BLUE DOLPHIN ENERGY CO
10-Ks and 10-Qs
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UNITED STATES
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Filed
by the Registrant
☒
Filed by a Party
other than the Registrant
☐
Check
the appropriate box:
☐
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
☒ Definitive
Proxy Statement
☐ Definitive
Additional Materials
☐ Soliciting
Material pursuant to
§240.14a-12
BLUE DOLPHIN ENERGY COMPANY
(Name
of Registrant as specified in its Charter)
Payment
of Filing Fee (Check the appropriate box):
☒ 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 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 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:
____________________________________________
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NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
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To Our
Stockholders:
Notice
is hereby given that an Annual Meeting of Stockholders (the
“Annual Meeting”) of Blue Dolphin Energy Company, a
Delaware corporation (referred to herein as “Blue
Dolphin,” “we,” “us” and
“our”), will be held on Friday, December 20, 2019 at
10:00 a.m. Central Time at Blue Dolphin’s principal office
located at 801 Travis Street, 21
st
Floor, Houston,
Texas 77002. At the Annual Meeting, stockholders will consider
proposals to:
(1)
elect five (5)
directors, all of whom shall serve until the next annual meeting of
stockholders, or in each case until their successors are duly
elected and qualified, or until their earlier resignation or
removal;
(2)
ratify the
selection of UHY LLP (“UHY”) as our independent
registered public accounting firm for the fiscal year ending
December 31, 2019; and
(3)
transact any other
business that may properly come before the Annual
Meeting.
Additional
information regarding the Annual Meeting is set forth in the
accompanying proxy statement. Our Board of Directors (the
“Board”) has specified the close of business on
November 29, 2019 as the record date (“Record Date”)
for the purpose of determining the stockholders who are entitled to
receive notice of, and to vote at, the Annual Meeting. Only
stockholders of record at the close of business on the Record Date
are entitled to notice of and to vote at the Annual Meeting and at
any adjournment or postponement thereof.
Regardless of
whether you plan to attend the Annual Meeting in person, we request
that you
vote your shares of Blue
Dolphin common stock at your earliest convenience in order to
ensure that your shares of Blue Dolphin common stock will be
represented at the Annual Meeting.
Depending on how you hold
your shares of Blue Dolphin common stock, options to cast your
ballot include the Internet, telephone, or mail. If you have
Internet access, we recommend that you record your vote via the
Internet.
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AVAILABILITY
OF PROXY MATERIALS – IMPORTANT NOTICE
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Proxy
materials are available online
https://iproxydirect.com/BDCO
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MEETING
DETAILS
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Location
Blue
Dolphin Energy Company
801
Travis Street, 21st Floor
Houston, Texas
77002
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Parking
Parking
will be validated for attendees that park in the 801 Travis Street
parking garage (entrance off Rusk Street).
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Proxy
Forms
Registered
stockholders may vote in person at the Annual Meeting by completing
a ballot or by submitting their pre-printed proxy form. Beneficial
stockholders that desire to vote in person at the Annual Meeting
must obtain a legal proxy form from the brokerage firm, bank, trust
or other nominee and present it to the inspector of election with
their ballot. The inspector of election at the Annual Meeting has
access to the registered stockholder’s list to verify whether
a registered stockholder is entitled to vote as of the Record Date.
However, the inspector of election does not have access to the
control number verification system that brokerage firms, banks,
trusts and other nominees use to verify whether a beneficial
stockholder is entitled to vote at the Annual Meeting. See
“Frequently Asked Questions – 7. How do I vote if I am
a beneficial stockholder?” for more information on voting
shares held through a brokerage firm, bank, trust or other
nominee.
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By
Order of the Board
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/s/
JONATHAN P. CARROLL
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Jonathan P.
Carroll
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Chairman of the
Board
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December 3,
2019
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Houston,
Texas
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BLUE
DOLPHIN ENERGY COMPANY
December 3,
2019
Fellow
Stockholders:
We are ending 2019 on a positive note, having made significant
progress towards improving our operations and financial stability.
For a roughly 2-year period from September 2017 to August 2019, a
significant portion of our cash from operations was dedicated to
reducing the outstanding balance of the final arbitration award
payable to GEL Tex Marketing, LLC (“GEL”), as
follows:
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(in
millions)
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Initial
payment (September 2017)
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$
3.7
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Interim
payments under a letter agreement with GEL (July 2018 to April
2019)
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8.0
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Settlement
payment under the settlement agreement with GEL (May
2019)
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10.0
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Deferred
interim installment payments under the settlement agreement with
GEL (June 2019 to August 2019)
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0.5
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Total
payments to GEL
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$
22.2
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Having successfully finalized the settlement with GEL, we realized
a $9.1 million gain on the extinguishment of the liability for the
three months ended September 30, 2019. Other recent positive
milestones include:
Reporting a gross
profit of $2.4 million, or a gross margin of approximately 3%, for
the three months ended September 30, 2019 compared to gross profit
of $1.4 million, or a gross margin of nearly 2%, for the three
months ended September 30, 2018. The $1.0 million increase in gross
profit between the periods primarily related to higher margins on
slightly lower volume in the current period compared to the prior
period.
Securing
a long-term crude supply contract with Pilot Travel Centers LLC
(“Pilot”). The prior agreement with Pilot was
month-to-month. In connection with the crude supply contract, Pilot
stores its crude oil at the Nixon Facility pursuant to a terminal
services agreement. Pilot currently provides us with adequate
amounts of crude oil and condensate on favorable terms, and we
expect Pilot to continue to do so for the foreseeable
future.
I am
greatly encouraged by our 2019 achievements, and I am thankful for
the ongoing support of our personnel and the faith of our
stockholders.
