
thorough consideration.
The Board of Directors of Tri-Valley Corporation (the "Company")
hereby solicits your Proxy (on the gold form) for use at the Annual Meeting of
Shareholders of the Company to be held Saturday, August 22, 1998, at 9:00 A.M.
(local time) in the Contra Costa Room of the Embassy Suites Hotel (Airport), 150
Anza Boulevard, San Francisco, California 94010.
IF YOU ARE NOT ABLE TO BE PRESENT AT THIS MEETING, IT IS REQUESTED THAT YOU
RETURN THE ENCLOSED GOLD FORM PROXY, PROPERLY EXECUTED, IN ORDER THAT YOUR
SHARES BE REPRESENTED AND VOTED AT THE MEETING. You may revoke your Proxy at
any time prior to the exercise of the powers granted herein by transmitting a
written revocation to the Company or by appearing in person at the meeting.
The Company's administrative office is located at 230 South Montclair
Street, Suite 101 Bakersfield, California 93309. The approximate date on which
this Proxy Statement and gold form of proxy will first be sent to the
shareholders is July 15, 1998. The costs of this proxy notification will be
paid by the Company. A professional proxy solicitor has not been engaged.
ACTIONS TO BE TAKEN AT THE MEETING
At the Annual Meeting, holders of the Company's common stock will consider
and vote for the election as directors of the Company of F. Lynn Blystone,
Dennis P. Lockhart, Milton J. Carlson, Loren J. Miller, and Earl H. Beistline.
In addition, the shareholders will be asked to ratify the Board's selection of
Brown, Armstrong, Randall & Reyes Accountancy Corporation as the Company's
independent accountants for 1998. Finally, the shareholders will consider and
act on a proposed Incentive Stock Option Plan for the employees and officers of
the Company.
VOTING SECURITIES AND RIGHTS
There are 19,063,248 shares of common stock of the Company outstanding,
each of which is entitled to one vote in the election of directors and all other
matters to be voted upon at the meeting. SHAREHOLDERS OF RECORD AS OF THE CLOSE
OF BUSINESS AT 5:00 P.M. ON FRIDAY, JUNE 24, 1998, ARE THE ONLY PERSONS ENTITLED
TO VOTE AT THIS MEETING.
The presence in person or by proxy of the holders of not less than one-half
the outstanding shares is necessary to constitute a quorum at the meeting. The
vote of a majority of the shares present at the meeting, in person or by proxy,
is necessary to elect directors and to ratify the selection of the Company's
auditors. The approval of the proposed amendment to the Certificate of
Incorporation requires the affirmative vote of a majority of the outstanding
shares.
Set forth below in tabular form is information concerning the only persons
known to the Company to own more than 5% of the Company's common stock as of
June 24, 1998.
AMOUNT
TITLE OF NAME AND ADDRESS BENEFICIALLY PERCENT
CLASS____ OF BENEFICIAL OWNER OWNED__ OF CLASS
Common Stock Dennis Vaughan 1,033,200 5.42%
2298 Featherhill Road
Santa Barbara, CA 93108
Although the Company is incorporated in Delaware, it currently maintains
its business offices and principal oil and gas operations in California.
Accordingly, shareholders are entitled, under California corporation law, to
cumulative voting rights in the election of directors. This means that a
shareholder may multiply the shares held by the total number of directors to be
elected (five) and vote all of such shares for any one director. Prior to the
meeting and vote on directors, any shareholder wishing to exercise cumulative
voting rights must give the Company written notice of same. Discretionary
authority to cumulate votes in the exercise of proxies is hereby solicited by
management.
I. ELECTION OF DIRECTORS:
The Board of Directors consists of five (5) directors and each director
serves for a term of one (1) year. All five (5) director positions are up for
election at the meeting.
THE BOARD OF DIRECTORS HAS NOMINATED AND RECOMMENDS YOUR APPROVAL OF DR.
EARL BEISTLINE, LYNN BLYSTONE, MILTON CARLSON, DENNIS LOCKHART, AND LOREN
MILLER, CPA AS DIRECTORS OF TRI-VALLEY CORPORATION. All proxies will be voted
FOR these nominees. Information about the nominees follows:
COMMON STOCK PERCENT
NAME AND POSITION DIRECTOR BENEFICIALLY OF
WITH COMPANY__ AGE SINCE_ OWNED___ CLASS_
F. Lynn Blystone 62 1974 498,909 2.62
Dennis Lockhart 51 1982 122,091 .64
Milton Carlson 68 1985 129,000 .68
Loren Miller 53 1992 95,300 .50
Earl Beistline 81 1992 78,000 .41
PRINCIPAL OCCUPATIONS OF NOMINEES DURING THE PAST FIVE YEARS:
F. Lynn Blystone - 62 President and Chief Executive Officer 1974
Tri-Valley Corporation, and its wholly owned
subsidiaries, Tri-Valley Oil & Gas Co. &
Tri-Valley Power Corporation, Bakersfield, California
Mr. Blystone became president of Tri-Valley Corporation in October 1981,
and was nominally vice president from July to October 1981. His background
includes institution management, venture capital and various management
functions for a mainline pipeline contractor including the Trans-Alaska Pipeline
Project. He has founded, run and sold companies in several fields including
Learjet charter, commercial construction, municipal finance and land
development. He is also president of a family corporation, Bandera Land
Company, Inc., with real estate interests in Kern, Riverside and Orange Counties
California. A graduate of Whittier College, California, he did graduate work at
George Williams College, Illinois in organization management. He gives full
time to Tri-Valley.
