UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Section 240.14a-11(c) or Section
240.14a-12
BLUE DOLPHIN ENERGY COMPANY
(Name of Registrant as specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which the transaction
applies:
---------------------------------------------
(2) Aggregate number of securities to which the transaction
applies:
---------------------------------------------
(3) Per unit price or other underlying value of the transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
---------------------------------------------
(4) Proposed maximum aggregate value of the 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: __________________
(3) Filing Party: ______________________________________________
(4) Date Filed: ________________________________________________
BLUE DOLPHIN ENERGY COMPANY
801 TRAVIS, SUITE 2100
HOUSTON, TEXAS 77002
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 19, 2005
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 Thursday, May 19, 2005, at 10:00 a.m., Houston time, at the Company's
principal executive offices at 801 Travis, Suite 2100, Houston, Texas, for the
following purposes:
1. To elect six directors to serve until the next annual meeting of
stockholders or until their successors are duly elected and
qualified, or until their earlier resignation or removal; and
2. To transact any other business that may properly come before the
Annual Meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on April 19, 2005,
are entitled to notice of, and to vote at, the Annual Meeting and any
adjournment or postponement thereof. Your vote is important. Because many
stockholders are not able to attend the Annual Meeting, we have enclosed a proxy
card for your use. You may vote on the matters to be acted upon at the Annual
Meeting by completing and returning the proxy card promptly in the enclosed
postage paid return envelope.
For the Board of Directors
/s/ Ivar Siem
-------------------------------------
IVAR SIEM,
Chairman and Chief Executive Officer
Houston, Texas
April 20, 2005
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE ENCOURAGED TO
INDICATE YOUR VOTE AS TO THE MATTERS TO BE ACTED UPON ON THE ENCLOSED PROXY CARD
AND RETURN THE PROXY CARD PROMPTLY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY
CHANGE YOUR VOTE AT THAT TIME.
1
BLUE DOLPHIN ENERGY COMPANY
801 Travis, Suite 2100
Houston, Texas 77002
(713) 227-7660
PROXY STATEMENT
----------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 19, 2005
----------------------------------------------------------------------
This proxy statement, the accompanying notice and form of proxy are
first being mailed to stockholders on or about April 21, 2005. These proxy
materials are being furnished to the stockholders of Blue Dolphin Energy
Company, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
annual meeting of stockholders (the "Annual Meeting") and any adjournment or
postponement thereof. The Annual Meeting will be held on Thursday, May 19, 2005,
at 10:00 a.m., Houston time, at the Company's principal executive offices at 801
Travis, Suite 2100, Houston, Texas.
At the Annual Meeting, stockholders will be asked (i) to elect six
directors to serve until the next annual meeting of stockholders or until their
successors are duly elected and qualified, or until their earlier resignation or
removal; and (ii) to transact any other business that may properly come before
the Annual Meeting or any adjournment or postponement thereof.
The Company will bear all costs of this solicitation. Proxies will be
solicited primarily by mail, but directors, officers and other employees of the
Company may also solicit proxies in person or by telephone in the ordinary
course of business for which they will not receive additional compensation. The
Company has requested that brokerage houses, nominees, fiduciaries and other
custodians send proxy materials to the beneficial owners of the Company's common
stock, par value $.01 per share (the "Common Stock"), for which the Company will
reimburse them for their reasonable out-of-pocket expenses.
RECORD DATE; QUORUM
The Board of Directors has fixed the close of business on April 19,
2005, as the record date (the "Record Date") for the determination of
stockholders entitled to notice of, and to vote at, the Annual Meeting. A
complete list of stockholders entitled to vote at the Annual Meeting will be
open for examination by any stockholder during normal business hours for a
period of ten days prior to the Annual Meeting at the Company's principal
executive offices, 801 Travis, Suite 2100, Houston, Texas. At the close of
business on April 19, 2005, there were outstanding 8,551,490 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.
Abstentions and broker non-votes (i.e. shares held by brokers and other nominees
as to which they have not received voting instructions from the beneficial
owners and lack the discretionary authority to vote on a particular matter) are
counted as present for purposes of determining whether a quorum is present.
2
VOTING; REVOCATION OF PROXY
All shares of Common Stock represented at the Annual Meeting by
properly executed proxies will be voted in accordance with the instructions
indicated on the proxies. If no instructions are indicated with respect to any
shares for which properly executed proxies have been received, such proxies will
be voted "FOR" election of all nominees to the Board of Directors and in the
discretion of the proxy holder on any other matters properly brought before the
Annual Meeting.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by any
of the following actions:
o by providing written notice of revocation to the Company;
o delivering to the Company a signed proxy of a later date; or
o by voting in person at the Annual Meeting.
Any written notice revoking a proxy should be sent to the Secretary of
the Company at the Company's principal executive offices, 801 Travis, Suite
2100, Houston, Texas 77002.
VOTING AGREEMENT
When the Company entered into that certain Note and Warrant Purchase
Agreement dated September 8, 2004 (the "Purchase Agreement"), the Company's
Chief Executive Officer, President, the members of the Board of Directors,
except for Laurence N. Benz and F. Gardner Parker, and Colombus Petroleum
Limited, Inc., the Company's largest stockholder, entered into a voting
agreement with the investors that are party to the Purchase Agreement and
granted an irrevocable proxy to Mr. Parker and Mr. Barrett L. Webster. The proxy
granted to Messrs. Parker and Webster represents approximately 33.8% of the
issued and outstanding shares of Common Stock and gives Messrs. Parker and
Webster the authority to vote all of the shares of Common Stock beneficially
owned by such stockholder "FOR" the election of Messrs. Benz and Parker as
nominees to the Board of Directors. In addition, the stockholders executing the
voting agreement with the investors also agreed not to sell, transfer, assign,
pledge or otherwise dispose of any of the shares of Common Stock beneficially
owned by such stockholder until either the closing of the transactions
contemplated by the Purchase Agreement or the termination of the Purchase
Agreement.
