UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 14-A
Proxy Statement Pursuant to Section 14(a) of the
Securities 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 the use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 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)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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 No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
BLUE DOLPHIN ENERGY COMPANY
801 TRAVIS, SUITE 2100
HOUSTON, TEXAS 77002
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2000
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
in Houston, Texas, on May 18, 2000, at 10:00 a.m., Central Daylight Time, at the
Company's principal executive offices, 801 Travis, Suite 2100, Houston, Texas,
for the following purposes:
1. To elect four 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 approve the Company's 2000 Stock Incentive Plan; and
3. To transact such other business as may properly come before the Annual
Meeting, or any adjournment or postponement thereof.
Stockholders of record at the close of business on March 23, 2000, are entitled
to notice of, and to vote at, the Annual Meeting, or any adjournment or
postponement thereof.
Your vote is important. Since many stockholders are not able to attend the
Annual Meeting, we request that you indicate your vote as to the matters to be
acted upon at the Annual Meeting and sign, date and mail promptly the enclosed
proxy in the enclosed stamped return envelope provided.
For the Board of Directors
/s/ MICHAEL J. JACOBSON
MICHAEL J. JACOBSON,
President and Chief Executive Officer
Houston, Texas
April 20, 2000
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE URGED TO
SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY. IF YOU ATTEND THE ANNUAL
MEETING, YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE>
BLUE DOLPHIN ENERGY COMPANY
801 TRAVIS, SUITE 2100
HOUSTON, TEXAS 77002
PROXY STATEMENT
---------
ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 2000
---------
This Proxy Statement is being furnished to the stockholders in connection
with the solicitation of proxies by the Board of Directors of Blue Dolphin
Energy Company, a Delaware corporation (the "Company"), from holders of its
Common Stock, $.01 par value per share ("Common Stock") for use at the 2000
Annual Meeting of Stockholders or at any adjournment or postponement thereof
(such meeting and any adjournment or postponement thereof is referred to herein
as the "Annual Meeting"). The Annual Meeting is to be held on May 18, 2000, at
10:00 a.m., Central Daylight Time, at the Company's principal executive offices,
801 Travis, Suite 2100, Houston, Texas, for the purpose of considering and
voting upon the matters set forth in the accompanying Notice of Annual Meeting
of Stockholders (the "Notice").
This Proxy Statement, and the accompanying Notice and form of proxy, are
first being mailed to stockholders on or about April 20, 2000 along with the
Annual Report to Stockholders for the year ended December 31, 1999.
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 be
compensated. Arrangements may be made with brokerage houses or other custodians,
nominees, and fiduciaries to send proxy material to the beneficial owners of the
Common Stock and the Company will reimburse them for their reasonable
out-of-pocket expenses incurred in connection there in. All costs of this
solicitation will be borne by the Company.
VOTING
At the Annual Meeting, stockholders will be asked (i) to consider and vote
upon the election of four persons to serve on the Board of Directors of the
company; (ii) to consider and approve the Company's 2000 Stock Incentive Plan
(The "Plan") and (iii) to consider and take action upon such other matters as
may properly come before the Annual Meeting.
All shares of the Common Stock, represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual Meeting, and not
revoked, will be voted at the Annual Meeting in accordance with the instructions
indicated on such proxies. If no instructions are indicated with respect to any
shares for which properly executed proxies have been received and which are
eligible to vote, such proxies will be voted "FOR" all nominees for election to
the Board of Directors and "FOR" approval of the Plan. The Board of Directors of
the Company does not know of any other matters to be brought before the
1
<PAGE>
Annual Meeting. If any other matters are properly presented at the Annual
Meeting for action, the persons named in the proxies and acting thereunder will
have discretion to vote on such matters in accordance with their best judgment
as to the best interest of the Company.
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:
o by providing written notice of revocation to the Company:
o delivering to the Company a signed proxy of a later date: or
o 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.
The Board of Directors has fixed the close of business on March 23, 2000,
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. As of March 23, 2000, there were outstanding
5,950,880 shares of Common Stock. Stockholders will be 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.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of members of the Board
of Directors, currently four members, shall be determined by the Board of
Directors. The members of the Board of Directors serve one year terms. 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, an abstention will have no effect on the election of
directors. Shares held by brokers will not be considered entitled to vote on
matters as to which the brokers withhold authority, a broker non-vote will have
no effect on the election of directors.
NOMINEES
Messrs. Michael S. Chadwick, Harris A. Kaffie, Daniel B. Porter and Ivar
Siem (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. Each is currently a Director of the Company. 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.
2
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF THE NOMINEES.
NOMINEES AND EXECUTIVE OFFICERS
The following table provides information with respect to the Nominees,
each of whom is currently a Director, and the executive officers of the Company.
POSITION
NAME AGE POSITION HELD SINCE
---- --- -------- ----------
Ivar Siem 53 Chairman of the Board 1989
Michael S. Chadwick 48 Director 1992
Harris A. Kaffie 50 Director 1989
Daniel B. Porter 43 Director 1989
Michael J. Jacobson 53 President and Chief 1990
Executive Officer
Roland B. Keller 61 Executive Vice President 1990
John P. Atwood 48 Vice President 1998
G. Brian Lloyd 41 Vice President, Treasurer 1989
and Secretary
The following is a brief description of the background and principal
occupation of each Nominee and executive officer:
IVAR SIEM - Chairman of the Board of Directors - Mr. Siem is currently
a member of the Board of Directors of Avenir A/S, Siem Industries, Greywolf Inc.
and DSND ASA. Since 1995, he has served on the Board of Directors of Greywolf
Inc., during which time he served as Chairman from 1995 to 1998 and 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. Since October 1999, Mr. Siem has served as a Director of American
Resources Offshore, Inc., and since December 1999 he has served as President of
ARO, at which time ARO became a 75% owned subsidiary of the Company.
MICHAEL S. CHADWICK - Director - Mr. Chadwick has been engaged in the
commercial and investment banking business since 1975. From 1988 to July 1994,
Mr. Chadwick was President of Chadwick, Chambers & Associates, Inc., a private
merchant and investment banking firm in Houston, Texas, which he founded in
1988. In August 1994, Mr. Chadwick joined Sanders Morris Mundy now known as
Sanders Morris Harris, an investment banking and financial advisory firm, as
Senior Vice President and a Managing Director in the Corporate Finance
Department. Mr. Chadwick holds a Bachelor of Arts Degree in Economics
3
<PAGE>
from the University of Texas at Austin and a Master of Business Administration
Degree from Southern Methodist University.
HARRIS A. KAFFIE - Director - Mr. Kaffie has been a partner in Kaffie
Brothers, a real estate, farming and ranching company, and has held this
position for more than five years. He currently serves as an Advisory Director
of Nations Bank Corpus Christi, Director of KBK Capital Corporation and Director
of CCNG, Inc., the General Partner of Corpus Christi Natural Gas Company, L.P.,
a privately-held company which owns and operates natural gas pipelines and
processing facilities, and is engaged in the marketing of natural gas. Mr.
Kaffie received a Bachelor of Business Administration Degree from Southern
Methodist University in 1972.
DANIEL B. PORTER - Director - Mr. Porter is the Chairman and Chief
Executive Officer of CCNG, Inc., a privately-held natural gas pipeline and
marketing company, and has held this position for more than five years . Mr.
Porter received a Bachelor of Science Degree in Marketing from the University of
Houston in 1979.
MICHAEL J. JACOBSON - President and Chief Executive Officer - 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 it's 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. He has been a
member of several Boards of Directors, including Volvo Petroleum, Inc., W.L.
Somner Company, Inc., and Flagstaff Corporation. Mr. Jacobson holds a Bachelor
of Science Degree in Finance from the University of Colorado. Mr. Jacobson has
served as President and Chief Executive Officer of the Company since January
1990. Since October 1999, Mr. Jacobson has served as a Director of ARO.
ROLAND B. KELLER - Executive Vice President - Exploration and
Development - Mr. Keller has been associated with the energy industry since
1962, serving in senior management capacities since 1976. Prior to joining the
Company in 1990, he served as Senior Vice President - Exploration for Sandefer
Oil and Gas Company, an independent oil and gas company from 1982. He served as
Vice President - Exploration and Production for Volvo Petroleum, Inc., from 1980
to 1982, and Vice President and Division Manager for Florida Exploration Co.,
from 1976 to 1980. Mr. Keller began his career with Amoco Production Co.,
serving in various technical and management capacities from 1962 through 1976.
Mr. Keller holds Bachelor of Science and Master of Science degrees in Geology
from the University of Florida. Mr. Keller has served as Executive Vice
President - Exploration and Development of the Company since September 1990.
Since December 1999, Mr. Keller has served as Vice President of ARO.
JOHN P. ATWOOD - Vice President, Finance and Corporate Development -
Mr. Atwood has been associated with the energy industry since 1974, serving in
various management capacities since 1981. He served as Senior Area Land Manager
for CSX Oil & Gas Corporation and Division Land Manager for Hamilton Brothers
Oil Company/Volvo Petroleum, Inc. He served in various land capacities for
Tenneco Oil Company from 1977 to 1981. Mr. Atwood is a Certified Professional
Landman and holds a Bachelor of Arts Degree from Oklahoma City University and a
Master of Business Administration Degree from Houston
4
<PAGE>
Baptist University. Mr. Atwood served as Vice President of Land from 1991 until
his appointment as Vice President of Finance and Corporate Development in
October 1998. Since December 1999, Mr. Atwood has served as a Director, Vice
President and Secretary of ARO.
G. BRIAN LLOYD - Vice President, Treasurer and Secretary - Mr. Lloyd
is a Certified Public Accountant and has been employed by the Company since
December 1985. Prior to joining the Company, he was an accountant for DeNovo Oil
and Gas Inc., an independent oil and gas company. Mr. Lloyd received a Bachelor
of Science Degree in Finance from Miami University, Oxford, Ohio in 1982 and
attended the University of Houston in 1983 and 1984. Mr. Lloyd has served as
Secretary of the Company since May 1989, Treasurer since September 1989 and Vice
President since March 1998. Since December 1999, Mr. Lloyd has served as Vice
President and Treasurer of ARO.
There are no family relationships between any Nominee or executive
officer.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During 1999, the Board of Directors of the Company held five 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 has two standing
committees, each of which is discussed below.
The Audit Committee consisting of Messrs. Siem, Kaffie and Chadwick, met
one time during the last fiscal year. The Audit Committee's duties include
overseeing the Company's financial reporting and internal control functions.
The Compensation Committee, consisting of Messrs. Siem, Kaffie, Porter and
Jacobson, met one time during the last fiscal year. The Compensation Committee's
duties are to oversee and set compensation policy and to administer the
Company's stock option plan.
The Company does not have a nominating committee. However, pursuant to the
Company's Bylaws, stockholder nominations for election to the Board of Directors
must be received by the Company at least 90 days prior to the anniversary date
of the preceding year's annual meeting of stockholders. See "Nominations and
Proposals by Stockholders for the 2000 Annual Meeting."
COMPENSATION OF DIRECTORS
The Company pays to non-employee members of the Board of Directors a fee
of $300 per meeting attended in person, and $100 per telephone meeting in which
the Director participated. No additional remuneration is paid to such Directors
for committee meetings attended, except that such Directors are entitled to be
reimbursed for expenses related to attendance of board or committee meetings.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to the Chief
Executive Officer and each of the executive officers of the Company whose cash
compensation exceeded $100,000 in 1999 (collectively, the "Named Executive
Officers") for services rendered to the Company.
5
<PAGE>
SUMMARY COMPENSATION TABLE*
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
NAME AND ------------------- UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#)
- ----------------------- ------ -------- -------- ------------
Ivar Siem 1999 $150,000 -- 14,292
Chairman of the Board 1998 $ 65,085 -- --
1997 $ 30,000 $ 2,000 10,000
Michael J. Jacobson 1999 $200,000 -- 14,445
President and Chief 1998 $200,000 -- --
Executive Officer 1997 $185,000 $ 7,000 10,000
Roland B. Keller 1999 $140,000 -- 10,140
Executive Vice 1998 $140,000 -- --
President - Exploration 1997 $125,000 $ 5,700 8,333
and Development
William D. Fisher 1999 $140,000 -- 11,440
Executive Vice 1998 $140,000 -- --
President - Pipelines 1997 $127,500 $ 5,600 6,667
John P. Atwood (1)
Vice President of 1999 $120,000 -- 9,834
Finance and Corporate 1998 $105,000 -- --
Development 1997 $ 90,000 $ 3,900 3,335
- ----------
(1) Became an executive officer in October 1998.
*Excludes certain personal benefits, the aggregate value of which do not
exceed 10% of the Annual Compensation shown for each person.
6
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR END(#) AT YEAR END(1)
SHARES ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ivar Siem ......... 15,111 $34,861 11,222 8,446 $28,953 $20,101
Michael J. Jacobson 0 $ 0 23,444 23,556 $60,590 $56,151
Roland B. Keller .. 5,556 $13,198 11,000 13,668 $28,570 $33,445
William D. Fisher . 0 $ 0 9,666 12,668 $25,373 $31,792
John P. Atwood .... 2,889 $ 6,135 5,777 8,558 $15,488 $22,454
</TABLE>
- ---------------------
(1) Based on the difference between the average of the closing bid and
ask prices on December 31, 1999 (the last trading day of 1999) and
the exercise price.