Dennis P. Lockhart - 51 President 1982
Heller International Group., Inc.
Chicago, Illinois
Mr. Lockhart is President of Heller International Group, Inc., a subsidiary
of Heller Financial Inc., a position he has held since 1988. He also serves as
a director of Heller Financial Inc., and several of the company's overseas
subsidiaries. Prior to joining Heller, Mr. Lockhart was a domestic and
international corporate banking officer with Citicorp/Citibank. He worked for
Citicorp in a succession of assignments in Lebanon, Saudi Arabia, Greece, Iran,
Atlanta, and New York. He is currently serving on the Advisory Committee of the
United States export-import Bank. Mr. Lockhart was educated at Stanford
University and Johns Hopkins University. He attended the Senior Executives
Program at the Sloan School of Management, Massachusetts Institute of
Technology, in 1994.
Milton J. Carlson - 68 Investor, Kalispell, Montana 1985
Mr. Carlson is a principal in Earthsong, Inc., which is a non-profit,
public benefit corporation engaged in a wide field of ecological matters in the
public interest. Until its merger with another firm, Mr. Carlson formerly was
vice president and corporate secretary of Union Sugar Company, a $100 million
unit of Sara Lee Corporation. He was involved in representing industrial end
users of energy through the California Manufacturers Association as the former
chairman of the CMA steering committee of the standing energy and environmental
committees. Mr. Carlson was also the energy and environmental representative
with Sara Lee energy advisory group and monitored related matters before the
California Public Utilities Commission and Energy Commission as well as serving
as the legislative representative in Sacramento and Washington, D.C. Mr.
Carlson attended the University of Colorado at Boulder and the University of
Denver.
Earl H. Beistline, LLD. - 81 Mining Consultant 1992
Fairbanks, Alaska
Dr. Beistline is a past chairman of the Alaska State Minerals Commission
and Dean Emeritus of the School of Mineral Industry of the University of Alaska.
Born in Juneau, he has achieved a special position in Alaska during its
transition from territorial status into statehood. He has numerous honors from
local, state and federal governments, academia, professional and civic
organizations and the mineral industry. An active miner in the Central-Circle
Mining District, Dr. Beistline also serves as a director of one of the states'
primary companies, Usibelli Coal Mines, Inc. He holds a bachelor of Mining
Engineering, Engineer of Mines and Honorary Doctor of Law degree from the
University of Alaska.
Loren J. Miller, CPA - 53 Controller 1992
Petro America, Inc.
Long Beach, California
For the last four years, Mr. Miller has been the controller of Petro
America, Inc. He has also served in a treasury and chief financial officer
capacity as vice president successively of McMullen Oil Company, Mock Resources,
Inc., and Hershey Oil Corporation. Prior to that he was vice president and
general manager of Tosco Production Finance Corporation and formerly a senior
auditor with Touche Ross & Co. He is experienced in exploration, production,
product trading, refining and distribution as well as corporate finance. He
holds a B.S. in accounting and an M.B.A. in finance from the University of
Southern California.
During 1997, the Board of Directors held six meetings; no director attended
less than 75% of such meetings.
The Company has no nominating or compensation committees, as these are
dealt with by the full board. Mr. Miller is the audit representative.
COMPENSATION OF OFFICERS AND DIRECTORS
The following table summarizes the compensation of the chairman of the
board and the president of the Company and its subsidiaries, F. Lynn Blystone,
for the fiscal year ended December 31, 1997, and for the fiscal years ended July
31, 1996, and 1995.
Long Term
Compensation
Annual Compensation Awards
(a) (b) ( c ) (d) (e)
Other Securities
Name Period Covered Salary Compensation Underlying Options
F. Lynn FYE 12/31/97 $197,660(1) 195,000(2)
Blystone, CEO 5 Mo. Ended
12/31/96 $42,250(1)
FYE 7/31/96 $49,610(1)
FYE 7/31/95 $43,750(1)
(1) Includes salary that was deferred when Mr. Blystone took a reduced
salary in 1996.
(2) 95,000 options expired unexercised in December, 1997.
AGGREGATED 1997 OPTION EXERCISES AND YEAR-END VALUES
The following table summarizes the number and value of all unexercised
stock options held by the Named Officers and Directors at the end of 1997.