ELECTION OF DIRECTORS
NOMINEES
Messrs. Laurence N. Benz, Michael S. Chadwick, Harris A. Kaffie, F.
Gardner Parker, Ivar Siem and James M. Trimble (each a "Nominee" and
collectively, the "Nominees") have been nominated by the Board of Directors to
serve as directors until the next annual meeting of stockholders, or in each
case, until their successors have been duly elected and qualified, or until
their earlier resignation or removal. Pursuant to the terms of the Purchase
Agreement, the Company has agreed to nominate Messrs. Benz and Parker to stand
for election at the 2005 Annual Meeting. Each Nominee is currently a director of
the Company and has previously been elected by the stockholders. 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
3
or persons exercising the proxies will vote for the election of a substitute
nominee designated by the Board of Directors.
VOTE REQUIRED
A plurality of the votes cast by the stockholders present and entitled
to vote at the Annual Meeting, in person or by proxy, is necessary for the
election of directors. Accordingly, abstentions and broker non-votes will have
no effect on the election of directors.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF EACH OF THE NOMINEES.
NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The following table provides certain information with respect to our
directors and executive officers.
NAME AGE POSITION POSITION HELD SINCE
---- --- -------- -------------------
Ivar Siem 58 Chairman of the Board, Chief Executive 1989
Officer and Director
Laurence N. Benz 43 Director 2004
Michael S. Chadwick 53 Director 1992
Harris A. Kaffie 55 Director 1989
F. Gardner Parker 63 Director 2004
James M. Trimble 56 Director 2002
Michael J. Jacobson 58 President 1990
G. Brian Lloyd 46 Vice President, Treasurer and Secretary 1989
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 and Chief Executive
Officer - Mr. Siem has served as Chairman of the Board of Directors since 1989
and was appointed as the Chief Executive Officer of the Company in April, 2004.
Since September 2000, Mr. Siem has served as Chairman and President of Drillmar,
Inc. a well construction and intervention company. From 1995 to 2000, Mr. Siem
served on the Board of Directors of Grey Wolf, Inc., during which time he served
as Chairman from 1995 to 1998 and as interim President in 1995 during its
restructuring. Since 1985, he has been an international consultant in energy,
technology and finance. He has served as a Director of Business Development for
Norwegian Petroleum Consultants and as an independent consultant to the oil and
gas exploration and production industry based in London, England. Mr. Siem holds
a Bachelor of Science Degree in Mechanical Engineering from the University of
California, Berkeley, and has completed an executive MBA program at Amos Tuck
School of Business, Dartmouth University.
Laurence N. Benz - Director - Mr. Benz was appointed as a Director in
September 2004, as one of two Directors named by the investors in the Purchase
Agreement. From 1987 to the present, he has served as the President of Kentucky
Orthopedic Rehabilitation LLC, which he founded. In 2003, Mr. Benz founded
Genesis Health Systems and currently serves as its President. From 1984 through
1989, he served in the U.S. Army as a Captain in the Army Medical Annualists
Corps. He serves as a Director for
4
the charitable organization of Girls on the Run - Kentucky. Mr. Benz received a
Masters degree in Physical Therapy from Baylor University, a Masters in Business
Administration from The Ohio State University and a Doctorate in Physical
Therapy from MGHIHP located in Boston, Massachusetts.
Michael S. Chadwick - Director - Mr. Chadwick has been engaged in the
commercial and investment banking businesses since 1975. From 1988 to 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 1994, Mr. Chadwick joined Sanders Morris Harris Group, Inc., an
investment banking and financial advisory firm, as Senior Vice President and a
Managing Director in the Corporate Finance Group, a position he continues to
hold today. He currently serves on the boards of directors of Landry's
Restaurants, Inc. and Home Solutions of America, Inc., as well as numerous
privately held companies. Mr. Chadwick holds a Bachelor of Arts Degree in
Economics from the University of Texas at Austin and a Master of Business
Administration Degree from Southern Methodist University.
Harris A. Kaffie - Director - Mr. Kaffie is a partner in Kaffie
Brothers, a real estate, farming and ranching partnership. He currently serves
as a director of KBK Capital Corporation and Drillmar, Inc. Mr. Kaffie received
a Bachelor of Business Administration Degree from Southern Methodist University
in 1972.
F. Gardner Parker - Director - Mr. Parker was appointed as a Director
in September 2004, as one of two Directors named by the investors in the
Purchase Agreement. Mr. Parker is lead managing trustee with Camden Property
Trust and Chairman of Camden's Compensation Committee and Corporate Governance
Committee. He also serves as a director of Carrizo Oil and Gas, Inc., Crown
Resources Corp., and Sharps Compliance, Inc. and serves on and/ or chairs their
respective Audit Committees and Compensation Committees. Mr. Parker is also a
director of several private companies including Gillman Auto Dealerships, Net
Near U. Communications, Camp Longhorn, nii Communications, Sherwood Nursing Home
and Butler Online. Mr. Parker is a Certified Public Accountant and was employed
by Ernst & Young (formerly Ernst & Ernst) for fourteen years, seven of which he
served as a partner. Mr. Parker is a graduate of the University of Texas.