The Company's Stock Option Plans provide 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 Stock Option Plans, 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 had the option
already been exercised. The Stock Option Plans provide 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.
7
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 23, 2000, certain information
with respect to the beneficial ownership of shares of the Common Stock (the only
class of voting security issued and outstanding) as to (i) all persons known by
the Company 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 15.3
Ivar Siem(3) 414,204 6.9
Harris A. Kaffie(3)(4) 854,066 14.0
Daniel B. Porter(3) 178,525 3.0
Michael S. Chadwick(3) 8,281 *
Michael J. Jacobson(3) 122,050 2.0
Roland B. Keller(3) 41,542 *
William D. Fisher(3) 13,373 *
John P. Atwood(3) 19,331 *
Executive Officers and
Directors, as a Group
(9 persons)(3) 1,665,947 27.0
----------------------
* Less than 1%
8
<PAGE>
(1) Based upon 5,950,880 shares of Common Stock outstanding on March 23, 2000.
(2) 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 March 23, 2000 as follows: Mr. Siem -
11,222; Mr. Kaffie - 4,333; Mr. Porter - 1,835; Mr. Chadwick - 1,835; Mr.
Jacobson - 23,444; Mr. Keller - 11,000; Mr. Fisher - 9,666; Mr. Atwood -
5,777 and all directors and executive officers as a group - 74,113.
(4) Includes 151,515 shares of Common Stock issuable upon conversion of a
$1,000,000 promissory note, due June 1, 2000, held by Mr. Kaffie.
APPROVAL OF THE COMPANY'S 2000 STOCK INCENTIVE PLAN
On April 14, 2000, the Board of Directors adopted, subject to shareholder
approval, the Plan in order to provide the Company with an effective means of
attracting and retaining key employees, consultants and outside directors,
encouraging their commitment, motivating their performance, facilitating their
ownership interest in the Company and enabling them to share in the Company's
long term growth and success.
The affirmative vote of a majority of the Common Stock present in person
or by proxy and entitled to vote at the Annual Meeting is required to approve
this proposal. Abstentions will have the same effect as a vote "Against" the
Plan. Broker non-votes will have no effect on the approval of the 2000 Stock
Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE
PLAN.
SUMMARY DESCRIPTION OF THE PROGRAM
The following summary of the terms of the Plan is qualified in its
entirety by reference to the text of the Plan, which is attached as Appendix A
to this Proxy Statement. If adopted by shareholders, the Plan will be effective
as of April 14, 2000.
SHARES SUBJECT TO PLAN. Under the Plan, the Company may issue Incentive
Awards up to 5% of the number of shares of Common Stock issued and outstanding
on the first day of the then preceding calendar quarter. No more than 500,000
shares of Common Stock 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.
ADMINISTRATION. The Plan will be 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,
9
<PAGE>
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 ("NSOs");
III. stock appreciation rights ("SARs");
IV. shares of restricted stock;
V. performance units and performance shares; and
VI. other stock-based awards.
ISOs and NSOs together are called "Options." The terms of each Incentive Award
will be 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 ISOs are exercisable for the first time by any employee
during any calendar year exceeds $100,000, those Options must be treated as
NSOs.
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 will not recognize income for federal income tax purposes, nor
will the Company be entitled to a deduction, when a NSO is granted. However,
when a NSO is exercised, the optionee will recognize 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 will generally recognize
a tax deduction in the same amount at the same time.
10
<PAGE>
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.
SARS. Upon the exercise of an SAR, the holder will receive 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. SARs will
be subject to such conditions and will be 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.
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.
OTHER TAX CONSIDERATIONS. Upon accelerated exercisability of Options and
accelerated lapsing of restrictions upon restricted stock or other Incentive
Awards in connection with a Change in Control (as defined in the Plan), certain
amounts associated with such Incentive Awards could, depending upon the
individual circumstances of the participant, constitute "excess parachute
payments" under Section 280G of the Internal Revenue Code. Such a determination
would subject the participant to a 20% excise tax on those payments and deny the
Company a corresponding deduction. The limit on deductibility of compensation
under Section 162(m) of the Code is also reduced by the amount of any excess
parachute payments. Whether amounts constitute excess parachute payments depends
upon, among other things, the value of the Incentive Awards accelerated and the
past compensation of the participant.
Taxable compensation earned by executive officers who are subject to
Section 162(m) of the Internal Revenue Code with respect to Incentive Awards is
subject to certain limitations set forth in the Plan. Those limitations are
generally intended to satisfy the requirements for "qualified performance-based
compensation," but the Company may not be able to satisfy these requirements in
all cases, and may, in its sole discretion, determine in one or more cases that
it is best not to satisfy these requirements even if it can.
11
<PAGE>
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 ISOs, 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 SARs
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.
TRANSACTIONS WITH RELATED PERSONS
In June 1999, the Company received $1,960,000 through a private placement
of 392,000 shares of Common Stock, $.01 par value per share, at $5.00 per share.
A director of the Company, Harris A. Kaffie, participated in the private
placement, purchasing 100,000 shares.
In December 1999, the Company completed a private placement of 1,016,718
shares of Common Stock at $6.00 per share. Consideration for the Common Stock
sold consisted of approximately $4,200,000 cash and the surrender of
approximately $1,900,000 of the Company's promissory notes due December 31,
2000, along with accrued interest through December 1, 1999. Three directors of
the
12
<PAGE>
Company participated in this private placement: one director, Daniel B. Porter,
paid cash for 16,667 shares and tendered a note and accrued interest totaling
$100,200 for 16,700 shares, another director, Daniel B. Porter, tendered a note
and accrued interest totaling $187,800 for 31,300 shares and a third director,
Ivar Siem, tendered a note and accrued interest totaling $28,200 for 4,700
shares.
On December 1, 1999, the Company issued a $1,000,000 promissory note to
Harris A. Kaffie, a director of the Company. The note is due June 1, 2000, bears
interest at 10% per annum, and is convertible into Common Stock at $6.60 per
share.
NOMINATIONS AND PROPOSALS BY STOCKHOLDERS
FOR THE 1999 ANNUAL MEETING
NOMINATIONS FOR THE YEAR 2001 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 not less than 90
calendar days prior to the anniversary date of the immediately preceding annual
meeting of stockholders. 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, at the year 2001
annual meeting of stockholders, persons to serve on the Board of Directors must
submit nominations to the Company, at its principal executive office, so that
such notice is received by the Company no later than February 19, 2001. 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 2001 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 2001 annual meeting of
stockholders, 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 15, 2000. 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 2001 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 February 28, 2001 and (2) satisfy the
rules of the U.S. Securities and Exchange Commission.
RELATIONSHIP WITH
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG L.L.P., independent public accountants, have been engaged by the
Company's Board of Directors as the principal accountants for the Company since
November, 1990. The Company expects that they will continue as principal
accountants. Representatives of KPMG L.L.P. are expected to be
13
<PAGE>
present at the Annual Meeting, with the opportunity to make a statement if they
desire to do so, and to respond to questions.
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.
By Order of the Board of Directors
/s/ G. BRIAN LLOYD
G. Brian Lloyd
Vice President, Treasurer
Houston, Texas
April 20, 2000
14
<PAGE>
APPENDIX 1
BLUE DOLPHIN ENERGY COMPANY
2000 STOCK INCENTIVE PLAN
(AS EFFECTIVE APRIL 14, 2000)
<PAGE>
TABLE OF CONTENTS
PAGE
----
SECTION 1. GENERAL PROVISIONS RELATING TO PLAN GOVERNANCE, COVERAGE AND
BENEFITS.........................................................1
1.1 Purpose..........................................................1
1.2 Definitions......................................................1
(a) Authorized Officer.........................................1
(b) Board......................................................1
(c) Cause......................................................1
(d) CEO........................................................2
(e) Change in Control..........................................2
(f) Code.......................................................2
(g) Committee..................................................2
(h) Common Stock...............................................2
(i) Company....................................................3
(j) Consultant.................................................3
(k) Covered Employee...........................................3
(l) Deferred Stock.............................................3
(m) Disability.................................................3
(n) Employee...................................................3
(o) Employment.................................................3
(p) Exchange Act...............................................4
(q) Fair Market Value..........................................4
(r) Grantee....................................................4
(s) Immediate Family...........................................4
(t) Incentive Award............................................4
(u) Incentive Agreement........................................4
(v) Incentive Stock Option.....................................5
(w) Independent SAR............................................5
(x) Insider....................................................5
(y) Nonstatutory Stock Option..................................5
(z) Option Price...............................................5
(aa) Other Stock-Based Award....................................5
(bb) Outside Director...........................................5
(cc) Parent.....................................................5
(dd) Performance-Based Exception................................5
(ee) Performance Period.........................................5
(ff) Performance Share or Performance Unit......................5
(gg) Plan.......................................................5
(hh) Publicly Held Corporation..................................5
(ii) Restricted Stock...........................................6
(jj) Restricted Stock Award.....................................6
(kk) Restriction Period.........................................6
<PAGE>
TABLE OF CONTENTS (continued)
PAGE
----
(ll) Share......................................................6
(mm) Share Pool.................................................6
(nn) Spread.....................................................6
(oo) Stock Appreciation Right or SAR............................6
(pp) Stock Option or Option.....................................6
(qq) Subsidiary.................................................6
1.3 Plan Administration..............................................6
(a) Authority of the Committee.................................6
(b) Meetings...................................................6
(c) Decisions Binding..........................................7
(d) Modification of Outstanding Incentive Awards...............7
(e) Delegation of Authority....................................7
(f) Expenses of Committee......................................7
(g) Indemnification............................................7
1.4 Shares of Common Stock Available for Incentive Awards............8
1.5 Share Pool Adjustments for Awards and Payouts....................9
1.6 Common Stock Available...........................................9
1.7 Participation....................................................9
(a) Eligibility................................................9
(b) Incentive Stock Option Eligibility........................10
(c) Exercise Price............................................10
1.8 Types of Incentive Awards.......................................10
SECTION 2. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS......................10
2.1 Grant of Stock Options..........................................10
2.2 Stock Option Terms..............................................11
(a) Written Agreement.........................................11
(b) Number of Shares..........................................11
(c) Exercise Price............................................11
(d) Term......................................................11
(e) Exercise..................................................11
(f) $100,000 Annual Limit on Incentive Stock Options..........11
2.3 Stock Option Exercises..........................................12
(a) Method of Exercise and Payment............................12
(b) Restrictions on Share Transferability.....................13
(c) Notification of Disqualifying Disposition of Shares from
Incentive Stock Options...................................13
(d) Proceeds of Option Exercise...............................13
2.4 Stock Appreciation Rights Independent of Nonstatutory Stock
Options.........................................................13
(a) Grant.....................................................13
(b) General Provisions........................................13
(c) Exercise..................................................14
(d) Settlement................................................14
ii
<PAGE>
TABLE OF CONTENTS (continued)
PAGE
----
SECTION 3. RESTRICTED STOCK.................................................14
3.1 Award of Restricted Stock.......................................14
(a) Grant.....................................................14
(b) Immediate Transfer Without Immediate Delivery of
Restricted Stock..........................................14
3.2 Restrictions....................................................15
(a) Forfeiture of Restricted Stock............................15
(b) Issuance of Certificates..................................15
(c) Removal of Restrictions...................................16
3.3 Delivery of Shares of Common Stock..............................16
SECTION 4. PERFORMANCE UNITS AND PERFORMANCE SHARES.........................16
4.1 Performance Based Awards........................................16
(a) Grant.....................................................16
(b) Performance Criteria......................................16
(c) Modification..............................................16
(d) Payment...................................................17
(e) Special Rule for Covered Employees........................17
SECTION 5. OTHER STOCK-BASED AWARDS.........................................17
5.1 Grant of Other Stock-Based Awards...............................17
5.2 Other Stock-Based Award Terms...................................18
(a) Written Agreement.........................................18
(b) Purchase Price............................................18
(c) Performance Criteria and Other Terms......................18
(d) Payment...................................................18
(e) Dividends.................................................18
SECTION 6. PROVISIONS RELATING TO PLAN PARTICIPATION........................18
6.1 Plan Conditions.................................................18
(a) Incentive Agreement.......................................18
(b) No Right to Employment....................................19
(c) Securities Requirements...................................19
6.2 Transferability.................................................20
6.3 Rights as a Stockholder.........................................20
(a) No Stockholder Rights.....................................20
(b) Representation of Ownership...............................20
6.4 Listing and Registration of Shares of Common Stock..............21
6.5 Change in Stock and Adjustments.................................21
(a) Changes in Law or Circumstances...........................21
(b) Exercise of Corporate Powers..............................21
(c) Recapitalization of the Company...........................22
(d) Issue of Common Stock by the Company......................22
(e) Assumption under the Plan of Outstanding Stock Options....22
(f) Acquisition of Company by a Successor.....................22
iii
<PAGE>
TABLE OF CONTENTS (continued)
PAGE
----
6.6 Termination of Employment, Death or Disability..................23
(a) Termination of Employment.................................23
(b) Termination of Employment for Cause.......................24
(c) Disability or Death.......................................24
(d) Continuation..............................................24
6.7 Change in Control...............................................25
6.8 Financing.......................................................26
SECTION 7. GENERAL..........................................................26
7.1 Effective Date and Grant Period.................................26
7.2 Funding and Liability of Company................................27
7.3 Withholding Taxes...............................................27
(a) Tax Withholding...........................................27
(b) Share Withholding.........................................27
(c) Incentive Stock Options...................................27
(d) Loans.....................................................28
7.4 No Guarantee of Tax Consequences................................28
7.5 Designation of Beneficiary by Participant.......................28
7.6 Deferrals.......................................................28
7.7 Amendment and Termination.......................................28
7.8 Requirements of Law.............................................29
7.9 Rule 16b-3 Securities Law Compliance for Insiders...............29
7.10 Compliance with Code Section 162(m) for Publicly Held
Corporation.....................................................29
7.11 Successors to Company...........................................29
7.12 Miscellaneous Provisions........................................30
7.13 Severability....................................................30
7.14 Gender, Tense and Headings......................................30
7.15 Governing Law...................................................30
iv
<PAGE>
BLUE DOLPHIN ENERGY COMPANY
2000 STOCK INCENTIVE PLAN
SECTION 1.