( A ) ( B ) ( C )
Number of Securities Value of Unexercised In-
Underlying Unexercised The-Money Options/SARs at
Options/SARs at FY-End (#) FY-End ($)*
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
F. Lynn Blystone 100,000/0 0/0
Dennis P. Lockhart 30,000/0 $18,750/0
40,000/0 $23,000/0
Milton J. Carlson 30,000/0 $18,750/0
40,000/0 $23,000/0
Loren J. Miller 30,000/0 $18,750/0
40,000/0 $23,000/0
Earl H. Beistline 20,000/0 $12,500/0
40,000/0 $23,000/0
*Based on a fair market value of $1.125 per share, which was the closing
bid price of the Company's Common Stock in the NASDAQ National Market System on
December 31, 1997.
COMPENSATION OF DIRECTORS
The Company compensates non-employee directors for their service on the
board of directors. No directors received any stock options in 1997. The
following tables sets forth information regarding the cash compensation paid to
outside directors in 1997.
(A) (B)
NAME FEES
Earl Beistline $3,800
Milton Carlson $3,800
Dennis P. Lockhart $3,450
Loren J. Miller $3,800
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 and Securities and
Exchange Commission regulations require that the Company's directors, certain
officers, and greater than 10 percent shareholders are required to file reports
of ownership and changes in ownership with the SEC and to furnish the Company
with copies of all such reports they file. Based solely upon a review of the
copies of the forms furnished to the Company, or written representations from
certain reporting persons that no reports were required, the Company believes
that no person failed to file required reports on a timely basis during or in
respect of 1997.
II. APPROVE BROWN, ARMSTRONG, RANDALL & REYES ACCOUNTANCY CORPORATION, INC.
AS INDEPENDENT ACCOUNTANTS.
It is the opinion of our Board of Directors and its Finance Committee that
the certified public accounting firm of Brown, Armstrong, Randall & Reyes
Accountancy Corporation, Inc. (BARR) of Bakersfield, California, is best suited
to conduct the Company audits, and reviews as well as related business
consulting. The partner in charge, Burton Armstrong, has been a board member of
and is on the tax committee of the California Independent Petroleum Association
(CIPA) and active in many industry accounting and SEC related bodies in addition
to the broader resources of the firm. The Company feels BARR conducts its
business with detailed thoroughness in an expeditiously professional and
economical manner and recommends your approval of continuing to retain them.
Mr. Armstrong is expected to attend the shareholder meeting, will have an
opportunity to make a statement and will be available to respond to appropriate
questions. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF BARR AS THE
COMPANY'S INDEPENDENT ACCOUNTANTS.
III. APPROVE INCENTIVE STOCK OPTION PLAN
As the Company grows, it needs to compete for personnel and provide
employment compensation commensurate with its competitors. An Incentive Stock
Option Plan will be considered for adoption by the shareholders at the Annual
Meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCENTIVE
STOCK OPTION PLAN (THE "PLAN").
The purpose of the Plan is to promote the growth and profitability of the
Company by providing, through the ownership of stock options, incentives to
attract and retain highly talented persons to provide managerial,
administrative, and other specialized services to the Company. It is the
intention of the Company in administering the Plan to provide employees,
including its executive officers, with an ongoing incentive to increase earnings
and productivity and to acknowledge superior service to the Company by executive
officers and employees. The Board of Directors has approved of the Plan being
submitted to the shareholders. If the Plan is adopted, the Company will reserve
1,000,000 shares of its Common Stock (an amount equal to approximately 5% of the
shares outstanding on June 25, 1998) for issuance pursuant to the Plan. No
increase in the number of shares authorized Common Stock is necessary in order
to implement the Plan.
The Plan will be administered by a committee of the Company's Board of
Directors (the "Committee"). The Committee shall have full power and discretion
to determine which eligible officers and employees receive options and the time,
number of shares, and terms of any options to be granted under the Plan. The
exercise price of all options to be granted under the Plan shall be the fair
market value of the Company's Common Stock, determined by the closing daily
price on any stock exchange, automated quotation system or similar trading
system, on the date of grant of the option. If no such quotation exists on the
date of grant, the fair market value shall be determined in good faith by the
Committee. Members of the Committee may not be eligible to participate in the
Plan and may not have been eligible to participate in the Plan for one year
prior to appointment to the Committee.
All full-time employees of the Company will be eligible to participate in
the Plan, except for members of the Committee.
The Company has not until now had any stock option plan for its officers
and employees. From time to time in the past, certain executives have been
granted options in privately negotiated transactions. See Executive
Compensation.