James M. Trimble - Director - Mr. Trimble served as President and CEO
of TexCal Energy (GP) LLC, formerly known as Tri-Union Development Corporation,
a privately held oil and gas company, from July 2002 through November 2004.
Previously he served as President of Elysium Energy, L.L.C., from July 2000
until the contribution of its properties to a public oil and gas company in
November 2001. Prior to Elysium, Mr. Trimble served at Cabot Oil & Gas
Corporation from May 1983 to May 2000 in several managerial and senior level
executive positions. Before joining Cabot, Mr. Trimble served as President of
Volvo Petroleum, Inc. a Houston based, private domestic and international
exploration and production company. Mr. Trimble graduated from Mississippi State
University where he majored in Petroleum Engineering for undergraduate and
graduate studies.
Michael J. Jacobson - President - Mr. Jacobson has been associated with
the energy industry since 1968, serving in various senior management capacities
since 1980. He served as Senior Vice President and Chief Financial and
Administrative Officer for Creole International, Inc. and its subsidiaries,
international providers of engineering and technical services to the energy
sector, as well as Vice President of Operations for the parent holding company,
from 1985 until joining the Company in January 1990. He has also served as Vice
President and Chief Financial Officer of Volvo Petroleum, Inc., and for certain
Fred. Olsen oil and gas interests. Mr. Jacobson began his career with Shell Oil
Company, where he served in various analytical and management capacities in the
exploration and
5
production organization during the period 1968 through 1974. Mr. Jacobson holds
a Bachelor of Science Degree in Finance from the University of Colorado.
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 and also
attended the University of Houston. Mr. Lloyd has served as Secretary and
Treasurer of the Company since 1989 and Vice President since March 1998.
There are no family relationships between any director, Nominee or
executive officer.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During 2004, the Board of Directors held three regular meetings and
seven special meetings. Each director, except for Messers. Benz and Parker who
were appointed to the Board in September, 2004, attended at least 75% of the
total number of meetings of the Board of Directors and committees on which he
served.
At the beginning of 2004, the Audit Committee consisted of Messrs.
Chadwick, Kaffie and Trimble. In September 2004, the Board of Directors
appointed Messrs. Benz, Chadwick, and Trimble to serve as the Audit Committee,
with Mr. Benz elected as Chairman of the Audit Committee. The Board of Directors
has determined that Mr. Benz qualifies as an "audit committee financial expert"
as that term is defined in Item 401(e) of Regulation S-B promulgated by the SEC.
The Audit Committee's duties include overseeing the financial reporting and
internal control functions. The Audit Committee met five times during the last
fiscal year.
At the beginning of 2004, the Compensation Committee consisted of
Messrs. Chadwick, Siem and Trimble. In September 2004, the Board of Directors
elected Messers. Kaffie, Parker and Siem to serve as the Compensation Committee.
The Compensation Committee's duties are to oversee and set the Company's
compensation policy and to administer its stock option plan. The Compensation
Committee met once during the last fiscal year.
The Board of Directors currently does not have a standing nominating
committee and consequently has no nominating committee charter. The Board of
Directors believes that it is appropriate under existing circumstances for the
Company not to have a nominating committee because the Board is comprised of
only six members, a majority of whom are independent as defined under the Nasdaq
Stock Market listing standards. In the near future, however, the Company intends
to establish a nominating committee and adopt a nominating committee charter.
Currently, each member of the Board of Directors participates in the
consideration of director nominees.
The Board of Directors does not have a formal policy with regard to the
consideration of any director candidates recommended by stockholders because the
Board believes it can adequately evaluate any such recommendation on a
case-by-case basis. However, the Board of Directors would consider for possible
nomination qualified nominees recommended by stockholders. Stockholders who wish
to propose a qualified candidate for consideration should submit complete
information as to the identity and qualifications of that person to the
Secretary of the Company at 801 Travis, Suite 2100, Houston, Texas 77002 before
February 18, 2006, for the 2006 Annual Meeting. See "Nominations and Proposals
by Stockholders for the 2006 Annual Meeting."
6
The Board of Directors will continue to nominate qualified incumbent
directors whom the Board believes will continue to make important contributions
to the Board and the Company. The Board of Directors generally requires that
nominees be persons of sound ethical character, be able to represent all
stockholders fairly, have demonstrated professional achievement, have meaningful
experience and have a general appreciation of the major business issues facing
the Company.
COMMUNICATING WITH BOARD OF DIRECTORS
Any stockholder who desires to contact the Board of Directors or
specific members of the Board of Directors may do so by writing to: Board of
Directors, Blue Dolphin Energy Company, 801 Travis, Suite 2100, Houston, Texas
77002, Attention: Corporate Secretary.
DIRECTOR ATTENDANCE AT ANNUAL MEETING
The Board of Director's policy regarding director attendance at the
Annual Meeting of Stockholders is that they are welcome to attend, and that the
Company will make all appropriate arrangements for directors that choose to
attend. In 2004, three of the Company's six directors attended the Special
Meeting. It is unknown if all Nominees will attend the Annual Meeting.