GENERAL PROVISIONS RELATING TO
PLAN GOVERNANCE, COVERAGE AND BENEFITS
1.1 PURPOSE
The purpose of the Plan is to foster and promote the long-term financial
success of Blue Dolphin Energy Company (the "COMPANY") and its Subsidiaries and
to increase stockholder value by: (a) encouraging the commitment of selected key
Employees, Consultants and Outside Directors, (b) motivating superior
performance of key Employees, Consultants and Outside Directors by means of
long-term performance related incentives, (c) encouraging and providing key
Employees, Consultants and Outside Directors with a program for obtaining
ownership interests in the Company which link and align their personal interests
to those of the Company's stockholders, (d) attracting and retaining key
Employees, Consultants and Outside Directors by providing competitive incentive
compensation opportunities, and (e) enabling key Employees, Consultants and
Outside Directors to share in the long-term growth and success of the Company.
The Plan provides for payment of various forms of incentive compensation.
It is not intended to be a plan that is subject to the Employee Retirement
Income Security Act of 1974, as amended (ERISA). The Plan will be interpreted,
construed and administered consistent with its status as a plan that is not
subject to ERISA.
Subject to approval by the Company's stockholders pursuant to SECTION 7.1,
the Plan will become effective as of April 14, 2000 (the "EFFECTIVE Date"). The
Plan will commence on the Effective Date, and will remain in effect, subject to
the right of the Board to amend or terminate the Plan at any time pursuant to
SECTION 7.7, until all Shares subject to the Plan have been purchased or
acquired according to its provisions. However, in no event may an Incentive
Award be granted under the Plan after the expiration of ten (10) years from the
Effective Date.
1.2 DEFINITIONS
The following terms shall have the meanings set forth below:
(A) AUTHORIZED OFFICER. The Chairman of the Board or the Chief
Executive Officer of the Company or any other senior officer of the
Company to whom either of them delegate the authority to execute any
Incentive Agreement for and on behalf of the Company. No officer or
director shall be an Authorized Officer with respect to any Incentive
Agreement for himself.
(B) BOARD. The Board of Directors of the Company.
(C) CAUSE. When used in connection with the termination of a
Grantee's Employment, shall mean the termination of the Grantee's
Employment by the Company or any Subsidiary for reason of (i) the
conviction of the Grantee by a court of competent jurisdiction as to which
no further appeal can be taken of a crime involving moral turpitude or a
felony; (ii) the proven commission by the Grantee of a material act of
fraud upon the Company or any
<PAGE>
Subsidiary, or any customer or supplier thereof; (iii) the willful and
proven misappropriation of any funds or property of the Company or any
Subsidiary, or of any customer or supplier thereof; (iv) the willful,
continued and unreasonable failure by the Grantee to perform the material
duties assigned to him which is not cured to the reasonable satisfaction
of the Company within 30 days after written notice of such failure is
provided to Grantee by either the Board or the Company's Chief Executive
Officer; (v) the knowing engagement by the Grantee in any direct and
material conflict of interest with the Company or any Subsidiary without
compliance with the Company's or Subsidiary's conflict of interest policy
as then effective; or (vi) the knowing engagement by the Grantee, without
the written approval of the Board, in any material activity which competes
with the business of the Company or any Subsidiary, or which would result
in a material injury to the business, reputation or goodwill of the
Company or any Subsidiary.
(D) CEO. The then-current Chief Executive Officer of the Company.
(E) CHANGE IN CONTROL. Any of the events described in and subject to
SECTION 6.7.
(F) CODE. The Internal Revenue Code of 1986, as amended, and the
regulations and other authority promulgated thereunder by the appropriate
governmental authority. References herein to any provision of the Code
shall refer to any successor provision thereto.
(G) COMMITTEE. A committee appointed by the Board consisting of not
less than two directors as appointed by the Board to administer the Plan.
While the Company is a Publicly Held Corporation, the Plan shall be
administered by a committee appointed by the Board consisting of not less
than two directors who fulfill the "non-employee director" requirements of
Rule 16b-3 under the Exchange Act and the "outside director" requirements
of Section 162(m) of the Code. In either case, the Committee may be the
Compensation Committee of the Board, or any subcommittee of the
Compensation Committee, provided that the members of the Committee satisfy
the requirements of the previous provisions of this paragraph. The Board
shall have the power to fill vacancies on the Committee arising by
resignation, death, removal or otherwise. The Board, in its sole
discretion, may bifurcate the powers and duties of the Committee among one
or more separate committees, or retain all powers and duties of the
Committee in a single Committee. The members of the Committee shall serve
at the discretion of the Board.
Notwithstanding the preceding paragraph, the term "Committee" as
used in the Plan with respect to any Incentive Award for an Outside
Director shall refer to the entire Board. In the case of an Incentive
Award for an Outside Director, the Board shall have all the powers and
responsibilities of the Committee hereunder as to such Incentive Award,
and any actions as to such Incentive Award may be acted upon only by the
Board (unless it otherwise designates in its discretion). When the Board
exercises its authority to act in the capacity as the Committee hereunder
with respect to an Incentive Award for an Outside Director, it shall so
designate with respect to any action that it undertakes in its capacity as
the Committee.
(H) COMMON STOCK. The common stock of the Company, $.01 par value
per share, and any class of common stock into which such common shares may
hereafter be converted, reclassified or recapitalized.
2
<PAGE>
(I) COMPANY. Blue Dolphin Energy Company, a corporation organized
under the laws of the State of Delaware, and any successor in interest
thereto.
(J) CONSULTANT. An independent agent, consultant, attorney, an
individual who has agreed to become an Employee within the next six
months, or any other individual who is not an Outside Director or employee
of the Company (or any Parent or Subsidiary) and who, in the opinion of
the Committee, is in a position to contribute to the growth or financial
success of the Company (or any Parent or Subsidiary), (ii) is a natural
person and (iii) provides bona fide services to the Company (or any Parent
or Subsidiary), which services are not in connection with the offer or
sale of securities in a capital raising transaction, and do not directly
or indirectly promote or maintain a market for the Company's securities.
(K) COVERED EMPLOYEE. A named executive officer who is one of the
group of covered employees, as defined in Section 162(m) of the Code and
Treasury Regulation ss. 1.162-27(c) (or its successor), during such period
that the Company is a Publicly Held Corporation.
(L) DEFERRED STOCK. Shares of Common Stock to be issued or
transferred to a Grantee under an Other Stock-Based Award granted pursuant
to SECTION 5 at the end of a specified deferral period, as set forth in
the Incentive Agreement pertaining thereto.
(M) DISABILITY. As determined by the Committee in its discretion
exercised in good faith, a physical or mental condition of the Employee
that would entitle him to payment of disability income payments under the
Company's long term disability insurance policy or plan for employees, as
then effective, if any; or in the event that the Grantee is not covered,
for whatever reason, under the Company's long-term disability insurance
policy or plan, "Disability" means a permanent and total disability as
defined in Section 22(e)(3) of the Code. A determination of Disability may
be made by a physician selected or approved by the Committee and, in this
respect, the Grantee shall submit to any reasonable examination by such
physician upon request.
(N) EMPLOYEE. Any employee of the Company (or any Parent or
Subsidiary) within the meaning of Section 3401(c) of the Code who, in the
opinion of the Committee, is in a position to contribute to the growth,
development or financial success of the Company (or any Parent or
Subsidiary), including, without limitation, officers who are members of
the Board.
(O) EMPLOYMENT. Employment by the Company (or any Parent or
Subsidiary), or by any corporation issuing or assuming an Incentive Award
in any transaction described in Section 424(a) of the Code, or by a parent
corporation or a subsidiary corporation of such corporation issuing or
assuming such Incentive Award, as the parent-subsidiary relationship shall
be determined at the time of the corporate action described in Section
424(a) of the Code. In this regard, neither the transfer of a Grantee from
Employment by the Company to Employment by any Parent or Subsidiary, nor
the transfer of a Grantee from Employment by any Parent or Subsidiary to
Employment by the Company, shall be deemed to be a termination of
Employment of the Grantee. Moreover, the Employment of a Grantee shall not
be deemed to have been terminated because of an approved leave of absence
from active Employment on account of temporary illness, authorized
vacation or granted for reasons of professional advancement, education,
health, or government service, or during military leave for any period (if
the Grantee returns to active Employment within 90 days after the
termination of military
3
<PAGE>
leave), or during any period required to be treated as a leave of absence
by virtue of any applicable statute, Company personnel policy or
agreement. Whether an authorized leave of absence shall constitute
termination of Employment hereunder shall be determined by the Committee
in its discretion.
Unless otherwise provided in the Incentive Agreement, the term
"Employment" for purposes of the Plan is also defined to include (i)
compensatory or advisory services performed by a Consultant for the
Company (or any Parent or Subsidiary) and (ii) membership on the Board by
an Outside Director.
(P) EXCHANGE ACT. The Securities Exchange Act of 1934, as amended.
(Q) FAIR MARKET VALUE. The Fair Market Value of one share of Common
Stock on the date in question is deemed to be (i) the closing sales price
on the immediately preceding business day of a share of Common Stock as
reported on the New York Stock Exchange or other principal securities
exchange on which Shares are then listed or admitted to trading, or (ii)
if not so reported, the average of the closing bid and asked prices for a
Share on the immediately preceding business day as quoted on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"),
or (iii) if not quoted on NASDAQ, the average of the closing bid and asked
prices for a Share as quoted by the National Quotation Bureau's "Pink
Sheets" or the National Association of Securities Dealers' OTC Bulletin
Board System. If there was no public trade of Common Stock on the date in
question, Fair Market Value shall be determined by reference to the last
preceding date on which such a trade was so reported.
If the Company is not a Publicly Held Corporation at the time a
determination of the Fair Market Value of the Common Stock is required to
be made hereunder, the determination of Fair Market Value for purposes of
the Plan shall be made by the Committee in its discretion exercised in
good faith. In this respect, the Committee may rely on such financial
data, valuations, experts, and other sources, in its discretion, as it
deems advisable under the circumstances.
(R) GRANTEE. Any Employee, Consultant or Outside Director who is
granted an Incentive Award under the Plan.
(S) IMMEDIATE FAMILY. With respect to a Grantee, the Grantee's
child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships.
(T) INCENTIVE AWARD. A grant of an award under the Plan to a
Grantee, including any Nonstatutory Stock Option, Incentive Stock Option,
Stock Appreciation Right, Restricted Stock Award, Performance Unit,
Performance Share, or Other Stock-Based Award.
(U) INCENTIVE AGREEMENT. The written agreement entered into between
the Company and the Grantee setting forth the terms and conditions
pursuant to which an Incentive Award is granted under the Plan, as such
agreement is further defined in SECTION 6.1(A).
4
<PAGE>
(V) INCENTIVE STOCK OPTION. A Stock Option granted by the Committee
to an Employee under SECTION 2 which is designated by the Committee as an
Incentive Stock Option and intended to qualify as an Incentive Stock
Option under Section 422 of the Code.
(W) INDEPENDENT SAR. A Stock Appreciation Right described in SECTION
2.5.
(X) INSIDER. While the Company is a Publicly Held Corporation, an
individual who is, on the relevant date, an officer, director or ten
percent (10%) beneficial owner of any class of the Company's equity
securities that is registered pursuant to Section 12 of the Exchange Act,
all as defined under Section 16 of the Exchange Act.
(Y) NONSTATUTORY STOCK OPTION. A Stock Option granted by the
Committee to a Grantee under SECTION 2 that is not designated by the
Committee as an Incentive Stock Option.
(Z) OPTION PRICE. The exercise price at which a Share may be
purchased by the Grantee of a Stock Option.
(AA) OTHER STOCK-BASED AWARD. An award granted by the Committee to a
Grantee under SECTION 5.1 that is valued in whole or in part by reference
to, or is otherwise based upon, Common Stock.
(BB) OUTSIDE DIRECTOR. A member of the Board who is not, at the time
of grant of an Incentive Award, an employee of the Company or any Parent
or Subsidiary.
(CC) PARENT. Any corporation (whether now or hereafter existing)
which constitutes a "parent" of the Company, as defined in Section 424(e)
of the Code.