Options issued under the Plan will be entitled to "incentive stock option"
treatment for federal income tax purposes provided by Section 422 of the
Internal Revenue Code. An optionee, upon exercise of an option under the plan,
will not realize taxable income (but may generate a tax preference item which
may result in tax liability under alternative minimum tax provisions), nor will
the Company then be entitled to a deduction. The gain realized upon the
subsequent disposition of the stock acquired upon exercise of the options will
be entitled to capital gain treatment, provided that no such disposition is made
within 2 years after the option was granted and 1 year after the option was
exercised. If such holding period requirements are not satisfied, the optionee
will realize ordinary income equal to the lesser of (i) the fair market value of
the stock on the date of exercise minus the exercise price or (ii) the amount
realized on disposition minus the exercise price, and will receive a credit
against income tax to the extent alternative minimum tax liability was incurred
upon exercise. If the optionee must recognize ordinary income, the Company will
be entitled to a corresponding deduction. The foregoing statements are based
upon current federal income tax laws and regulations and are subject to change
if the tax laws and regulations, or interpretations thereof, change.
In addition, the Plan may establish for officers and directors of the
Company an exemption from the provisions of Section 16(b) of the Securities
Exchange Act of 1934 for the grants of options. Section 16(b) provides for
recovery by the Company of profits made by officers and directors on short-term
trading in shares of Common Stock of the Company. Grants of options to purchase
Common Stock under the Plan by officers and employee-directors of the Company
may be entitled to an exemption from the operation of Section 16(b), provided
certain conditions are met under the rules and regulations of the SEC.
ADDITIONAL INFORMATION
Prior to mailing the proxy statement to shareholders, each shareholder has
been mailed a copy of the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1997, which contains the Company's audited financial
statements dated December 31, 1997.
PROPOSALS BY SHAREHOLDERS - 1999
Any proposal by a shareholder to be submitted for inclusion in proxy
soliciting material for the 1999 annual shareholders meeting must be received by
the corporate secretary of the Company no later than December 31, 1998.
OTHER MATTERS
No proposals have been received from shareholders for inclusion in the
proxy statement or action at the 1998 annual meeting. Management does not know
of any matter to be acted upon at the meeting other than the matters above
described. However, if any other matter should properly come before the
meeting, the proxy holders named in the enclosed proxy will vote the shares for
which they hold proxies in their discretion.
<PAGE>
TRI-VALLEY CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints F. Lynn Blystone and Loren Miller as Proxies
with the power to appoint their substitutes, and hereby authorizes them to
represent and to vote, as designated below, all the shares of common stock of
Tri-Valley Corporation held on record by the undersigned on June 24, 1998, at
the Annual Meeting of Shareholders to be held in the Contra Costa Room of the
Embassy Suites in San Francisco, California, on August 22, 1998, at 9:00 A.M.
(P.S.T.).
1. ELECTION OF DIRECTORS or any adjournment thereof.
FOR ALL NOMINEES LISTED BELOW (EXCEPT AS MARKED TO THE CONTRARY BELOW).
(To withhold authority to vote for any individual nominee, strike a line
through the nominee's name in the list below.)
F. L. Blystone E. H. Beistline M. J. Carlson D.
P. Lockhart L. J. Miller
2. To approve Brown, Armstrong, Randall & Reyes Accountancy Corporation, Inc.
as independent accountants for the Company. For Against
Abstain
3. To approve incentive stock option plan.
For Against Abstain
4. To transact such other business as may properly come before the Annual
Meeting and any adjournments thereof. For Against
Abstain
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO SPECIFICATION
IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
Please sign and date this Proxy. When signing as attorney, executor,
administrator, trustee, guardian, corporate officer, etc., please indicate your
full title. Proxies received in this office later than 5:00 P.M. on August 21,
1998, will not be voted upon unless the shareholders are present to vote their
shares.
OTHER BUSINESS
It is not anticipated that any other matters will be brought before the meeting
for action. If any other matters shall properly come before the meeting or any
adjournment thereof, it is intended that the holders of the proxies may, in the
absence of instruction to the contrary, exercise their direction to vote or act
on such matters as they determine to be appropriate.
Dated:_________________________
_________________________________________________
________________________________________________
Signature
(Please mark, sign, date and return the
Signature if held jointly
Proxy Card promptly)
EXHIBIT A
TRI-VALLEY CORPORATION
1998 - STOCK OPTION PLAN
ARTICLE I
PURPOSE OF PLAN
The purpose of this Plan is to promote the growth and profitability of the
Company and other participating companies by providing, through the ownership of
Options, incentives to attract and retain highly talented persons to provide
managerial, administrative and other specialized services to the Company and
other participating Companies and to motivate such persons to use their best
efforts on behalf of the Company.
ARTICLE II
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings set
forth in this Article II:
2.1 Accrued installment. The term "Accrued installment" shall mean
any vested installment of an Option.
2.2 Board. The term "Board" shall mean the Board of Directors of the
Company.
2.3 Committee. The term "Committee" shall mean the Compensation
Committee, or a successor committee, appointed by the Board and constituting not
less than two members of the Board, each of whom is a Disinterested Person.
2.4 Company. The term "Company" shall mean Tri-Valley Corporation,
a Delaware corporation, or any successor thereof.
2.5 Director. The term "Director" shall mean a member of the Board,
or a member of the board of directors of any Participating Company.
2.6 Disinterested Person. The term "Disinterested Person" shall
mean any person defined as a Disinterested Person in Rule 16b-3 of the
Securities and Exchange Commission as amended from time to time and as
promulgated under the Exchange Act.