REPORT OF THE AUDIT COMMITTEE
The duties and responsibilities of the Audit Committee are set forth in
a written charter adopted by the Board of Directors. The Audit Committee of the
Board of Directors consists entirely of directors who meet the independence and
experience requirements of Nasdaq Stock Market, Inc. currently applicable to the
Company, as determined by the Board of Directors. The Audit Committee reviews
and reassesses the charter annually and recommends any changes to the Board of
Directors for approval. The Audit Committee has reviewed the relevant
requirements of the Sarbanes-Oxley Act of 2002, the rules, proposed and adopted,
of the Securities and Exchange Commission and the proposed new listing standards
of the Nasdaq Small Cap Market regarding audit committee procedures and
responsibilities. The Audit Committee charter was amended by the Board of
Directors in January 2005, and a copy of the Amended and Restated Audit
Committee Charter is attached hereto as "Exhibit "A".
The Audit Committee's primary duties and responsibilities are to:
o assess the integrity of the Company's financial reporting process
and systems of internal control regarding accounting;
o assess the independence and performance of the Company's independent
accountants; and
o provide an avenue of communication among the Company's independent
accountants, management and the Board of Directors.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with auditing standards generally accepted in the
United States and to issue a report thereon. The Audit Committee's
responsibility is to monitor and oversee these processes.
At the beginning of 2004, the Audit Committee consisted of Messrs.
Chadwick, Kaffie and Trimble. In September 2004, the Board of Directors elected
Messrs. Benz, Chadwick, Kaffie and
7
Trimble to serve as the Audit Committee, with Mr. Benz elected as Chairman of
the Audit Committee. The Board of Directors has determined that Mr. Benz
qualifies as an "audit committee financial expert" as that term is defined in
Item 401(e) of Regulation S-B promulgated by the SEC.
The Audit Committee reviewed and discussed the audited financial
statements of the Company for the fiscal year ended December 31, 2004 with the
Company's management and management represented to the Audit Committee that the
Company's financial statements were prepared in accordance with accounting
principles generally accepted in the United States. The Audit Committee
discussed with UHY Mann Frankfort Stein & Lipp CPA's, LLP ("UHY"), the Company's
independent accountants, the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees), and related
amendments.
The Audit Committee received the written disclosures and the letter
from UHY required by Independence Standards Board Standard No. 1 (Independence
Discussion with Audit Committees), and the Audit Committee discussed with UHY
their independence from the Company. The Audit Committee considered the
non-audit services provided by UHY and determined that the services provided are
compatible with maintaining UHY's independence. The Audit Committee must
pre-approve all audit and non-audit services provided to the Company by its
independent accountants.
The fees paid to UHY in fiscal years 2004 and 2003 by the Company are
as follows:
2004 2003
------------ -------------
Audit Fees.............................. $ 70,196 $ 78,046
Audit-Related Fees...................... - -
Tax Fees................................ 51,593 35,398
All other Fees.......................... 7,131 1,300
------------ -------------
Total................................... $ 128,920 $ 114,744
============ =============
Audit Fees include fees related to the audit of our consolidated
financial statements and review of our quarterly reports filed with the SEC. Tax
Fees were primarily for preparation of federal and state income tax returns, and
tax planning services.
Based on the Audit Committee's discussions with management and UHY, and
the Audit Committee's review of the representation of management and the report
of UHY to the Audit Committee, the Audit Committee recommended to the Board of
Directors that the Company's audited financial statements be included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
2004, for filing with the Securities and Exchange Commission.
The Audit Committee:
Laurence N. Benz, Chairman
Michael S. Chadwick
James M. Trimble
8
COMPENSATION OF DIRECTORS
In fiscal year 2004, the Company paid to non-employee members of the
Board of Directors an annual retainer of $12,000, payable 50% in cash and 50% in
Common Stock. The Audit Committee chairman receives an additional annual
retainer of $3,000 and other Audit Committee members receive an additional
annual retainer of $1,500. No additional remuneration is paid to directors for
committee meetings attended, except that directors are entitled to be reimbursed
for expenses related to attendance at board or committee meetings. No additional
compensation is paid to directors serving on the Compensation Committee.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to the Company's
Chief Executive Officer and each of the executive officers whose annual salary
exceeded $100,000 in fiscal 2004 (collectively, the "Named Executive Officers")
for services rendered to the Company.
SUMMARY COMPENSATION TABLE*
LONG-TERM
COMPENSATION
------------------
ANNUAL COMPENSATION SECURITIES
--------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (1)
------------------------------------------------- ----------- --------------- -------- ------------------
Ivar Siem 2004 $ 73,333 - -
Chairman of the Board and 2003 $ 80,000 - 30,000
Chief Executive Officer 2002 $ 80,000 - 10,000
Michael J. Jacobson 2004 $135,000 - -
President 2003 $125,000 - 30,000
2002 $125,000 - 10,000
John P. Atwood (2)
Vice President - 2004 $100,065 - -
Business 2003 $120,000 - 30,000
Development 2002 $ 90,000 - 10,000
G. Brian Lloyd 2004 $120,000 - -
Vice President - 2003 $112,500 - 30,000
Treasurer 2002 $105,000 - 10,000
----------
* Excludes certain personal benefits, the aggregate value of which do not
exceed 10% of the Annual Compensation shown for each person.
(1) In fiscal year 2004, no options were granted to the Named Executive
Officers.
(2) In connection with the implementation of the Company's cost reduction plan,
Mr. Atwood ceased to be an employee of the Company on August 1, 2004.