(DD) PERFORMANCE-BASED EXCEPTION. The performance-based exception
from the tax deductibility limitations of Section 162(m) of the Code, as
prescribed in Code ss. 162(m) and Treasury Regulation ss. 1.162-27(e) (or
its successor), which is applicable during such period that the Company is
a Publicly Held Corporation.
(EE) PERFORMANCE PERIOD. A period of time determined by the
Committee over which performance is measured for the purpose of
determining a Grantee's right to and the payment value of any Performance
Unit, Performance Share or Other Stock-Based Award.
(FF) PERFORMANCE SHARE OR PERFORMANCE UNIT. An Incentive Award
representing a contingent right to receive cash or shares of Common Stock
(which may be Restricted Stock) at the end of a Performance Period and
which, in the case of Performance Shares, is denominated in Common Stock,
and, in the case of Performance Units, is denominated in cash values.
(GG) PLAN. Blue Dolphin Energy Company 2000 Stock Incentive Plan, as
set forth herein and as it may be amended from time to time.
(HH) PUBLICLY HELD CORPORATION. A corporation issuing any class of
common equity securities required to be registered under Section 12 of the
Exchange Act.
5
<PAGE>
(II) RESTRICTED STOCK. Shares of Common Stock issued or transferred
to a Grantee pursuant to SECTION 3.
(JJ) RESTRICTED STOCK AWARD. An authorization by the Committee to
issue or transfer Restricted Stock to a Grantee.
(KK) RESTRICTION PERIOD. The period of time determined by the
Committee and set forth in the Incentive Agreement during which the
transfer of Restricted Stock by the Grantee is restricted.
(LL) SHARE. A share of the Common Stock of the Company.
(MM) SHARE POOL. The number of shares authorized for issuance under
SECTION 1.4, as adjusted for awards and Payouts under SECTION 1.5 and as
adjusted for changes in corporate capitalization under SECTION 6.5.
(NN) SPREAD. The difference between the exercise price per Share
specified in any Independent SAR grant and the Fair Market Value of a
Share on the date of exercise of the Independent SAR.
(OO) STOCK APPRECIATION RIGHT OR SAR. An Independent SAR described
in SECTION 2.4.
(PP) STOCK OPTION OR OPTION. Pursuant to SECTION 2, (i) an Incentive
Stock Option granted to an Employee, or (ii) a Nonstatutory Stock Option
granted to an Employee, Consultant or Outside Director, whereunder such
option the Grantee has the right to purchase Shares of Common Stock. In
accordance with Section 422 of the Code, only an Employee may be granted
an Incentive Stock Option.
(QQ) SUBSIDIARY. Any corporation (whether now or hereafter existing)
which constitutes a "subsidiary" of the Company, as defined in Section
424(f) of the Code.
1.3 PLAN ADMINISTRATION
(A) AUTHORITY OF THE COMMITTEE. Except as may be limited by law and
subject to the provisions herein, the Committee shall have full power to
(i) select Grantees who shall participate in the Plan; (ii) determine the
sizes, duration and types of Incentive Awards; (iii) determine the terms
and conditions of Incentive Awards and Incentive Agreements; (iv)
determine whether any Shares subject to Incentive Awards will be subject
to any restrictions on transfer; (v) construe and interpret the Plan and
any Incentive Agreement or other agreement entered into under the Plan;
and (vi) establish, amend, or waive rules for the Plan's administration.
Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan.
(B) MEETINGS. The Committee shall designate a chairman from among
its members who shall preside at all of its meetings, and shall designate
a secretary, without regard to whether that person is a member of the
Committee, who shall keep the minutes of the proceedings and all records,
documents, and data pertaining to its administration of the Plan. Meetings
shall be held
6
<PAGE>
at such times and places as shall be determined by the Committee and the
Committee may hold telephonic meetings. The Committee may take any action
otherwise proper under the Plan by the affirmative vote, taken with or
without a meeting, of a majority of its members. The Committee may
authorize any one or more of their members or any officer of the Company
to execute and deliver documents on behalf of the Committee.
(C) DECISIONS BINDING. All determinations and decisions made by the
Committee shall be made in its discretion pursuant to the provisions of
the Plan, and shall be final, conclusive and binding on all persons
including the Company, its shareholders, Employees, Grantees, and their
estates and beneficiaries. The Committee's decisions and determinations
with respect to any Incentive Award need not be uniform and may be made
selectively among Incentive Awards and Grantees, whether or not such
Incentive Awards are similar or such Grantees are similarly situated.
(D) MODIFICATION OF OUTSTANDING INCENTIVE AWARDS. Subject to the
stockholder approval requirements of SECTION 7.7 if applicable, the
Committee may, in its discretion, provide for the extension of the
exercisability of an Incentive Award, accelerate the vesting or
exercisability of an Incentive Award, eliminate or make less restrictive
any restrictions contained in an Incentive Award, waive any restriction or
other provisions of an Incentive Award, or otherwise amend or modify an
Incentive Award in any manner that is either (i) not adverse to the
Grantee to whom such Incentive Award was granted or (ii) consented to by
such Grantee; provided, however, the Committee shall not have the
authority to decrease the exercise price of any outstanding Stock Option
or other Incentive Award. With respect to an Incentive Award that is an
incentive stock option (as described in Section 422 of the Code), no
adjustment to such option shall be made to the extent constituting a
"modification" within the meaning of Section 424(h)(3) of the Code unless
otherwise agreed to by the optionee in writing.
(E) DELEGATION OF AUTHORITY. The Committee may delegate to the CEO
or other officers of the Company any of its duties and authority under
this Plan pursuant to such conditions or limitations as the Committee may
establish from time to time; provided, however, while the Company is a
Publicly Held Corporation, the Committee may not delegate to any person
the authority to take any action which would contravene the requirements
of Rule 16b-3 under the Exchange Act or the Performance-Based Exception
under Section 162(m) of the Code.
(F) EXPENSES OF COMMITTEE. The Committee may employ legal counsel,
including, without limitation, independent legal counsel and counsel
regularly employed by the Company, and other agents as the Committee may
deem appropriate for the administration of the Plan. The Committee may
rely upon any opinion or computation received from any such counsel or
agent. All expenses incurred by the Committee in interpreting and
administering the Plan, including, without limitation, meeting expenses
and professional fees, shall be paid by the Company.
(G) INDEMNIFICATION. Each person who is or was a member of the
Committee, or of the Board, shall be indemnified by the Company against
and from any damage, loss, liability, cost and expense that may be imposed
upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be a party or in
which he may be involved by reason of any action taken or failure to act
under the Plan, except for any such act or omission constituting willful
misconduct or gross negligence. Such person shall be indemnified by the
Company for all amounts paid by him in settlement thereof, with the
7
<PAGE>
Company's approval, or paid by him in satisfaction of any judgment in any
such action, suit, or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Articles or Certificate of Incorporation or Bylaws, as a matter
of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
1.4 SHARES OF COMMON STOCK AVAILABLE FOR INCENTIVE AWARDS
Subject to adjustment under SECTION 6.5, there shall be available for
Incentive Awards that are granted wholly or partly in Common Stock (including
rights or Options that may be exercised for or settled in Common Stock), a
number of Shares of Common Stock which shall equal, from time to time, seven
percent (7%) of the number of issued and outstanding Shares as of the first day
of the then-current fiscal quarter of the Company. Not more than 500,000 Shares
of Common Stock shall be available for Incentive Stock Options. The number of
Shares of Common Stock, which 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. The Company shall from time to time
take whatever actions are necessary to file any required documents with
governmental authorities, stock exchanges and transaction reporting systems to
ensure that Shares are available for issuance pursuant to Incentive Awards.
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, SARs,
Restricted Stock, Performance Units and Performance Shares paid out in
Shares, 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
500,000 Shares.
(b) The maximum aggregate cash payout (including SARs, Performance
Units and Performance Shares paid out in cash, or 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 or Stock Appreciation Right
granted to a Covered Employee that is canceled, the number of Shares
subject to such Stock Option or Stock Appreciation Right shall continue to
count against the maximum number of Shares that may be the subject of
Stock Options or Stock Appreciation Rights 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.
8
<PAGE>
(d) The limitations of subsections (a), (b) and (c) above shall be
construed and administered so as to comply with the Performance-Based
Exception.
1.5 SHARE POOL ADJUSTMENTS FOR AWARDS AND PAYOUTS
The following Incentive Awards and payouts shall reduce, on a one Share
for one Share basis, the number of Shares authorized for issuance under the
Share Pool:
(a) Stock Option;
(b) SAR;
(c) Restricted Stock;
(d) A payout of a Performance Share in Shares;
(e) A payout of a Performance Unit in Shares; and
(f) A payout of an Other Stock-Based Award in Shares.
The following transactions shall restore, on a one Share for one Share
basis, the number of Shares authorized for issuance under the Share Pool:
(a) A Payout of an SAR, Restricted Stock Award, or Other Stock-Based
Award in the form of cash;
(b) A cancellation, termination, expiration, forfeiture, or lapse
for any reason of any Shares subject to an Incentive Award; and
(c) Payment of an Option Price with previously acquired Shares or by
withholding Shares which otherwise would be acquired on exercise (i.e.,
the Share Pool shall be increased by the number of Shares turned in or
withheld as payment of the Option Price).
1.6 COMMON STOCK AVAILABLE.
The Common Stock available for issuance or transfer under the Plan shall
be made available from Shares now or hereafter (a) held in the treasury of the
Company, (b) authorized but unissued shares, or (c) shares to be purchased or
acquired by the Company. No fractional shares shall be issued under the Plan;
payment for fractional shares shall be made in cash.
1.7 PARTICIPATION
(A) ELIGIBILITY. The Committee shall from time to time designate
those Employees, Consultants and/or Outside Directors, if any, to be
granted Incentive Awards under the Plan, the type of Incentive Awards
granted, the number of Shares, Stock Options, rights or units, as the case
may be, which shall be granted to each such person, and any other terms or
conditions relating to the Incentive Awards as it may deem appropriate to
the extent consistent with the
9
<PAGE>
provisions of the Plan. A Grantee who has been granted an Incentive Award
may, if otherwise eligible, be granted additional Incentive Awards at any
time.
(B) INCENTIVE STOCK OPTION ELIGIBILITY. No Consultant or Outside
Director shall be eligible for the grant of any Incentive Stock Option. In
addition, no Employee shall be eligible for the grant of any Incentive
Stock Option who owns or would own immediately before the grant of such
Incentive Stock Option, directly or indirectly, stock possessing more than
ten percent (10%) of the total combined voting power of all classes of
stock of the Company, or any Parent or Subsidiary. This restriction does
not apply if, at the time such Incentive Stock Option is granted, the
Incentive Stock Option exercise price is at least one hundred and ten
percent (110%) of the Fair Market Value on the date of grant and the
Incentive Stock Option by its terms is not exercisable after the
expiration of five (5) years from the date of grant. For the purpose of
the immediately preceding sentence, the attribution rules of Section
424(d) of the Code shall apply for the purpose of determining an
Employee's percentage ownership in the Company or any Parent or
Subsidiary. This paragraph shall be construed consistent with the
requirements of Section 422 of the Code.
(C) EXERCISE PRICE. Subject to SECTION1.7(B) and other applicable
provisions of the Plan, with respect to ninety percent (90%) of the number
of Shares then reserved under the Plan pursuant to SECTION 1.4, the
exercise price for a Stock Option or other Incentive Award shall not be
set by the Committee below the Fair Market Value of the underlying Shares
on the grant date of the Incentive Award. Subject to SECTION 1.7(B) and
other applicable provisions of the Plan, with respect to ten percent (10%)
of the number of Shares then reserved under the Plan pursuant to SECTION
1.4 (referred to herein as the "NON-CONFORMING POOL"), the exercise price
for an Option or other Incentive Award may be set by the Committee, in its
discretion, below the Fair Market Value of the underlying Shares on the
grant date of the Incentive Award.
1.8 TYPES OF INCENTIVE AWARDS
The types of Incentive Awards under the Plan are Stock Options, Stock
Appreciation Rights as described in SECTION 2, Restricted Stock as described in
SECTION 3, Performance Units and Performance Shares as described in SECTION 4,
Other Stock-Based Awards as described in SECTION 5, or any combination of the
foregoing.
SECTION 2.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 GRANT OF STOCK OPTIONS
The Committee is authorized to grant (a) Nonstatutory Stock Options to
Employees, Consultants and/or Outside Directors and (b) Incentive Stock Options
to Employees only, in accordance with the terms and conditions of the Plan, and
with such additional terms and conditions, not inconsistent with the Plan, as
the Committee shall determine in its discretion. Successive grants may be made
to the same Grantee whether or not any Stock Option previously granted to such
person remains unexercised.
10
<PAGE>
2.2 STOCK OPTION TERMS
(A) WRITTEN AGREEMENT. Each grant of an Stock Option shall be
evidenced by a written Incentive Agreement. Among its other provisions,
each Incentive Agreement shall set forth the extent to which the Grantee
shall have the right to exercise the Stock Option following termination of
the Grantee's Employment. Such provisions shall be determined in the
discretion of the Committee, shall be included in the Grantee's Incentive
Agreement, need not be uniform among all Stock Options issued pursuant to
the Plan.