2.7 Effective. Shall mean the date on which the Plan is
approved by the stockholders of the Company.
2.8 Eligible Person. The term "Eligible Person" shall mean. except
as provided in Section 3. 1, any full-time employee or officer of any
participating Company.
2.9 Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
2.10 Fair Market Value. The term "Fair Market Value" shall mean
the closing sale price on the trading day in question of the Shares on the
Composite Tape for New York Stock Exchange Listed Stocks, or, if the Shares are
not quoted on the Composite Tape, on the New York Stock Exchange, or, if the
Shares are not listed on such Exchange, on the principal United States
securities exchange on which the Shares are listed, or, if the Shares are not
listed on any such exchange, the closing bid quotation with respect to the
Shares on the trading day in question on the National Association of Securities
Dealers, Inc. Automated Quotations Systems or any similar system then in use,
or if no such quotation is available, the fair market value on the date in
question of the Shares as determined in good faith by the Committee. If the day
in question is not a trading day, the determination of Fair Market Value shall
be made as of the nearest preceding trading day.
2.11 Option. The term "Option" shall mean an option to
acquire Shares granted under this Plan.
2.12 Optionee. The term "Optionee" shall mean an Eligible Person
who has been granted an Option.
2.13 Parent Corporation, The term "Parent Corporation" shall mean a
corporation as defined in
Internal Revenue Code Section 424 (e) or any successor thereto.
2.14 Participating Company. The term " Participating Company"
shall mean the Company and any Parent Corporation or Subsidiary Corporation of
the Company.
2.15 Plan. The term "Plan" shall refer to the Company's 1998
Stock Option Plan.
2.16 Shares. The term "Shares" shall mean shares of the
Company's Class A Common Stock, $.001
par value, and may be un-issued shares or treasury shares or shares purchased
for purposes of this Plan.
2.17 Subsidiary Corporation. The term "Subsidiary
Corporation" shall mean a corporation as defined
in Internal Revenue Code Section 424 (f) or any successor thereto.
2.18 Terminating Transaction. The term "Terminating Transaction"
shall mean any of the following events, (a) the dissolution or liquidation of
the Company; (b) a reorganization, merger or consolidation of the Company with
one or more other corporations as a result of which the Company goes out of
existence or becomes a subsidiary of another corporation which shall be deemed
to have occurred if another corporation shall own, directly or indirectly, over
eighty percent (80%) of the aggregate voting power of all outstanding equity
securities of the Company); (c) a sale of all or substantially all of the
Company's assets; or (d) a sale of the equity securities of the Company
representing more than eighty percent (80%) of the aggregate voting power of all
outstanding equity securities of the Company to any person or entity, or any
group of persons and entities acting in concert.
2.19 Termination Date. The term "Termination Date" shall mean August
22, 2008.
2.20 Total Disability. The term "Total Disability" shall mean
a permanent and total disability as that is defined in Internal Revenue
Code Section 22 (e) (3) or any successor thereto.
ARTICLE III
ADMINISTRATION OF PLAN
3.1 Administration by the Committee. This Plan shall be administered
by the Compensation Committee of the board, of its successor (the "Committee").
Subject to the provisions of this Plan document, the Committee shall have full
and absolute power and authority in its sole discretion to (i) determine which
Eligible Persons shall receive Option, (ii) determine the time when Options
shall be granted, (iii) determine the terms and conditions, not inconsistent
with the provisions of this Plan, of any Option granted hereunder, (iv)
determine the number of shares subject to or covered by each Option, and (v)
interpret the provisions of this Plan and of any Option granted under this Plan.
A member of the Committee shall not be an Eligible Person, and shall not have
been an Eligible Person at any time within one (1) year prior to appointment to
the Committee. Except as otherwise provided herein or otherwise permitted by
Rule 16b-3 (b) (3) of the Exchange Act, during said one (1) year prior to such
appointment, no member of the Committee shall have been eligible to acquire
stock, stock options or stock appreciation rights under any plan of the Company.
(a) The exercise price of the Options shall be Fair Market Value on the
date of grant.
3.2 Rules and Regulations. The Committee may adopt such rules and
regulations, as the Committee may deem necessary or appropriate to carry out the
purpose of this Plan and shall have authority to take all action necessary or
appropriate to administer this Plan.
3.3 Binding Authority. All decisions, determination, interpretations,
or other actions by the Committee shall be final, conclusive, and binding on all
Eligible Persons, Optionees, Participating Companies and any
successors-in-interest to such parties.
ARTICLE IV
NUMBER OF SHARES AVAILABLE UNDER THIS PLAN
The maximum aggregate number of Shares which may be optioned and sold under
this Plan is 1,000,000 Shares. In the event that Options granted under this
Plan shall for any reason terminate, lapse, be forfeited, or expire without
being exercised, the Shares subject to such unexercised Options may again be
subjected to Options under this Plan. In any event, however, no Option may be
granted hereunder if the sum of Shares subject to such Option and the number of
Shares subject to unexpired Options previously granted hereunder (or subject to
unexercised option or stock appreciation rights under any stock option or stock
appreciation right plan of the Company) would exceed twenty percent (20%) of
the total shares of voting stock outstanding at such time.