9
OPTION GRANTS IN LAST FISCAL YEAR
During the fiscal year ended December 31, 2004, no options were granted
to the Named Executive Officers.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ON OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END (*)
EXERCISE VALUE ------------------------------ ------------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------------- -------- -------- ----------- ------------- ----------- -------------
Ivar Siem - $ - 48,000 - $ 16,200 $ -
Michael J. Jacobson - $ - 46,000 - $ 16,200 $ -
G. Brian Lloyd - $ - 43,000 - $ 16,200 $ -
----------
(*) Based on the difference between the closing bid price on December 31, 2004
(the last trading day of 2004) which was $.97 per share and the exercise
price of options, whose exercise price was below $.97.
The Company's stock option plan provides that upon a change of control,
the Compensation Committee may accelerate the vesting of options, cancel options
and make payments in respect thereof in cash in accordance with the terms of the
stock option plan, adjust the outstanding options as appropriate to reflect such
change of control, or provide that each option shall thereafter be exercisable
for the number and class of securities or property that the optionee would have
been entitled to receive had the option been exercised. The stock option plan
provides that a change of control occurs if any person, entity or group acquires
or gains ownership or control of more than 50% of the outstanding Common Stock
or, if after certain enumerated transactions, the persons who were directors
before such transactions cease to constitute a majority of the Board of
Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 19, 2005, certain
information with respect to the beneficial ownership of shares of Common Stock
(the Company's only class of voting security issued and outstanding) as to (i)
all persons known by us to be beneficial owners of 5% or more of the outstanding
shares of Common Stock, (ii) each director, (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.
10
SHARES OWNED BENEFICIALLY
---------------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT (1)
----------------------------------------------------------------------- -------------- ---------------
Colombus Petroleum Limited, Inc. (2)(5) 911,712 10.7
Ivar Siem (4)(5) 975,392 11.4
Harris A. Kaffie (4)(5) 807,007 9.3
Michael S. Chadwick (4)(5) 239,318 2.7
James M. Trimble (5) 59,663 0.7
Laurence N. Benz (4) 183,334 2.1
F. Gardner Parker (3)(4)(5) 3,371,414 37.3
Michael J. Jacobson (4)(5) 245,741 2.9
G. Brian Lloyd (4) 112,298 1.3
Barrett L. Webster (3)(5) 3,114,009 36.4
Executive Officers and Directors, as a group (8 persons) (4) 4,017,793 41.9
(1) Based upon 8,551,490 shares of Common Stock outstanding on April 19, 2005.
(2) Based on a Schedule 13D filed with the Securities and Exchange Commission
on February 1, 1999. The address of Colombus Petroleum Limited, Inc., is
Aeulestrasse 74, FL-9490, Vaduz, Liechtenstein.
(3) Based on a Schedule 13D filed with the Securities and Exchange Commission
on October 5, 2004. The address of Barrett L. Webster is 1000 Louisiana,
Suite 1500, Houston, Texas 77002, and the address of F. Gardner Parker is
3601 Piping Rock, Houston, Texas 77027.
(4) Includes shares of Common Stock issuable upon exercise of options that may
be exercised within 60 days of April 19, 2005 as follows: Mr. Siem - 8,000;
Mr. Kaffie - 83,571; Mr. Chadwick - 83,571; Mr. Jacobson - 33,938; Mr.
Lloyd - 25,500 and all directors and executive officers as a group -
234,580. Includes shares of Common Stock issuable upon exercise of warrants
that may be exercised within 60 days of April 19, 2005 as follows: Mr.
Chadwick - 141,667; Mr. Benz - 183,334; Mr. Parker - 483,328 and all
directors and executive officers as a group - 808,329.
(5) In connection with the Purchase Agreement, Michael S. Chadwick, Harris A.
Kaffie, Ivar Siem and James M. Trimble, directors of the Company, Michael
J. Jacobson, the Company's President and Colombus Petroleum Limited, Inc.,
who combined beneficially own approximately 36.4% of the Common Stock,
entered into a voting agreement with the purchasers of the Promissory Notes
and the Warrants. Under the terms of this voting agreement, a proxy was
granted to Mr. Parker, a director of the Company, and Barrett L. Webster,
to vote on the election of Messrs. Benz and Parker as nominees for
director. With respect to Messrs. Parker and Webster, includes the
2,888,086 shares of common stock subject to the voting agreement.
Equity Compensation Plans. The following table sets forth certain
information as of December 31, 2004 with respect to shares of Common Stock that
may be issued under our Incentive Plan.
11
EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES
NUMBER OF REMAINING AVAILABLE
SECURITIES TO BE WEIGHTED-AVERAGE FOR FUTURE ISSUANCE
ISSUED UPON EXERCISE PRICE UNDER EQUITY
EXERCISE OF OF OUTSTANDING COMPENSATION PLANS
OUTSTANDING OPTIONS, (EXCLUDING
OPTIONS, WARRANTS WARRANTS AND SECURITIES REFLECTED
PLAN CATEGORY AND RIGHTS RIGHTS IN THE FIRST COLUMN)
----------------------------------------------- ------------------- ------------------ ----------------------
Equity compensation plan approved by
stockholders (*) 346,942 $1.08 85,916
Warrants to certain Directors approved by
stockholders 300,000 $ .25 -
----------
(*) Represents shares of Common Stock issuable upon exercise of outstanding
options granted under the Incentive Plan.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our directors, executive officers, and stockholders who own more than
10% of our Common Stock, to file reports of stock ownership and changes in
ownership with the Securities and Exchange Commission and to furnish us with
copies of all such reports they file. Based solely on a review of the copies of
the Section 16(a) reports furnished to us, we believe that during fiscal year
2004, all Section 16(a) filing requirements applicable to its directors,
executive officers and greater than 10% shareholders were complied with.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 2004, the Company entered into the Purchase Agreement with
certain accredited investors and certain directors of the Company for the
purchase and sale of promissory notes in an aggregate principal amount of
$750,000 (the "Promissory Notes") and 2,800,000 warrants (the "Warrants") to
purchase shares of common stock at a purchase price of $0.003 per warrant. The
sale of the Promissory Notes and the first tranche of 1,250,000 Warrants (the
"Initial Warrants") closed on September 8, 2004, and the closing of the sale of
the second tranche of 1,550,000 Warrants (the "Additional Warrants") closed on
November 30, 2004, after the Company received stockholder approval at its
November 11, 2004 special stockholders' meeting. The Company received net
proceeds of $758,400 from the sale of the Promissory Notes and the Warrants. The
Promissory Notes mature on September 8, 2005, and accrue interest at a rate of
12.0% per annum, of which 4% is payable monthly and 8% is payable at maturity.