(B) NUMBER OF SHARES. Each Stock Option shall specify the number of
Shares of Common Stock to which it pertains.
(C) EXERCISE PRICE. The exercise price per Share of Common Stock
under each Stock Option shall be determined by the Committee subject to
SECTION 1.7(C); provided, however, that in the case of an Incentive Stock
Option, such exercise price shall not be less than 100% of the Fair Market
Value per Share on the date the Incentive Stock Option is granted. To the
extent that the Company is a Publicly Held Corporation and the Stock
Option is intended to qualify for the Performance-Based Exception, the
exercise price shall not be less than 100% of the Fair Market Value per
Share on the date the Stock Option is granted. Each Stock Option shall
specify the method of exercise which shall be consistent with the
requirements of SECTION 2.3(A).
(D) TERM. In the Incentive Agreement, the Committee shall fix the
term of each Stock Option which shall be not more than ten (10) years from
the date of grant. In the event no term is fixed, such term shall be ten
(10) years from the date of grant.
(E) EXERCISE. The Committee shall determine the time or times at
which a Stock Option may be exercised in whole or in part. Each Stock
Option may specify the required period of continuous Employment and/or the
performance objectives to be achieved before the Stock Option or portion
thereof will become exercisable. Each Stock Option, the exercise of which,
or the timing of the exercise of which, is dependent, in whole or in part,
on the achievement of designated performance objectives, may specify a
minimum level of achievement in respect of the specified performance
objectives below which no Stock Options will be exercisable and a method
for determining the number of Stock Options that will be exercisable if
performance is at or above such minimum but short of full achievement of
the performance objectives. All such terms and conditions shall be set
forth in the Incentive Agreement.
(F) $100,000 ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS.
Notwithstanding any contrary provision in the Plan, to the extent that the
aggregate Fair Market Value (determined as of the time the Incentive Stock
Option is granted) of the Shares of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any Grantee
during any single calendar year (under the Plan and any other stock option
plans of the Company and its Subsidiaries or Parent) exceeds the sum of
$100,000, such Incentive Stock Option shall be treated as a Nonstatutory
Stock Option to the extent in excess of the $100,000 limit, and not an
Incentive Stock Option, but all other terms and provisions of such Stock
Option shall remain unchanged. This paragraph shall be applied by taking
Incentive Stock Options into account in the order in which they were
granted and shall be construed in accordance with Section 422(d) of the
Code. In the absence of such regulations or other authority, or if such
regulations or other authority require or permit a designation of the
Options which shall cease to constitute Incentive
11
<PAGE>
Stock Options, then such Incentive Stock Options, only to the extent of
such excess, shall automatically be deemed to be Nonstatutory Stock
Options but all other terms and conditions of such Incentive Stock
Options, and the corresponding Incentive Agreement, shall remain
unchanged.
2.3 STOCK OPTION EXERCISES
(A) METHOD OF EXERCISE AND PAYMENT. Stock Options shall be exercised
by the delivery of a signed written notice of exercise to the Company as
of a date set by the Company in advance of the effective date of the
proposed exercise. The notice shall set forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full
payment for the Shares.
The Option Price upon exercise of any Stock Option shall be payable
to the Company in full either: (i) in cash or its equivalent, or (ii)
subject to prior approval by the Committee in its discretion, by tendering
previously acquired Shares having an aggregate Fair Market Value at the
time of exercise equal to the total Option Price (provided that the Shares
which are tendered must have been held by the Grantee for at least six (6)
months prior to their tender to satisfy the Option Price), or (iii)
subject to prior approval by the Committee in its discretion, by
withholding Shares which otherwise would be acquired on exercise having an
aggregate Fair Market Value at the time of exercise equal to the total
Option Price, or (iv) subject to prior approval by the Committee in its
discretion, by a combination of (i), (ii), and (iii) above. Any payment in
Shares of Common Stock shall be effected by the delivery of such Shares to
the Secretary of the Company, duly endorsed in blank or accompanied by
stock powers duly executed in blank, together with any other documents as
the Secretary shall require from time to time.
The Committee, in its discretion, also may allow the Option Price to
be paid with such other consideration as shall constitute lawful
consideration for the issuance of Shares (including, without limitation,
effecting a "cashless exercise" with a broker of the Option), subject to
applicable securities law restrictions and tax withholdings, or by any
other means which the Committee determines to be consistent with the
Plan's purpose and applicable law. A "cashless exercise" of an Option is a
procedure by which a broker provides the funds to the Grantee to effect an
Option exercise. At the direction of the Grantee, the broker will either
(i) sell all of the Shares received when the Option is exercised and pay
the Grantee the proceeds of the sale (minus the Option Price, withholding
taxes and any fees due to the broker) or (ii) sell enough of the Shares
received upon exercise of the Option to cover the Option Price,
withholding taxes and any fees due the broker and deliver to the Grantee
(either directly or through the Company) a stock certificate for the
remaining Shares. Dispositions to a broker effecting a cashless exercise
are not exempt under Section 16 of the Exchange Act.
As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to or on behalf of
the Grantee, in the name of the Grantee or other appropriate recipient,
Share certificates for the number of Shares purchased under the Stock
Option. Such delivery shall be effected for all purposes when the Company
or a stock transfer agent of the Company shall have deposited such
certificates in the United States mail, addressed to Grantee or other
appropriate recipient.
12
<PAGE>
Subject to SECTION 6.2, during the lifetime of a Grantee, each
Option granted to him shall be exercisable only by the Grantee (or his
legal guardian in the event of his Disability) or by a broker-dealer
acting on his behalf pursuant to a cashless exercise under the foregoing
provisions of this SECTION 2.3(A).
(B) RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose
such restrictions on any Shares acquired pursuant to the exercise of a
Stock Option as it may deem advisable, including, without limitation,
restrictions under (i) any stockholders' agreement, buy/sell agreement or
right of first refusal, (ii) any applicable federal securities laws, (iii)
the requirements of any stock exchange or market upon which such Shares
are then listed and/or traded, or (iv) any blue sky or state securities
law applicable to such Shares. Any certificate issued to evidence Shares
issued upon the exercise of an Incentive Award may bear such legends and
statements as the Committee shall deem advisable to assure compliance with
federal and state laws and regulations.
Any Grantee or other person exercising an Incentive Award may be
required by the Committee to give a written representation that the
Incentive Award and the Shares subject to the Incentive Award will be
acquired for investment and not with a view to public distribution;
provided, however, that the Committee, in its sole discretion, may release
any person receiving an Incentive Award from any such representations
either prior to or subsequent to the exercise of the Incentive Award.
(C) NOTIFICATION OF DISQUALIFYING DISPOSITION OF SHARES FROM
INCENTIVE STOCK OPTIONS. Notwithstanding any other provision of the Plan,
a Grantee who disposes of Shares of Common Stock acquired upon the
exercise of an Incentive Stock Option by a sale or exchange either (i)
within two (2) years after the date of the grant of the Incentive Stock
Option under which the Shares were acquired or (ii) within one (1) year
after the transfer of such Shares to him pursuant to exercise, shall
promptly notify the Company of such disposition, the amount realized and
his adjusted basis in such Shares.
(D) PROCEEDS OF OPTION EXERCISE. The proceeds received by the
Company from the sale of Shares pursuant to Stock Options exercised under
the Plan shall be used for general corporate purposes.
2.4 STOCK APPRECIATION RIGHTS INDEPENDENT OF NONSTATUTORY STOCK OPTIONS
(A) GRANT. The Committee may grant Stock Appreciation Rights
independent of Nonstatutory Stock Options ("INDEPENDENT SARS").
(B) GENERAL PROVISIONS. The terms and conditions of each Independent
SAR shall be evidenced by an Incentive Agreement. The exercise price per
share of Common Stock shall be not less than one hundred percent (100%) of
the Fair Market Value of a Share of Common Stock on the date of grant of
the Independent SAR. The term of an Independent SAR shall be determined by
the Committee.
(C) EXERCISE. Independent SARs shall be exercisable at such time and
subject to such terms and conditions as the Committee shall specify in the
Incentive Agreement for the Independent SAR grant.
13
<PAGE>
(D) SETTLEMENT. Upon exercise of an Independent SAR, the holder
shall receive, for each Share specified in the Independent SAR grant, an
amount equal to the Spread. The Spread shall be payable in cash, Common
Stock, or a combination of both, in the discretion of the Committee or as
specified in the Incentive Agreement. The Spread shall be paid within 30
calendar days of the exercise of the Independent SAR. The number of Shares
of Common Stock which shall be issuable upon exercise of an Independent
SAR shall be determined by dividing (1) by (2), where (1) is the number of
Shares as to which the Independent SAR is exercised multiplied by the
Spread in such Shares and (2) is the Fair Market Value of a Share on the
exercise date.
SECTION 3.
RESTRICTED STOCK
3.1 AWARD OF RESTRICTED STOCK
(A) GRANT. In consideration of the performance of Employment by any
Grantee who is an Employee, Consultant or Outside Director, Shares of
Restricted Stock may be awarded under the Plan by the Committee with such
restrictions during the Restriction Period as the Committee may designate
in its discretion, any of which restrictions may differ with respect to
each particular Grantee; provided, however, in no event shall the
Restriction Period be less than a three (3) consecutive year period unless
such Restricted Shares are allocable to the Non-Conforming Pool described
in SECTION 1.7(C). Restricted Stock shall be awarded for no additional
consideration or such additional consideration as the Committee may
determine, which consideration may be less than, equal to or more than the
Fair Market Value of the shares of Restricted Stock on the grant date. The
terms and conditions of each grant of Restricted Stock shall be evidenced
by an Incentive Agreement.
(B) IMMEDIATE TRANSFER WITHOUT IMMEDIATE DELIVERY OF RESTRICTED
STOCK. Unless otherwise specified in the Grantee's Incentive Agreement,
each Restricted Stock Award shall constitute an immediate transfer of the
record and beneficial ownership of the Shares of Restricted Stock to the
Grantee in consideration of the performance of services as an Employee,
Consultant or Outside Director, as applicable, entitling such Grantee to
all voting and other ownership rights in such Shares.
As specified in the Incentive Agreement and subject to SECTION
3.1(A) regarding the Restriction Period, a Restricted Stock Award may
limit the Grantee's dividend rights during the Restriction Period in which
the shares of Restricted Stock are subject to a "substantial risk of
forfeiture" (within the meaning given to such term under Code Section 83)
and restrictions on transfer. In the Incentive Agreement, the Committee
may apply any restrictions to the dividends that the Committee deems
appropriate. Without limiting the generality of the preceding sentence, if
the grant or vesting of Shares of Restricted Stock granted to a Covered
Employee, if applicable, is designed to comply with the requirements of
the Performance-Based Exception, the Committee may apply any restrictions
it deems appropriate to the payment of dividends declared with respect to
such Shares of Restricted Stock, such that the dividends and/or the Shares
of Restricted Stock maintain eligibility for the Performance-Based
Exception. In the event that any dividend constitutes a derivative
security or an equity security pursuant to the rules under Section 16 of
the Exchange Act, if applicable, such dividend shall be subject to a
vesting period equal to
14
<PAGE>
the remaining vesting period of the Shares of Restricted Stock with
respect to which the dividend is paid.
Shares awarded pursuant to a grant of Restricted Stock may be issued
in the name of the Grantee and held, together with a stock power endorsed
in blank, by the Committee or Company (or their delegates) or in trust or
in escrow pursuant to an agreement satisfactory to the Committee, as
determined by the Committee, until such time as the restrictions on
transfer have expired. All such terms and conditions shall be set forth in
the particular Grantee's Incentive Agreement. The Company or Committee (or
their delegates) shall issue to the Grantee a receipt evidencing the
certificates held by it which are registered in the name of the Grantee.
3.2 RESTRICTIONS
(A) FORFEITURE OF RESTRICTED STOCK. Restricted Stock awarded to a
Grantee may be subject to the following restrictions until the expiration
of the Restriction Period: (i) a restriction that constitutes a
"substantial risk of forfeiture" (as defined in Code Section 83), or a
restriction on transferability; (ii) unless otherwise specified by the
Committee in the Incentive Agreement, the Restricted Stock that is subject
to restrictions which are not satisfied shall be forfeited and all rights
of the Grantee to such Shares shall terminate; and (iii) any other
restrictions that the Committee determines in advance are appropriate,
including, without limitation, rights of repurchase or first refusal in
the Company or provisions subjecting the Restricted Stock to a continuing
substantial risk of forfeiture in the hands of any transferee. Any such
restrictions shall be set forth in the particular Grantee's Incentive
Agreement.
(B) ISSUANCE OF CERTIFICATES. Reasonably promptly after the date of
grant with respect to Shares of Restricted Stock, the Company shall cause
to be issued a stock certificate, registered in the name of the Grantee to
whom such Shares of Restricted Stock were granted, evidencing such Shares;
provided, however, that the Company shall not cause to be issued such a
stock certificate unless it has received a stock power duly endorsed in
blank with respect to such Shares. Each such stock certificate shall bear
the following legend or any other legend approved by the Company:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND
CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER)
CONTAINED IN THE BLUE DOLPHIN ENERGY COMPANY 2000 STOCK INCENTIVE
PLAN AND AN INCENTIVE AGREEMENT ENTERED INTO BETWEEN THE REGISTERED
OWNER OF SUCH SHARES AND BLUE DOLPHIN ENERGY COMPANY. A COPY OF THE
PLAN AND INCENTIVE AGREEMENT ARE ON FILE IN THE CORPORATE OFFICES OF
BLUE DOLPHIN ENERGY COMPANY.