ARTICLE V
TERM OF PLAN
This Plan shall be effective as of the Effective Date and shall terminate
on the Termination Date. No Option may be granted hereunder after the
Termination Date.
ARTICLE VI
OPTIONS TERMS
6.1 Form of Option Agreement. Any option granted under this Plan
shall be evidenced by an agreement ("Option Agreement") in such form as the
Committee, in its discretion, may from time to time approve. Any Option
Agreement shall contain such terms and conditions as the Committee may deem, in
its sole discretion, necessary or appropriate and which are not inconsistent
with the provisions of this Plan.
6.2 Vesting and Exercisability of Options. Subject to the limitations
set forth herein and/or in any applicable Option Agreement entered into
hereunder, Options granted under this Plan shall vest and be exercisable in
accordance with the rules set forth in this Section 6.2
a. General. Subject to the other provisions of this Section 6.2,
Options shall vest and become exercisable at such times and in such
installments, as the Committee shall provide in each individual Option
Agreement. Notwithstanding the foregoing, the Committee may in its sole
discretion accelerate the time at which an Option or installment thereof may be
exercised. Unless otherwise provided in this Section 6.2 or in the Option
Agreement pursuant to which an Option is granted, an Option may be exercised
when Accrued Installments accrue as provided in such Option Agreement and at any
time thereafter until, and including, the Option Termination Date (as defined
below).
b. Termination of Options. All installments and Options shall
expire and terminate on such date as the Committee shall determine ("Option
Termination Date"), which in no event shall be later than ten (10) years from
the date on which such Option was granted.
c. Termination of Eligible Person Status Other Than by Reason of
Death or Disability. In the event that the employment of an Eligible Person
with a Participating Company is terminated for any such reason (other than by
reason of death or Total Disability). Any installments under an Option held by
such Eligible Person which has not accrued as of such termination date shall
expire and become unexercisable as of such termination date. All Accrued
installments as of the employment termination date shall remain exercisable only
within such period of time as the Committee may determine, but in no event shall
any Accrued installments remain exercisable for a period in excess of three (3)
months following such termination date or for a period in excess of the original
Option Termination Date, whichever is earlier. For purposes of this Plan, an
Eligible Person who is a employee or Director of any Participating Company shall
not be deemed to have incurred a termination of his employment (whichever may
be applicable) so long as such Eligible Person is an employee or Director
(whichever may be applicable) of any Participating Company.
d. Leave of Absence. In the case of any employee on an
approved leave of absence, the Committee may deem such provision respecting
continuance of any Options held by the employee as the Committee deems
appropriate in its sole discretion, except in no event shall an Option be
exercisable after the original Option Termination Date.
e. Death or Total Disability of Eligible Person. In the event
that the employment of an Eligible Person with a Participating Company is
terminated by reason of death or Total Disability, any unexercised Accrued
installments of Options granted hereunder to such Eligible Person shall expire
and become unexercisable as of the earlier of:
(1) The applicable Option Termination Date, or
(2) The first anniversary of the date of termination of the employment
of such Eligible Person by reason of the Eligible person's death or Total
Disability. Any such Accrued Installments of a deceased Eligible Person may be
exercised prior to their expiration only by the person or persons to whom the
Eligible Person's Option rights pass by will or the laws of descent and
distribution. Any Option installments under such a deceased or disabled
Eligible Person's Option that have not accrued as of the date of the termination
of employment, or directorship due to death or Total Disability shall expire and
become unexercisable as of such termination date.
6.3 Options Not Transferable. Options granted under this Plan may not
be sold, pledged, hypothecated, assigned, encumbered, gifted or otherwise
transferred or alienated in any manner, either voluntarily or involuntarily or
by operation of law, other than by will or the laws of descent and distribution,
and (except as specifically provided to the contrary in Section 6.2 (e) hereof)
may be exercised during the lifetime of an Optionee only by such Optionee.
6.4 Restrictions on Issuance of Shares.
a. No Shares shall be issued or delivered upon exercise of an
Option unless and until there shall have been compliance with all applicable
requirements of the Securities Act of 1933, all applicable listing requirements
of any market or securities exchange on which the Company's Common Stock is then
listed, and any other requirements of law or of any regulatory body having
jurisdiction over such issuance and delivery. The inability of the Company to
obtain any required permits, authorizations or approvals necessary for the
lawful issuance and sale of any Shares hereunder on terms deemed reasonable by
the Committee shall relieve the Company, the Board, and the Committee of any
liability in respect of the non-issuance or sale of such Shares as to which such
requisite permits, authorizations or approvals shall not have been obtained.