The Promissory Notes are secured by a second lien on the Company's 83% interest
in the Blue Dolphin Pipeline system. All Warrants are immediately exercisable
and will expire five years after their date of issuance. Each Warrant is
exercisable for one share of Common Stock at an exercise price of $0.25 per
share. The Warrants contain standard antidilution provisions, as well as
provisions that will result in adjustments to the exercise price of the Warrants
if we issue Common Stock at a price below $0.25 per share, subject to certain
exceptions.
Pursuant to the terms of the Purchase Agreement, the Company appointed
Messrs. Benz and Parker to its Board of Directors. Messrs. Benz and Parker each
purchased a Promissory Note in the principal amount of $25,000. Messrs. Benz and
Parker purchased 83,334 and 383,328 Warrants, respectively. Mr. Chadwick, an
existing director, purchased a Promissory Note in the principal amount
12
of $12,500 and 41,667 Warrants. In addition Messrs. Benz, Chadwick and Parker
were each granted 100,000 Warrants.
The Company entered into a Note Modification Agreement and a Waiver
Agreement with Western Gulf Pipeline Partners, LP ("Western Gulf") effective
April 8, 2005. Western Gulf holds a promissory note in the principal amount of
$275,000 and warrants exercisable to acquire 916,667 shares of Common Stock,
originally issued pursuant to the Purchase Agreement. The promissory note bears
interest at 12% per annum of which 4% is payable monthly and 8% is payable at
maturity. Pursuant to the terms of the Note Modification and Waiver Agreements,
the Company and Western Gulf agreed as follows:
o To amend the terms of the Promissory Note to (i) extend the maturity
date from September 8, 2005 to June 30, 2006 and (ii) defer the
payment of all interest on the promissory note until maturity;
o To waive Western Gulf's compliance with the lock-up provisions of
the Purchase Agreement and allow it to sell shares of the Company's
common stock that it may receive upon exercise of the warrants; and
o To accelerate the date the Company is required to file a
registration statement registering the resale of the shares of the
Company's common stock that Western Gulf may acquire upon exercise
of warrants to May 15, 2005.
The Company has offered and expects to enter into substantially similar
arrangements with the other note and warrant holders, except those who are
Directors of the Company.
In addition to serving on the Company's Board of Directors, Mr.
Chadwick is also a Senior Vice President and Managing Director of Sanders Morris
Harris Group, Inc. ("SMH"), a financial services holding company headquartered
in Houston, Texas. The Company paid SMH a $25,000 fee in connection with the
Purchase Agreement and agreed to retain SMH to provide a fairness opinion, if
required.
The Company also entered into a consulting agreement with Mr. Parker.
Mr. Parker's consulting agreement has a term of up to eighteen months. The
Company is obligated to pay Mr. Parker a monthly fee of $2,000 and a bonus that
will accrue at the rate of $3,000 per month and be payable upon consummation of
a merger or acquisition by the Company.
The Company owns 12.8% of the common stock of Drillmar, Inc. The
Company's Chairman, Ivar Siem, and one of its Directors, Harris A. Kaffie, own
or control 33.9%, and 30.3%, respectively, of Drillmar's common stock. Messrs.
Siem and Kaffie are both directors, and Mr. Siem is Chairman and President of
Drillmar.
In 2002, the Company recorded a full impairment of its investment in
Drillmar and a full reserve for the accounts receivable amount owed to the
Company from Drillmar of approximately $200,000 due to Drillmar's working
capital deficiency and delays in securing capital funding. During 2004, the
Company collected $165,000 of the accounts receivable from Drillmar and it has
collected the remaining balance of approximately $45,000 in 2005.
In January 2003, Drillmar stockholders approved a restructuring plan
whereby Drillmar was able to issue up to $3.0 million of convertible notes that
will convert into common stock representing over
13
99% of Drillmar's outstanding shares. As a result, the Company's ownership in
Drillmar can be reduced to less than 1%. However, in November 2003, the Company
converted a contingent obligation due from Drillmar for providing office space,
accounting and administrative services from May 2002 through January 2003
totaling $162,000 (9 months at $18,000 per month) into a convertible note, which
if converted along with all of Drillmar's outstanding convertible notes would
represent 5.5% of Drillmar's common stock. Messrs. Siem, Kaffie and Trimble
(each a Director of the Company) hold or control Drillmar convertible notes
which if converted along with all of Drillmar's outstanding convertible notes
would represent 30.2%, 28.7% and 1.5%, respectively, of Drillmar's common stock.