Such legend shall not be removed from the certificate evidencing such
Shares of Restricted Stock until such Shares vest pursuant to the terms of
the Incentive Agreement.
(C) REMOVAL OF RESTRICTIONS. Subject to SECTION 3.1(A) regarding the
Restriction Period, the Committee, in its discretion, shall have the
authority to remove any or all of the restrictions on the Restricted Stock
if it determines that, by reason of a change in applicable law
15
<PAGE>
or another change in circumstance arising after the grant date of the
Restricted Stock, such action is appropriate.
3.3 DELIVERY OF SHARES OF COMMON STOCK
Subject to withholding taxes under SECTION 7.3 and to the terms of the
Incentive Agreement, a stock certificate evidencing the Shares of Restricted
Stock with respect to which the restrictions in the Incentive Agreement have
been satisfied shall be delivered to the Grantee or other appropriate recipient
free of restrictions. Such delivery shall be effected for all purposes when the
Company shall have deposited such certificate in the United States mail,
addressed to the Grantee or other appropriate recipient.
SECTION 4.
PERFORMANCE UNITS AND PERFORMANCE SHARES
4.1 PERFORMANCE BASED AWARDS
(A) GRANT. The Committee is authorized to grant Performance Units
and Performance Shares to selected Grantees who are Employees, Outside
Directors or Consultants. Each grant of Performance Units and/or
Performance Shares shall be evidenced by an Incentive Agreement in such
amounts and upon such terms as shall be determined by the Committee;
provided, however, the Performance Period shall not be less than one year
unless such Shares are allocable to the Non-Conforming Pool described in
SECTION 1.7(C). The Committee may make grants of Performance Units or
Performance Shares in such a manner that more than one Performance Period
is in progress concurrently. For each Performance Period, the Committee
shall establish the number of Performance Units or Performance Shares and
their contingent values which may vary depending on the degree to which
performance criteria established by the Committee are met.
(B) PERFORMANCE CRITERIA. At the beginning of each Performance
Period, the Committee shall (i) establish for such Performance Period
specific financial or non-financial performance objectives that the
Committee believes are relevant to the Company's business objectives; (ii)
determine the value of a Performance Unit or the number of Shares under a
Performance Share grant relative to performance objectives; and (iii)
notify each Grantee in writing of the established performance objectives
and, if applicable, the minimum, target, and maximum value of Performance
Units or Performance Shares for such Performance Period.
(C) MODIFICATION. If the Committee determines, in its discretion
exercised in good faith, that the established performance measures or
objectives are no longer suitable to the Company's objectives because of a
change in the Company's business, operations, corporate structure, capital
structure, or other conditions the Committee deems to be appropriate, the
Committee may modify the performance measures and objectives to the extent
it considers to be necessary; provided, however, the Performance Period
shall not be less than one year unless such Shares are allocable to the
Non-Conforming Pool described in SECTION 1.7(C). The Committee shall
determine whether any such modification would cause the Performance Unit
or Performance Share to fail to qualify for the Performance-Based
Exception, if applicable.
16
<PAGE>
(D) PAYMENT. The basis for payment of Performance Units or
Performance Shares for a given Performance Period shall be the achievement
of those performance objectives determined by the Committee at the
beginning of the Performance Period as specified in the Grantee's
Incentive Agreement. If minimum performance is not achieved for a
Performance Period, no payment shall be made and all contingent rights
shall cease. If minimum performance is achieved or exceeded, the value of
a Performance Unit or Performance Share may be based on the degree to
which actual performance exceeded the preestablished minimum performance
standards. The amount of payment shall be determined by multiplying the
number of Performance Units or Performance Shares granted at the beginning
of the Performance Period times the final Performance Unit or Performance
Share value. Payments shall be made, in the discretion of the Committee as
specified in the Incentive Agreement, solely in cash or Common Stock, or a
combination of cash and Common Stock, following the close of the
applicable Performance Period.
(E) SPECIAL RULE FOR COVERED EMPLOYEES. The Committee may establish
performance goals applicable to Performance Units or Performance Shares
awarded to Covered Employees in such a manner as shall permit payments
with respect thereto to qualify for the Performance-Based Exception, if
applicable. If a Performance Unit or Performance Share granted to a
Covered Employee is intended to comply with the Performance-Based
Exception, the Committee in establishing performance goals shall be guided
by Treasury Regulationss. 1.162-27(e)(2) (or its successor).
SECTION 5.
OTHER STOCK-BASED AWARDS
5.1 GRANT OF OTHER STOCK-BASED AWARDS
Other Stock-Based Awards may be awarded by the Committee to selected
Grantees that are denominated or payable in, valued in whole or in part by
reference to, or otherwise related to, Shares of Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan and the goals of the
Company. Other types of Stock-Based Awards include, without limitation, Deferred
Stock, purchase rights, Shares of Common Stock awarded which are not subject to
any restrictions or conditions, convertible or exchangeable debentures, other
rights convertible into Shares, Incentive Awards valued by reference to the
value of securities of or the performance of a specified Subsidiary, division or
department, and settlement in cancellation of rights of any person with a vested
interest in any other plan, fund, program or arrangement that is or was
sponsored, maintained or participated in by the Company or any Parent or
Subsidiary. As is the case with other Incentive Awards, Other Stock-Based Awards
may be awarded either alone or in addition to any other Incentive Awards.
5.2 OTHER STOCK-BASED AWARD TERMS
(A) WRITTEN AGREEMENT. The terms and conditions of each grant of an
Other Stock-Based Award shall be evidenced by an Incentive Agreement.
(B) PURCHASE PRICE. Except to the extent that an Other Stock-Based
Award is granted in substitution for an outstanding Incentive Award or is
delivered upon exercise of a Stock Option, the amount of consideration
required to be received by the Company shall be
17
<PAGE>
either (i) no consideration other than services actually rendered (in the
case of authorized and unissued shares) or to be rendered, or (ii) in the
case of an Other Stock-Based Award in the nature of a purchase right,
consideration (other than services rendered or to be rendered) at least
equal to 50% of the Fair Market Value of the Shares covered by such grant
on the grant date (or such percentage higher than 50% that is required by
any applicable tax or securities law); provided, however, in the case of
an Other Stock-Based Award described in this clause (ii), if the
consideration (other than services rendered or to be rendered) is less
than 100% of the Fair Market Value of the Shares covered by such grant on
the grant date, the Shares subject to such Other Stock-Based Award shall
be allocable to the Non-Conforming Pool described in SECTION 1.7(C).
(C) PERFORMANCE CRITERIA AND OTHER TERMS. In its discretion, the
Committee may specify such criteria, periods or goals for vesting in Other
Stock-Based Awards and payment thereof to the Grantee as it shall
determine; and the extent to which such criteria, periods or goals have
been met shall be determined by the Committee; provided however, in no
event shall the Performance Period be less than one year unless such
Shares are allocable to the Non-Conforming Pool described in SECTION
1.7(C). All terms and conditions of Other Stock-Based Awards shall be
determined by the Committee and set forth in the Incentive Agreement.
(D) PAYMENT. Other Stock-Based Awards may be paid in Shares of
Common Stock or other consideration related to such Shares, in a single
payment or in installments on such dates as determined by the Committee,
all as specified in the Incentive Agreement.
(E) DIVIDENDS. The Grantee of an Other Stock-Based Award shall be
entitled to receive, currently or on a deferred basis, dividends or
dividend equivalents with respect to the number of Shares covered by the
Other Stock-Based Award, as determined by the Committee and set forth in
the Incentive Agreement. The Committee may also provide in the Incentive
Agreement that such amounts (if any) shall be deemed to have been
reinvested in additional Shares of Common Stock.
SECTION 6.
PROVISIONS RELATING TO PLAN PARTICIPATION
6.1 PLAN CONDITIONS
(A) INCENTIVE AGREEMENT. Each Grantee to whom an Incentive Award is
granted shall be required to enter into an Incentive Agreement with the
Company, in such a form as is provided by the Committee. The Incentive
Agreement shall contain specific terms as determined by the Committee, in
its discretion, with respect to the Grantee's particular Incentive Award.
Such terms need not be uniform among all Grantees or any
similarly-situated Grantees. The Incentive Agreement may include, without
limitation, vesting, forfeiture and other provisions particular to the
particular Grantee's Incentive Award, as well as, for example, provisions
to the effect that the Grantee (i) shall not disclose any confidential
information acquired during Employment with the Company, (ii) shall abide
by all the terms and conditions of the Plan and such other terms and
conditions as may be imposed by the Committee, (iii) shall not interfere
with the employment or other service of any employee, (iv) shall not
compete with the Company or become involved in a conflict of interest with
the interests of the Company, (v) shall forfeit an
18
<PAGE>
Incentive Award if terminated for Cause, (vi) shall not be permitted to
make an election under Section 83(b) of the Code when applicable, and
(vii) shall be subject to any other agreement between the Grantee and the
Company regarding Shares that may be acquired under an Incentive Award
including, without limitation, a stockholders' agreement or other
agreement restricting the transferability of Shares by Grantee. An
Incentive Agreement shall include such terms and conditions, as are
determined by the Committee, in its discretion, to be appropriate and
consistent with the terms of the Plan, with respect to any individual
Grantee. The Incentive Agreement shall be signed by the Grantee to whom
the Incentive Award is made and by an Authorized Officer.
(B) NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any instrument
executed pursuant to the Plan shall create any Employment rights
(including without limitation, rights to continued Employment) in any
Grantee or affect the right of the Company to terminate the Employment of
any Grantee at any time without regard to the existence of the Plan.
(C) SECURITIES REQUIREMENTS. The Company shall be under no
obligation to effect the registration pursuant to the Securities Act of
1933 of any Shares of Common Stock to be issued hereunder or to effect
similar compliance under any state laws. Notwithstanding anything herein
to the contrary, the Company shall not be obligated to cause to be issued
or delivered any certificates evidencing Shares pursuant to the Plan
unless and until the Company is advised by its counsel that the issuance
and delivery of such certificates is in compliance with all applicable
laws, regulations of governmental authorities, and the requirements of any
securities exchange on which Shares are traded. The Committee may require,
as a condition of the issuance and delivery of certificates evidencing
Shares of Common Stock pursuant to the terms hereof, that the recipient of
such Shares make such covenants, agreements and representations, and that
such certificates bear such legends, as the Committee, in its discretion,
deems necessary or desirable.
If the Shares issuable on exercise of an Incentive Award are not
registered under the Securities Act of 1933, the Company may imprint on
the certificate for such Shares the following legend or any other legend
which counsel for the Company considers necessary or advisable to comply
with the Securities Act of 1933:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT UPON
SUCH REGISTRATION OR UPON RECEIPT BY THE CORPORATION OF AN OPINION
OF COUNSEL SATISFACTORY TO THE CORPORATION, IN FORM AND SUBSTANCE
SATISFACTORY TO THE CORPORATION, THAT REGISTRATION IS NOT REQUIRED
FOR SUCH SALE OR TRANSFER.
6.2 TRANSFERABILITY
Incentive Awards granted under the Plan shall not be transferable or
assignable other than: (a) by will or the laws of descent and distribution or
(b) pursuant to a qualified domestic relations order (as defined by Section
414(p) of the Code); provided, however, only with respect to Incentive Awards
19
<PAGE>
consisting of Nonstatutory Stock Options, the Committee may, in its discretion,
authorize all or a portion of the Nonstatutory Stock Options to be granted on
terms which permit transfer by the Grantee to (i) the members of the Grantee's
Immediate Family, (ii) a trust or trusts for the exclusive benefit of such
Immediate Family, (iii) a partnership in which such members of such Immediate
Family are the only partners, or (iv) any other entity owned solely by members
of the Immediate Family; provided that (A) there may be no consideration for any
such transfer, (B) the Incentive Agreement pursuant to which such Nonstatutory
Stock Options are granted must be approved by the Committee, and must expressly
provide for transferability in a manner consistent with this SECTION 6.2, and
(C) subsequent transfers of transferred Nonstatutory Stock Options shall be
prohibited except in accordance with clauses (a) and (b) (above) of this
sentence. Following any permitted transfer, the Nonstatutory Stock Option shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that the term "Grantee" shall be deemed
to refer to the transferee. The events of termination of employment, as set out
in SECTION 6.6 and in the Incentive Agreement, shall continue to be applied with
respect to the original Grantee, and the Incentive Award shall be exercisable by
the transferee only to the extent, and for the periods, specified in the
Incentive Agreement.
Except as may otherwise be permitted under the Code, in the event of a
permitted transfer of a Nonstatutory Stock Option hereunder, the original
Grantee shall remain subject to withholding taxes upon exercise. In addition,
the Company and the Committee shall have no obligation to provide any notices to
any Grantee or transferee thereof, including, for example, notice of the
expiration of an Incentive Award following the original Grantee's termination of
employment.