b. As a condition to the granting or exercise of any
Option, the Committee may require the person receiving or exercising such Option
to make any representations and warranties to the Company as may be required or
appropriate under any applicable law or regulation, including, but not limited
to, a representation that the Option or Shares are being acquired only for
investment and without any present intention to sell or distribute such Option
or Shares, if such a representation is required under the Securities Act of 1933
or any other applicable law, rule or regulation.
c. The exercise of any Option under this plan is conditioned
On approval of this Plan, within twelve (12) months of the adoption of this Plan
By the Board, by (I) the vote of the holders of a majority of the outstanding
securities of the Company present, or represented, and entitled to vote at a
meeting duly held in accordance with applicable law, or (ii) the written consent
of the holders of a majority of the securities of the Company entitled to vote
if the requirements of Rule 16b-3 (b) (2) promulgated under the Exchange Act are
otherwise satisfied. In the event such shareholder approval is not obtained
within such time period, any Options granted hereunder shall be void.
6.5 Option Adjustments.
a. If the outstanding Shares are increased, decreased,
changed into or exchanged for a different number or kind of shares of the
Company through reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, an appropriate and proportionate
adjustment shall be made in the number or kind of shares, and the per-share
Option price thereof which may be issued in the aggregate and to any individual
Optionee under this Plan upon exercise of Options granted under this Plan;
provided, however, that no such adjustment need be made if, upon the advice of
counsel, the Committee determines that such adjustment may result in the receipt
of federally taxable income to holders of Options granted hereunder or the
holders of Shares or other classes of the Company's securities.
b. Upon the occurrence of a Terminating Transaction (as
defined in Article II hereof), as of the effective date of such Terminating
Transaction, this Plan and any then outstanding Options (whether or not vested)
shall terminate unless (i) provision is made in writing in connection with such
transaction for the continuance of this Plan and for the assumption of such
Options, or for the substitution of such Options of new options covering the
securities of the successor or surviving corporation in the Terminating
Transaction or an affiliate thereof, with appropriate adjustments as to the
number and kind of securities and prices, in which event this Plan and such
outstanding Options shall continue or be replaced, as the case may be, in the
manner and under the terms so provided; or (ii) the Committee otherwise shall
provide in writing for such adjustments as it deems appropriate in the terms and
conditions of the then outstanding Options (whether or not vested), including
without limitation (a) accelerating the vesting of outstanding Options, and/or
(b) providing for the cancellation of Options and their automatic conversion
into the right to receive the securities or other properties which a holder of
the Shares underlying such Options would have been entitled to receive upon
consummation of such Terminating Transaction had such Shares been issued and
outstanding (net of the appropriate option exercise prices). If this Plan or
the Options shall terminate pursuant to the foregoing provisions of this
paragraph (b) because neither (i) nor (ii) is satisfied, any Optionee holding
outstanding Options shall have the right, at such time immediately prior to the
consummation of the Terminating Transaction as the Company shall designate and
theretofore exercised, including any installments which have not yet become
Accrued installments.
c. In all cases, the nature and extent of adjustments under
this Section 6.5 shall be determined by the Committee in its sole discretion,
and any such determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive. No fractional shares of stock
shall be issued under this Plan pursuant to any such adjustment.
6.6 Taxes. The Committee shall make such provisions and take such
steps as it deems necessary or appropriate for the withholding of any federal,
state, local and other tax required by law to be withheld with respect to the
grant or exercise of an Option under this Plan, including, but without
limitation, the withholding of the number of Shares at the time of the grant or
exercise of an Option the Fair Market Value of which would satisfy any
withholding tax on said exercise or grant, the deduction of the amount of any
such withholding tax from any compensation or other amounts payable to an
Optionee by any member of the Participating Companies, or requiring an Optionee
(or the Optionee beneficiary or legal representative) as a condition of granting
or exercising an Option to pay to any member of the Participating Companies any
amount required to be withheld, or to execute such other documents as the
Committee deems necessary or appropriate in connection with the satisfaction of
any applicable withholding obligation.
6.7 Legends. Each Option Agreement and each certificate representing
Shares acquired upon exercise of an Option shall be endorsed with all legends,
if any, required by applicable federal and state securities laws to be placed
thereon. The determination of which legends, if any, shall be placed upon
Option Agreements and/or said Share certificates shall be made by the Committee
in its sole discretion and such decision shall be final, binding and conclusive.
ARTICLE VII
SPECIAL OPTION TERMS UNDER THIS PLAN
7.1 Option Exercise Price. The Option exercise price for Shares
to be issued under this Plan shall be the Fair Market Value of the Shares on the
date of grant. The date of grant shall be deemed to be the date on which the
Committee authorizes the grant of the Option, unless a subsequent date is
specified in such authorization.