The Company entered into a new agreement with Drillmar effective as of
February 1, 2003, whereby it provides and charges for office space which is
currently $4,750 per month. The Company had provided professional, accounting
and administrative services to Drillmar based on hourly rates based on its cost.
However, since the Company's implementation of staff reductions in mid 2004, no
such services have been provided. The agreement can be terminated upon 30 days
notice or by the mutual agreement of the parties.
In March 2003, the Company entered into a sublease agreement expiring
December 31, 2006 for certain of its office space with TexCal Energy (GP) LLC,
formerly Tri-Union Development Corporation. The Company's annual receipts from
this sublease are approximately $78,000. One of the Company's Directors, Mr.
Trimble, was the Chairman and Chief Executive Officer of TexCal Energy (GP) LLC
until November 2004.
NOMINATIONS AND PROPOSALS BY STOCKHOLDERS
FOR THE 2006 ANNUAL MEETING
The Company has tentatively set its year 2006 annual meeting for May
19, 2006. Accordingly, stockholders should submit nominations and proposals in
accordance with the guidance set forth below.
Nominations for the year 2006 Annual Meeting. The Company's Certificate
of Incorporation provides that no person shall be eligible for nomination and
election as a director unless written notice of such nomination is received from
a stockholder of record by the Secretary of the Company 90 days before the
anniversary date of the previous year's annual meeting. Further, such written
notice is to be accompanied by the written consent of the nominee to serve, the
name, age, business and residence addresses, and principal occupation of the
nominee, the number of shares beneficially owned by the nominee, and any other
information which would be required to be furnished by law with respect to any
nominee for election to the Board of Directors. Stockholders who desire to
nominate persons to serve on the Board of Directors at the 2006 annual meeting
of stockholders must submit nominations to the Company, at its principal
executive office, so that such notice is received by the Company no later than
February 17, 2006. 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 2006 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 2006 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 17, 2005. 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.
14
Moreover, any stockholder who intends to submit a proposal for
consideration at the Company's 2006 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 17, 2006 and (2) satisfy the
rules of the U.S. Securities and Exchange Commission.
RELATIONSHIP WITH
INDEPENDENT PUBLIC ACCOUNTANTS
UHY, has been engaged by the Company's Board of Directors as the
independent accountants for the Company since 2002. The Company expects that
they will continue as independent accountants. Representatives of UHY are
expected to be present at the Annual Meeting, with the opportunity to make a
statement if they desire to do so, and to respond to appropriate questions.
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.
INFORMATION INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2004 is being mailed with this proxy statement and is incorporated
herein by reference and deemed to be a part of this proxy statement.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement.
By Order of the Board of Directors
/s/ G. Brian Lloyd
--------------------------------------------
G. Brian Lloyd
Vice President, Treasurer and Secretary
Houston, Texas
April 20, 2005
15
EXHIBIT A
BLUE DOLPHIN ENERGY COMPANY
AMENDED AND RESTATED
AUDIT COMMITTEE CHARTER
Effective January 7, 2005
The Audit Committee is appointed by the Board of Directors to assist the Board
in monitoring (1) the integrity of the financial statements of the Company, (2)
the compliance by the Company with legal and regulatory requirements, and (3)
the independence and performance of the Company's independent auditors.
The Audit Committee shall have the authority to retain, at the Company's
expense, special legal, accounting or other consultants or experts to advise the
Audit Committee. The Audit Committee may request any officer or employee of the
Company or the Company's outside counsel or independent auditor to attend a
meeting of the Audit Committee or to meet with any member of, or consultants to,
the Audit Committee.
The Audit Committee shall make regular reports to the Board. The Audit Committee
shall meet at least four times each year and hold such other meetings from time
to time as may be called by its Chairman or any two members of the Audit
Committee. At least quarterly, the Audit Committee will meet separately in an
executive session with the independent auditors.
Composition
The Audit Committee shall be comprised of at least three directors who shall be
appointed by the Board. The Audit Committee shall only include directors who
satisfy the independence requirements of the Securities and Exchange Commission
(the "SEC") and the NASDAQ Stock Market, Inc. (the "NASDAQ") applicable to the
Company and are free of any relationship that, in the opinion of the Board,
would interfere with their exercise of independent judgment as an Audit
Committee member. No member of the Audit Committee may receive any payment from
the Company other than payment for services as a director or member of a
committee of the Board of Directors or be an affiliate of the Company or any of
its subsidiaries.
Audit Committee members must be able to read and understand fundamental
financial statements, including the Company's balance sheet, income statement
and cash flow statement. As required by NASDAQ, one member of the Audit
Committee shall have accounting or related financial management expertise and
qualify as a "financial expert" in accordance with the requirements of the SEC
and the NASDAQ (as may be modified or supplemented). The role of the financial
expert will be that of assisting the Audit Committee in overseeing the audit
process, not auditing the Company.
Responsibilities and Duties.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval.
2. Review the annual audited financial statements with management, including
major issues regarding accounting and auditing principles and practices as
well as the adequacy of internal controls that could significantly affect the
Company's financial statements.
3. Review with management and the independent auditor (a) significant financial
reporting issues, accounting principles, practices and judgments made in
connection with the preparation of the Company's financial statements,
including an analysis of the effect of alternative GAAP methods on the
Company's financial statements and a description of any transactions as to
which management obtained Statement on Auditing Standards No. 50 letters and
(b) any material reports or estimates prepared by outside consultants,
reserve engineers, or other experts or specialists.