No transfer by will or by the laws of descent and distribution shall be
effective to bind the Company unless the Committee has been furnished with a
copy of the deceased Grantee's enforceable will or such other evidence as the
Committee deems necessary to establish the validity of the transfer. Any
attempted transfer in violation of this SECTION 6.2 shall be void and
ineffective. All determinations under this SECTION 6.2 shall be made by the
Committee in its discretion.
6.3 RIGHTS AS A STOCKHOLDER
(A) NO STOCKHOLDER RIGHTS. Except as otherwise provided in SECTION
3.1(B) for grants of Restricted Stock, a Grantee of an Incentive Award (or
a permitted transferee of such Grantee) shall have no rights as a
stockholder with respect to any Shares of Common Stock until the issuance
of a stock certificate for such Shares.
(B) REPRESENTATION OF OWNERSHIP. In the case of the exercise of an
Incentive Award by a person or estate acquiring the right to exercise such
Incentive Award by reason of the death or Disability of a Grantee, the
Committee may require reasonable evidence as to the ownership of such
Incentive Award or the authority of such person and may require such
consents and releases of taxing authorities as the Committee may deem
advisable.
6.4 LISTING AND REGISTRATION OF SHARES OF COMMON STOCK
The exercise of any Incentive Award granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that the
issuance and delivery of Shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities and
the requirements of any securities exchange on which Shares of Common Stock are
traded. The Committee may, in its discretion, defer the effectiveness of any
exercise of an Incentive
20
<PAGE>
Award in order to allow the issuance of Shares of Common Stock to be made
pursuant to registration or an exemption from registration or other methods for
compliance available under federal or state securities laws. The Committee shall
inform the Grantee in writing of its decision to defer the effectiveness of the
exercise of an Incentive Award. During the period that the effectiveness of the
exercise of an Incentive Award has been deferred, the Grantee may, by written
notice to the Committee, withdraw such exercise and obtain the refund of any
amount paid with respect thereto.
6.5 CHANGE IN STOCK AND ADJUSTMENTS
(A) CHANGES IN LAW OR CIRCUMSTANCES. Subject to SECTION 6.7 (which
only applies in the event of a Change in Control), in the event of any
change in applicable laws or any change in circumstances which results in
or would result in any dilution of the rights granted under the Plan, or
which otherwise warrants equitable adjustment because it interferes with
the intended operation of the Plan, then, if the Committee should
determine, in its absolute discretion, that such change equitably requires
an adjustment in the number or kind of shares of stock or other securities
or property theretofore subject, or which may become subject, to issuance
or transfer under the Plan or in the terms and conditions of outstanding
Incentive Awards, such adjustment shall be made in accordance with such
determination. Such adjustments may include changes with respect to (i)
the aggregate number of Shares that may be issued under the Plan, (ii) the
number of Shares subject to Incentive Awards, and (iii) the price per
Share for outstanding Incentive Awards. Any adjustment under this
paragraph of an outstanding Incentive Stock Option shall be made only to
the extent not constituting a "modification" within the meaning of Section
424(h)(3) of the Code unless otherwise agreed to by the Grantee in
writing. The Committee shall give notice to each applicable Grantee of
such adjustment which shall be effective and binding.
(B) EXERCISE OF CORPORATE POWERS. The existence of the Plan or
outstanding Incentive Awards hereunder shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalization, reorganization or other changes in
the Company's capital structure or its business or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred
or prior preference stocks ahead of or affecting the Common Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding whether of a similar character or
otherwise.
(C) RECAPITALIZATION OF THE COMPANY. Subject to SECTION 6.7, if
while there are Incentive Awards outstanding, the Company shall effect any
subdivision or consolidation of Shares of Common Stock or other capital
readjustment, the payment of a stock dividend, stock split, combination of
Shares, recapitalization or other increase or reduction in the number of
Shares outstanding, without receiving compensation therefor in money,
services or property, then the number of Shares available under the Plan
and the number of Incentive Awards which may thereafter be exercised shall
(i) in the event of an increase in the number of Shares outstanding, be
proportionately increased and the Fair Market Value of the Incentive
Awards awarded shall be proportionately reduced; and (ii) in the event of
a reduction in the number of Shares outstanding, be proportionately
reduced, and the Fair Market Value of the Incentive Awards awarded shall
be proportionately increased. The Committee shall take such action and
whatever other action it
21
<PAGE>
deems appropriate, in its discretion, so that the value of each
outstanding Incentive Award to the Grantee shall not be adversely affected
by a corporate event described in this subsection (c).
(D) ISSUE OF COMMON STOCK BY THE COMPANY. Except as hereinabove
expressly provided in this SECTION 6.5 and subject to SECTION 6.7, the
issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or
for labor or services, either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor, or upon any conversion of shares
or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number of, or Fair Market Value of, any
Incentive Awards then outstanding under previously granted Incentive
Awards; provided, however, in such event, outstanding Shares of Restricted
Stock shall be treated the same as outstanding unrestricted Shares of
Common Stock.
(E) ASSUMPTION UNDER THE PLAN OF OUTSTANDING STOCK OPTIONS.
Notwithstanding any other provision of the Plan, the Committee, in its
discretion, may authorize the assumption and continuation under the Plan
of outstanding and unexercised stock options or other types of stock-based
incentive awards that were granted under a stock option plan (or other
type of stock incentive plan or agreement) that is or was maintained by a
corporation or other entity that was merged into, consolidated with, or
whose stock or assets were acquired by, the Company as the surviving
corporation. Any such action shall be upon such terms and conditions as
the Committee, in its discretion, may deem appropriate, including
provisions to preserve the holder's rights under the previously granted
and unexercised stock option or other stock-based incentive award, such
as, for example, retaining an existing exercise price under an outstanding
stock option. Any such assumption and continuation of any such previously
granted and unexercised incentive award shall be treated as an outstanding
Incentive Award under the Plan and shall count against the number of
Shares reserved for issuance pursuant to SECTION 1.4. In addition, any
Shares issued by the Company through the assumption or substitution of
outstanding grants from an acquired company shall reduce the Shares
available for grants under SECTION 1.4.
(F) ACQUISITION OF COMPANY BY A SUCCESSOR. Subject to the
accelerated vesting and other provisions of SECTION 6.7 that apply in the
event of a Change in Control, in the event of a Corporate Event (defined
below), each Grantee shall be entitled to receive, in lieu of the number
of Shares subject to Incentive Awards, such shares of capital stock or
other securities or property as may be issuable or payable with respect to
or in exchange for the number of Shares which Grantee would have received
had he exercised the Incentive Award immediately prior to such Corporate
Event, together with any adjustments (including, without limitation,
adjustments to the Option Price and the number of Shares issuable on
exercise of outstanding Stock Options). For this purpose, Shares of
Restricted Stock shall be treated the same as unrestricted outstanding
Shares of Common Stock. A "Corporate Event" means any of the following:
(i) a dissolution or liquidation of the Company, (ii) a sale of all or
substantially all of the Company's assets, or (iii) a merger,
consolidation or combination involving the Company (other than a merger,
consolidation or combination (A) in which the Company is the continuing or
surviving corporation and (B) which does not result in the outstanding
Shares being converted into or exchanged for different securities, cash or
other property, or any combination thereof). The Committee shall take
whatever other action it deems appropriate to preserve the rights of
Grantees holding outstanding Incentive Awards.
22
<PAGE>
Notwithstanding the previous paragraph of this SECTION 6.5(F) but
subject to the accelerated vesting and other provisions of SECTION 6.7
that apply in the event of a Change in Control, the Committee, in its
discretion, if it determines that such action is in the best interests of
the Company, shall have the right and power to:
(i) cancel, effective immediately prior to the occurrence of the
Corporate Event, each outstanding Incentive Award (whether or not
then exercisable) and, in full consideration of such cancellation,
pay to the Grantee an amount in cash equal to the excess of (A) the
value, as determined by the Committee, of the property (including
cash) received by the holders of Common Stock as a result of such
Corporate Event over (B) the exercise price of such Incentive Award,
if any; provided, however, this subsection (i) shall be inapplicable
to an Incentive Award granted within six (6) months before the
occurrence of the Corporate Event but only if the Grantee is an
Insider and such disposition is not exempt under Rule 16b-3 (or
other rules preventing liability of the Insider under Section 16 (b)
of the Exchange Act), and, in that event, the provisions hereof
shall be applicable to such Incentive Award after the expiration of
six (6) months from the date of grant; or
(ii) provide for the exchange of each Incentive Award
outstanding immediately prior to such Corporate Event (whether or
not then exercisable) for another award with respect to the Common
Stock or other property for which such Incentive Award is
exchangeable and, incident thereto, make an equitable adjustment as
determined by the Committee, in its discretion, in the exercise
price of the Incentive Award, if any, or in the number of Shares or
amount of property (including cash) subject to the Incentive Award.
The Committee, in its discretion, shall have the authority to take
whatever action it deems to be necessary or appropriate to effectuate the
provisions of this SUBSECTION (F).
6.6 TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY
(A) TERMINATION OF EMPLOYMENT. Unless otherwise expressly provided
in the Grantee's Incentive Agreement, if the Grantee's Employment is
terminated for any reason other than due to his death or Disability or for
Cause, any non-vested portion of any Stock Option or other applicable
Incentive Award at the time of such termination shall automatically expire
and terminate and no further vesting shall occur after his termination
date. In such event, except as otherwise expressly provided in his
Incentive Agreement, the Grantee shall be entitled to exercise his rights
only with respect to the portion of the Incentive Award that was vested as
of the termination date for a period that shall end on the earlier of (i)
the expiration date set forth in the Incentive Agreement or (ii) the three
(3) month anniversary of his termination date.
(B) TERMINATION OF EMPLOYMENT FOR CAUSE. Unless otherwise expressly
provided in the Grantee's Incentive Agreement, in the event of the
termination of a Grantee's Employment for Cause, all vested and non-vested
Stock Options and other Incentive Awards granted to such Grantee shall
immediately expire, and shall not be exercisable to any extent, as of
12:01 a.m. (CST) on the date of such termination of Employment.
23
<PAGE>
(C) DISABILITY OR DEATH. Unless otherwise expressly provided in the
Grantee's Incentive Agreement, upon termination of Employment as a result
of the Grantee's Disability or death:
(i) any nonvested portion of any outstanding Option or other
applicable Incentive Award shall immediately terminate upon
termination of Employment and no further vesting shall occur; and
(ii) any vested Incentive Award shall expire on the earlier of
either (A) the expiration date set forth in the Incentive Agreement
or (B) the one year anniversary date of the Grantee's termination of
Employment date.
In the case of any vested Incentive Stock Option held by an Employee
following termination of Employment, notwithstanding the definition of
"Disability" in SECTION 1, whether the Employee has incurred a
"Disability" for purposes of determining the length of the Option exercise
period following termination of Employment under this subsection (c) shall
be determined by reference to Section 22(e)(3) of the Code to the extent
required by Section 422(c)(6) of the Code. The Committee shall determine
whether a Disability for purposes of this subsection (c) has occurred.
(D) CONTINUATION. Subject to the conditions and limitations of the
Plan and applicable law and regulation in the event that a Grantee ceases
to be an Employee, Outside Director or Consultant, as applicable, for
whatever reason, the Committee and Grantee may mutually agree with respect
to any outstanding Option or other Incentive Award then held by the
Grantee (i) for an acceleration or other adjustment in any vesting
schedule applicable to the Incentive Award, (ii) for a continuation of the
exercise period following termination for a longer period than is
otherwise provided under such Incentive Award, or (iii) to any other
change in the terms and conditions of the Incentive Award; provided,
however, in each such event, any modification of an outstanding Incentive
Award shall be subject to applicable terms of the Plan regarding the
minimum Restriction Period of SECTION 3.1(A) and the minimum Performance
Period of SECTION 4.1(A). Moreover, any reduction in the exercise price of
a Stock Option shall be subject to SECTION 1.7(C). In the event of any
such change to an outstanding Incentive Award, a written amendment to the
Grantee's Incentive Agreement shall be required.
6.7 CHANGE IN CONTROL
Notwithstanding any contrary provision in the Plan, in the event of a
Change in Control (as defined below), the following actions shall automatically
occur as of the day immediately preceding the Change in Control date unless
expressly provided otherwise in the Grantee's Incentive Agreement:
(a) all of the Stock Options and Stock Appreciation Rights then
outstanding shall become 100% vested and immediately and fully
exercisable;
(b) all of the restrictions and conditions of any Restricted Stock
and any Other Stock-Based Awards then outstanding shall be deemed
satisfied, and the Restriction Period with respect thereto shall be deemed
to have expired, and thus each such Incentive Award shall become free of
all restrictions and fully vested; and
24
<PAGE>
(c) all of the Performance Shares, Performance Units and any Other
Stock-Based Awards shall become fully vested, deemed earned in full, and
promptly paid within thirty (30) days to the affected Grantees without
regard to payment schedules and notwithstanding that the applicable
performance cycle, retention cycle or other restrictions and conditions
have not been completed or satisfied.
Notwithstanding any other provision of this Plan, unless otherwise
expressly provided in the Grantee's Incentive Agreement, the provisions of this
SECTION 6.7 may not be terminated, amended, or modified to adversely affect any
Incentive Award theretofore granted under the Plan without the prior written
consent of the Grantee with respect to his outstanding Incentive Award.