7.2 Exercise of Options. An Option may be exercised in accordance
with this Section 7.2 as to all or any portion of the Shares covered by an
Accrued installment of the Option from time to time during the applicable Option
period, except that an Option shall not be exercisable with respect to fractions
of a Share. Options may be exercised, in whole or in part, by giving written
notice of exercise to the Company, which notice shall specify the number of
Shares to be purchased and shall be accompanied by payment in full of the
purchase price in accordance with Section 7.3. An Option shall be deemed
exercised when such written notice of exercise and payment has been received by
the Company. No Shares shall be issued until full payment has been made and the
Optionee has satisfied such other conditions as may be required by this Plan, as
may be by applicable law, rules, or regulations, or as may be adopted or imposed
by the Committee. Until the required stock certificates have been issued, no
right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to optioned Shares notwithstanding the exercise of the
Option. No adjustment will be made for a dividend or other rights for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section 6.5.
7.3 Payment of Option Exercise Price.
a. Except as otherwise provided in Section 7.3 (b),
the entire Option exercise price shall be paid in cash at the time the Option is
exercised.
b. In the discretion of the Committee, an Optionee may elect to
pay for all or some of the Optionee's Shares with Common Stock of the Company
previously acquired and owned at the time of exercise by the Optionee, subject
to all restrictions and limitations of applicable laws, rules and regulations,
and subject to the satisfaction of any conditions the Committee may impose,
including, but not limited to, the making of such representations and warranties
and the providing of such other assurances that the Committee may require with
respect to the Optionee's title to the Company's Common Stock used for payment
of the exercise price. Such payment shall be made by delivery of certificates
representing the Company's Common Stock, duly endorsed or with duly signed stock
power attached, such Common Stock to be valued at its Fair Market Value on the
date notice of exercise is received by the Company.
7.4 Special Limitations on Incentive Stock Options. To the extent that
the aggregate Fair Market Value (determined at the time the respective Incentive
Stock Option is granted) of Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by an individual during any calendar
year under all incentive stock option plans of the Company and its Parent
Corporation and Subsidiaries exceeds $100,000, such excess Incentive Stock
Options shall be treated as Nonqualified Options. The Committee shall
determine, in accordance with applicable provisions of the Code, Treasury
Regulations and other administrative pronouncements, which of an Optionee's
Incentive Stock Option will not constitute Incentive Stock Options because of
such limitation and shall notify the Optionee of such determination as soon as
practicable after such determination. No Incentive Stock Option shall be
granted to an individual if, at the time the Option is granted, such individual
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of its Parent Corporation or a Subsidiary,
within the meaning of Section 422(b)(6) of the Code, unless (i) at the time such
Option is granted the option price is at least 110% of the Fair Market Value of
the Common Stock subject to the Option and (ii) such Option by its terms is not
exercisable after the expiration of five years from the date of grant.
ARTICLE VIII
AMENDMENT OR TERMINATION OF PLAN
8.1 Board Authority. The Board may amend, alter, and/or terminate
this Plan at any time; provided, however, that unless required by applicable
law, rule, or regulation or unless no longer required to satisfy the
requirements of Rule 16b-3 promulgated under the Exchange Act, the Board shall
not amend this Plan without the approval of stockholders (as obtained in
accordance with the provisions of Section 6.4(c) hereof) if the amendment would
(A) materially increase the benefits accruing to participants under this Plan,
(B) materially increase the number of securities which may be issued under this
Plan, or (C) materially modify the requirements as to eligibility for
participation in this Plan. In determining whether a given amendment is within
the scope of (A), (B) or (C), the Company may rely, without limitation, upon the
regulations promulgated and the advice provided by the Securities and Exchange
Commission with respect to Rule 16b-3. No amendment of this Plan or of any
Option Agreement shall affect in a material and adverse manner Options granted
prior to the date of any such amendment without the consent of any Optionee
holding any such affected Options.
8.2 Contingent Grants Based on Amendments. Options may be granted
in reliance on and consistent with any amendment adopted by the Board alone
which is necessary to enable such Options to be granted under this Plan, even
though such amendment requires future stockholder approval; provided, however,
that any such contingent Option by its terms may not be exercised prior to
stockholder approval of such amendment and provided, further, that in the event
stockholder approval is not obtained within twelve (12) months of the date of
grant of such contingent Option, then such contingent Option shall be deemed
canceled and no longer outstanding.
ARTICLE IX
GENERAL PROVISIONS
9.1 Availability of Plan. A copy of this Plan shall be delivered
to the Secretary and Assistant Secretary of the Company and shall be shown by
the Secretary or Assistant Secretary to any Eligible Person making reasonable
inquiry concerning this Plan.
9.2 Notice. Any notice or other communication required or
permitted to be given pursuant to this Plan or under any Option Agreement must
be in writing and shall be deemed to have been given when delivered to and
actually received by the party to whom addressed. Notice shall be given to
Optionee's at their most recent addresses shown in the Company's records.
Notice to the Company shall be addressed to the Company at the address of the
Company's principal executive offices, to the attention of the Secretary of the
Company.
9.3 Titles and Headings. Titles and headings of sections of this
Plan are for convenience of reference only and shall not affect the construction
of any provision of this Plan.
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