4. Review with management and the independent auditor the effect of regulatory
and accounting initiatives as well as off-balance sheet structures on the
Company's financial statements.
5. Review with management and the independent auditor the Company's quarterly
financial statements prior to the filing of its Form 10-Q, including the
results of the independent auditors' reviews of the quarterly financial
statements. The Chair of the Committee may perform this task and convene the
Committee when appropriate.
6. Meet periodically with management to review the Company's major financial
risk exposures and the steps management has taken to monitor and control such
exposures.
7. Review major changes to the Company's auditing and accounting principles and
practices as suggested by the independent auditor or management.
8. Review the experience and qualifications of the senior members of the
independent auditor team and the quality control procedures of the
independent auditor.
9. Retain and, where warranted in the Committee's judgment, terminate
independent auditors selected to audit the financial statements of the
Company.
10. Approve all permissible non-audit services to be performed by the
independent auditors.
11. Approve the fees to be paid to the independent auditor.
12. Receive periodic reports from the independent auditor regarding the
auditor's independence consistent with Independence Standards Board
Standard 1, discuss such reports with the auditor, and if so determined by
the Audit Committee, take or recommend that the full Board take appropriate
action to oversee the independence of the auditor.
13. Establish procedures for the receipt, retention, and treatment of
complaints received by the Company regarding accounting, internal
accounting controls, or auditing matters.
14. Approve all related-party transactions.
15. Meet with the independent auditor prior to the audit to review the planning
and staffing of the audit.
16. Obtain from the independent auditor assurance that Section 10A of the
Securities Exchange Act of 1934 (added by the Private Securities Litigation
Reform Act of 1995) has not been implicated.
17. Review with management and the independent auditor any correspondence with
regulators or governmental agencies and any employee complaints or
published reports which raise material issues regarding the Company's
financial statements or accounting policies.
18. Obtain reports from management and the independent auditor that the acts
and conduct of the Company's executives are in conformity with applicable
legal requirements.
19. Discuss with the independent auditor the matters required to be discussed
by Statement on Auditing Standards No. 61, and related amendments, relating
to the conduct of the audit.
20. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include:
a. Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
b. Any changes required in the planned scope of the audit.
21. Prepare the Audit Committee report required by the rules of the Securities
and Exchange Commission to be included in the Company's annual proxy
statement.
22. Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations.
23. Review with the outside legal counsel matters that may have a material
impact on the financial statements, the Company's compliance policies and
any material reports or inquiries received from regulators or governmental
agencies.
WHILE THE AUDIT COMMITTEE HAS THE RESPONSIBILITIES AND POWERS SET FORTH IN THIS
CHARTER, IT IS NOT THE DUTY OF THE AUDIT COMMITTEE TO PLAN OR CONDUCT AUDITS OR
TO DETERMINE THAT THE COMPANY'S FINANCIAL STATEMENTS ARE COMPLETE AND ACCURATE
AND ARE IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. THIS IS THE
RESPONSIBILITY OF MANAGEMENT AND THE INDEPENDENT AUDITOR. NOR IS IT THE DUTY OF
THE AUDIT COMMITTEE TO CONDUCT INVESTIGATIONS, TO RESOLVE DISAGREEMENTS, IF ANY,
BETWEEN MANAGEMENT AND THE INDEPENDENT AUDITOR OR TO ASSURE COMPLIANCE WITH LAWS
AND REGULATIONS.
Approved by the Board of Directors
-----------------------------------
Brian Lloyd
Secretary
BLUE DOLPHIN ENERGY COMPANY
ANNUAL MEETING OF STOCKHOLDERS MAY 19, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Stockholders and the Proxy Statement, and
appoints Michael J. Jacobson and G. Brian Lloyd, and each of them, the proxy of
the undersigned, with full power of substitution to vote all shares of common
stock of Blue Dolphin Energy Company (the "Company") that the undersigned is
entitled to vote, either on his or her own behalf or on behalf of any entity or
entities, at the Annual Meeting of Stockholders of the Company to be held at the
Company's principal executive offices at 801 Travis, Suite 2100 Houston, Texas
77002 on Thursday, May 19, 2005 at 10:00 a.m. local time, and at any adjournment
or postponement thereof, with the same force and effect as the undersigned might
or could do if personally present thereat. The shares represented by this proxy
shall be voted in the manner set forth on the reverse side.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK:
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
1. Election of Directors:
[ ] for all
[ ] withhold all
[ ] for all except ____________________
(see instructions below)
To withhold authority to vote for fewer than all of the nominees, mark "For All
Except" and write the nominee's name from the list below.
Nominees
--------
Laurence N. Benz F. Gardner Parker
Michael S. Chadwick Ivar Siem
Harris A. Kaffie James M. Trimble
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
IF YOU RETURN YOUR PROPERLY EXECUTED PROXY, THE PROXIES WILL VOTE YOUR SHARES AS
YOU DIRECT. IF YOU DO NOT SPECIFY ON YOUR PROXY HOW YOU WANT TO VOTE YOUR
SHARES, THE PROXIES WILL VOTE THEM "FOR" ALL NOMINEE'S IN PROPOSAL 1, AND IN THE
DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
Please sign EXACTLY as your name appears
hereon. When signing as attorney, executor,
administrator, trustee or guardian, please
give your full title as such. If more than
one trustee, all should sign. If shares are
held jointly, both owners must sign.
------------------------------------ -------------
Signature Date
------------------------------------ --------------
Signature (Joint Owner) Date