For all purposes of this Plan, a "CHANGE IN CONTROL" of the Company means
the occurrence of any one or more of the following events:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "PERSON"))
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 50% or more of either (i) the then outstanding
shares of common stock of the Company (the "OUTSTANDING COMPANY STOCK") or
(ii) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors
(the "OUTSTANDING COMPANY VOTING Securities"); provided, however, that the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from the Company or any Subsidiary, (ii) any
acquisition by the Company or any Subsidiary or by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
Subsidiary, or (iii) any acquisition by any corporation pursuant to a
reorganization, merger, consolidation or similar business combination
involving the Company (a "MERGER"), if, following such Merger, the
conditions described in clauses (i) and (ii) SECTION 6.7(C) (below) are
satisfied;
(b) Individuals who, as of the Effective Date, constitute the Board
of Directors of the Company (the "INCUMBENT BOARD") cease for any reason
to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the Effective Date whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board;
(c) Approval by the shareholders of the Company of a Merger, unless
immediately following such Merger, (i) substantially all of the holders of
the Outstanding Company Voting Securities immediately prior to Merger
beneficially own, directly or indirectly, more than 50% of the common
stock of the corporation resulting from such Merger in substantially the
same proportions as their ownership of Outstanding Company Voting
Securities immediately prior to such Merger and (ii) at least a majority
of the members of the board of directors of the corporation resulting from
such Merger were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such Merger;
25
<PAGE>
(d) The sale or other disposition of all or substantially all of the
assets of the Company, unless immediately following such sale or other
disposition, (i) substantially all of the holders of the Outstanding
Company Voting Securities immediately prior to the consummation of such
sale or other disposition beneficially own, directly or indirectly, more
than 50% of the common stock of the corporation acquiring such assets in
substantially the same proportions as their ownership of Outstanding
Company Voting Securities immediately prior to the consummation of such
sale or disposition, AND (ii) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent Board
at the time of execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the Company; or
(e) Any other event that a majority of the Board, in its sole
discretion, determines to constitute a Change in Control hereunder.
6.8 FINANCING
The Company may extend and maintain, or arrange for and guarantee, the
extension and maintenance of financing to any Grantee to purchase Shares
pursuant to exercise of an Incentive Award upon such terms as are approved by
the Committee in its discretion.
SECTION 7.
GENERAL
7.1 EFFECTIVE DATE AND GRANT PERIOD
This Plan is adopted by the Board effective as of April 14, 2000 (the
"EFFECTIVE DATE") subject to the approval of the stockholders of the Company
within one year from the Effective Date. Incentive Awards may be granted under
the Plan at any time prior to receipt of such stockholder approval; provided,
however, if the requisite stockholder approval is not obtained then any
Incentive Awards granted hereunder shall automatically become null and void and
of no force or effect. Unless sooner terminated by the Board, no Incentive Award
shall be granted under the Plan after ten (10) years from the Effective Date.
7.2 FUNDING AND LIABILITY OF COMPANY
No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made, or otherwise
to segregate any assets. In addition, the Company shall not be required to
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with
respect to Grantees who are entitled to cash, Common Stock or rights thereto
under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Company shall not be required to segregate any assets that may
at any time be represented by cash, Common Stock or rights thereto. The Plan
shall not be construed as providing for such segregation, nor shall the Company,
the Board or the Committee be deemed to be a trustee of any cash, Common Stock
or rights thereto. Any liability or obligation of the Company to any Grantee
with respect to an Incentive Award shall be based solely upon any contractual
obligations that may be created by this Plan and any Incentive Agreement,
26
<PAGE>
and no such liability or obligation of the Company shall be deemed to be secured
by any pledge or other encumbrance on any property of the Company. Neither the
Company, the Board nor the Committee shall be required to give any security or
bond for the performance of any obligation that may be created by the Plan.
7.3 WITHHOLDING TAXES
(A) TAX WITHHOLDING. The Company shall have the power and the right
to deduct or withhold, or require a Grantee to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of the Plan or an Incentive Award
hereunder.
(B) SHARE WITHHOLDING. With respect to tax withholding required upon
the exercise of Stock Options or upon any other taxable event arising as a
result of any Incentive Award, the Grantee may elect, subject to the
approval of the Committee in its discretion, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold Shares
having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the
transaction. All such elections shall be made in writing, signed by the
Grantee, and shall be subject to any restrictions or limitations that the
Committee, in its discretion, deems appropriate. Upon the lapse of
restrictions on Restricted Stock, the Committee, in its discretion, may
elect to satisfy the tax withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value on the date
the tax is to be determined equal to the minimum statutory total tax which
could be imposed on the transaction.
(C) INCENTIVE STOCK OPTIONS. With respect to Shares received by a
Grantee pursuant to the exercise of an Incentive Stock Option, if such
Grantee disposes of any such Shares within (i) two years from the date of
grant of such Option or (ii) one year after the transfer of such shares to
the Grantee, the Company shall have the right to withhold from any salary,
wages or other compensation payable by the Company to the Grantee an
amount sufficient to satisfy federal, state and local tax withholding
requirements attributable to such disqualifying disposition.
(D) LOANS. The Committee may provide for loans, on either a short
term or demand basis, from the Company to a Grantee who is an Employee or
Consultant to permit the payment of taxes required by law.
7.4 NO GUARANTEE OF TAX CONSEQUENCES
Neither the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to any
person participating or eligible to participate hereunder.
7.5 DESIGNATION OF BENEFICIARY BY PARTICIPANT
Each Grantee may, from time to time, name any beneficiary or beneficiaries
(who may be named contingently or successively) to whom any benefit under the
Plan is to be paid in case of his death before he receives any or all of such
benefit. Each such designation shall revoke all prior designations by the
27
<PAGE>
same Grantee, shall be in a form prescribed by the Committee, and will be
effective only when filed by the Grantee in writing with the Committee during
the Grantee's lifetime. In the absence of any such designation, benefits
remaining unpaid at the Grantee's death shall be paid to the Grantee's estate.
7.6 DEFERRALS
The Committee may permit a Grantee to defer such Grantee's receipt of the
payment of cash or the delivery of Shares that would, otherwise be due to such
Grantee by virtue of the lapse or waiver of restrictions with respect to
Restricted Stock, or the satisfaction of any requirements or goals with respect
to Performance Units, Performance Shares or Other Stock-Based Awards. If any
such deferral election is permitted, the Committee shall, in its discretion,
establish rules and procedures for such payment deferrals to the extent required
for tax deferral under the Code.
7.7 AMENDMENT AND TERMINATION
The Board shall have complete power and authority to terminate or amend
the Plan at any time; provided, however, the Board shall not, without the
approval of the stockholders of the Company within the time period required by
applicable law, (a) except as provided in SECTION 6.5, increase the maximum
number of Shares which may be issued under the Plan pursuant to SECTION 1.4, (b)
amend the requirements of the Plan, if any, regarding the class of Employees
eligible to purchase Common Stock under the Plan, (c) extend the term of the
Plan, or, if the Company is a Publicly Held Corporation (i) increase the maximum
limits on Incentive Awards to Covered Employees as set for compliance with the
Performance-Based Exception, or (ii) decrease the authority granted to the
Committee under the Plan in contravention of Rule 16b-3 under the Exchange Act.
No termination, amendment, or modification of the Plan shall adversely
affect in any material way any outstanding Incentive Award previously granted to
a Grantee under the Plan, without the written consent of such Grantee or other
designated holder of such Incentive Award.
In addition, to the extent that the Committee determines that (a) the
listing for qualification requirements of any national securities exchange or
quotation system on which the Company's Common Stock is then listed or quoted,
if applicable, or (b) the Code (or regulations promulgated thereunder), require
stockholder approval in order to maintain compliance with such listing
requirements or to maintain any favorable tax advantages or qualifications, then
the Plan shall not be amended in such respect without approval of the Company's
stockholders.
7.8 REQUIREMENTS OF LAW
The granting of Incentive Awards and the issuance of Shares under the Plan
shall be subject to all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required. Certificates evidencing shares of Common Stock delivered under this
Plan (to the extent that such shares are so evidenced) may be subject to such
stop transfer orders and other restrictions as the Committee may deem advisable
under the rules and regulations of the Securities and Exchange Commission, any
securities exchange or transaction reporting system upon which the Common Stock
is then listed or to which it is admitted for quotation, and any applicable
federal or state securities law, if applicable. The Committee may cause a legend
or legends to be placed upon such certificates (if any) to make appropriate
reference to such restrictions.
28
<PAGE>
7.9 RULE 16B-3 SECURITIES LAW COMPLIANCE FOR INSIDERS
With respect to Insiders to the extent applicable, transactions under the
Plan are intended to comply with all applicable conditions of Rule 16b-3 under
the Exchange Act. Any ambiguities or inconsistencies in the construction of an
Incentive Award or the Plan shall be interpreted to give effect to such
intention, and to the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void to the extent
permitted by law and deemed advisable by the Committee in its discretion.
7.10 COMPLIANCE WITH CODE SECTION 162(M) FOR PUBLICLY HELD CORPORATION
While the Company is a Publicly Held Corporation, unless otherwise
determined by the Committee with respect to any particular Incentive Award, it
is intended that the Plan shall comply fully with the applicable requirements so
that any Incentive Awards subject to Section 162(m) that are granted to Covered
Employees shall qualify for the Performance-Based Exception, except for grants
of Nonstatutory Stock Options with an Option Price set at less than the Fair
Market Value of a Share on the date of grant. If any provision of the Plan or an
Incentive Agreement would disqualify the Plan or would not otherwise permit the
Plan or Incentive Award to comply with the Performance-Based Exception as so
intended, such provision shall be construed or deemed to be amended to conform
to the requirements of the Performance-Based Exception to the extent permitted
by applicable law and deemed advisable by the Committee; provided, however, no
such construction or amendment shall have an adverse effect on the prior grant
of an Incentive Award or the economic value to a Grantee of any outstanding
Incentive Award.
7.11 SUCCESSORS TO COMPANY
All obligations of the Company under the Plan with respect to Incentive
Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
7.12 MISCELLANEOUS PROVISIONS
(a) No Employee, Consultant, Outside Director, or other person shall
have any claim or right to be granted an Incentive Award under the Plan.
Neither the Plan, nor any action taken hereunder, shall be construed as
giving any Employee, Consultant, or Outside Director any right to be
retained in the Employment or other service of the Company or any Parent
or Subsidiary.
(b) The expenses of the Plan shall be borne by the Company.
(c) By accepting any Incentive Award, each Grantee and each person
claiming by or through him shall be deemed to have indicated his
acceptance of the Plan.
7.13 SEVERABILITY
In the event that any provision of this Plan shall be held illegal,
invalid or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provisions of the Plan,
29
<PAGE>
and the Plan shall be construed and enforced as if the illegal, invalid, or
unenforceable provision was not included herein.
7.14 GENDER, TENSE AND HEADINGS
Whenever the context so requires, words of the masculine gender used
herein shall include the feminine and neuter, and words used in the singular
shall include the plural. Section headings as used herein are inserted solely
for convenience and reference and constitute no part of the interpretation or
construction of the Plan.
7.15 GOVERNING LAW
The Plan shall be interpreted, construed and constructed in accordance
with the laws of the State of Texas without regard to its conflicts of law
provisions, except as may be superseded by applicable laws of the United States.
IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed
in its name and on its behalf by its duly authorized officer.
BLUE DOLPHIN ENERGY COMPANY
By: _____________________________
Name: ___________________________
Title: __________________________
30
<PAGE>
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1 AND PROPOSAL 2.
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies and confirms all that
said Proxies, their substitutes, or any of them, may lawfully do by virtue
hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
DATED:
---------------------------
---------------------------
Signature
---------------------------
(Signature if held jointly)
Please date the proxy and sign your
name exactly as it appears hereon.
Where there is more than one owner,
each should sign. When signing as an
attorney, administrator, executor,
guardian or trustee, please add your
title as such. If executed by a
corporation, the proxy should be
signed by a duly authorized officer.
Please sign the proxy and return it
promptly whether or not you expect to
attend the meeting. You may
nevertheless vote in person if you do
attend.
<PAGE>
PROXY
BLUE DOLPHIN ENERGY COMPANY
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Stockholders of Blue Dolphin Energy Company (the "Company") to be
held on May 18, 2000, at 10:00 AM., central daylight time, at the Company's
principal executive offices, 801 Travis, Suite 2100, Houston, Texas and the
Proxy Statement in connection therewith, and (b) appoints Michael J. Jacobson
and G. Brian Lloyd, and each of them, his proxies with full power of
substitution and revocation, for and in the name, place and stead of the
undersigned, to vote upon and act with respect to all of the shares of Common
Stock of the Company standing in the name of the undersigned or with respect to
which the undersigned is entitled to vote and act at said meeting or at any
adjournment thereof, and the undersigned directs that his proxy be voted as
follows:
PROPOSAL 1. With- For All PLEASE CHECK BOX
The Election of Directors For hold Except IF YOU PLAN TO
[ ] [ ] [ ] ATTEND THE MEETING [ ]
IVAR SIEM, HARRIS A. KAFFIE, DANIEL B. PORTER, AND MICHAEL S. CHADWICK
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
PROPOSAL 2. For Withhold Against
Approval of the 2000 Stock Incentive Plan. [ ] [ ] [ ]
PROPOSAL 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).