With
regards,
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Jonathan
P. Carroll
Chairman
of the Board,
Chief
Executive Officer and President
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801
Travis Street, Suite 2100, Houston, Texas 77002
Phone
(713) 568-4725 ● Fax (713) 227-7626 ●
www.blue-dolphin-energy.com
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PROXY STATEMENT
BLUE DOLPHIN ENERGY COMPANY
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TABLE OF CONTENTS
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PAGE
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PROCEDURAL
MATTERS
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2
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General
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2
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Date, Time and
Place
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2
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Purpose
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2
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Record Date; Who
Is Entitled to Vote
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2
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Material
Delivery
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2
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Quorum
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2
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Abstentions and
Broker Non-Votes
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3
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Votes Required for
Approval
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3
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Voting Your
Shares
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3
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Revoking Your
Proxy
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4
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Where to Direct
Questions
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4
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Reimbursement of
Solicitation Expenses
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4
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FREQUENTLY ASKED QUESTIONS (“FAQs”)
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5
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PROPOSALS
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8
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(1)
ELECTION OF DIRECTORS
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8
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(2)
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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11
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(3)
TRANSACTION OF OTHER MATTERS
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11
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EXECUTIVE OFFICERS
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12
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CORPORATE GOVERNANCE AND BOARD MATTERS
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13
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AUDIT COMMITTEE REPORT
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15
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COMPENSATION DISCUSSION AND ANALYSIS
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17
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COMPENSATION COMMITTEE REPORT
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19
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
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19
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RELATED PARTY TRANSACTIONS
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20
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
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24
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DIRECTOR NOMINATION AND STOCKHOLDER PROPOSALS BY STOCKHOLDERS FOR
ANNUAL MEETING OF STOCKHOLDERS
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WHERE YOU CAN FIND MORE INFORMATION
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26
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CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
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26
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DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN
ADDRESS
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27
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1
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P
ROCEDURAL MATTERS
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This
proxy statement and accompanying notice and proxy form are being
furnished to the stockholders of Blue Dolphin Energy Company
(referred to herein as “Blue Dolphin,”
“we,” “us” and “our”) in
connection with the solicitation of proxies by Blue Dolphin’s
Board of Directors (the “Board”) for use at the Annual
Meeting of Stockholders (the “Annual Meeting”) and any
adjournment or postponement thereof.
D
ate, Time and
Place
The
Annual Meeting will be held on Friday, December 20, 2019 at 10:00
a.m. Central Time at Blue Dolphin’s principal office, which
is located at 801 Travis Street, 21
st
Floor, Houston,
Texas 77002.
At the
Annual Meeting, stockholders are being asked to consider and vote
upon proposals to:
(1)
elect five (5)
directors, all of whom shall serve until the next annual meeting of
stockholders, or in each case until their successors are duly
elected and qualified, or until their earlier resignation or
removal;
(2)
ratify the
selection of UHY LLP (“UHY”) as our independent
registered public accounting firm for the fiscal year ending
December 31, 2019; and
(3)
transact any other
business that may properly come before the Annual
Meeting.
R
ecord Date; Who
Is Entitled to Vote
The
Board has fixed the close of business on November 29, 2019 as the
record date (the “Record Date”) for the determination
of stockholders entitled to notice of, and to vote at, the Annual
Meeting. A list of registered 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 (10) days prior to
the Annual Meeting at our principal office, which is located at 801
Travis Street, 21
st
Floor, Houston,
Texas 77002. On the Record Date, there were 12,327,365 shares of
our common stock, par value $0.01 per share (the “Common
Stock”), outstanding. Stockholders are entitled to one (1)
vote per share of Common Stock
held on
the Record Date
on
each matter presented at the Annual Meeting.
This
proxy statement, along with its accompanying notice and proxy form,
are first being mailed to stockholders on or about December 3,
2019. We are also mailing an insert notifying stockholders that our
Annual Report on Form 10-K for the fiscal year ended December 31,
2018 (the “Annual Report”) is available
online.
The
holders of a majority of the
shares
of Common Stock entitled to vote at the Annual Meeting and
represented in person or by proxy shall constitute a quorum at the
Annual Meeting
for the transaction of business.
2
Abstentions
– If a stockholder abstains from voting on
a proposal, the shares are considered present and entitled to vote
at the Annual Meeting. Therefore, abstentions will count toward
determining whether or not a quorum is present. Under Delaware law,
a proxy marked “abstain” is not considered a vote cast.
Accordingly, an abstention will have no effect on the proposal
regarding the election of directors, as the nominees are elected by
a plurality of the votes cast. Abstentions on proposals that
require the affirmative vote of a majority of the shares entitled
to vote and represented at the Annual Meeting, in person or by
proxy, will, in effect, be a vote against such matter.
Broker Non-Votes
– Broker non-votes occur when
brokers, banks or other nominees that hold shares on behalf of
beneficial (“street name”) stockholders do not receive
voting instructions from the beneficial stockholders prior to the
Annual Meeting and do not have discretionary voting authority to
vote those shares. Broker non-votes are considered present and
entitled to vote at the Annual Meeting. Therefore, broker non-votes
will count toward determining whether or not a quorum is present.
However, under New York Stock Exchange Rule 452, which has been
approved by the Securities and Exchange Commission (the
“SEC”), brokers are prohibited from voting shares of
Common Stock for which they have not received instructions on
non-routine matters, including the election of
directors.
With
the exception of the election of directors, our By-Laws, as amended
and restated (the “By-Laws”), require an affirmative
vote of a majority of the votes cast by the stockholders present,
either in person or by proxy, and entitled to vote at the Annual
Meeting for the proposal to be approved. The votes required for
approval, and the impact of abstentions and broker non-votes for
each proposal stockholders are being asked to consider and vote
upon are as follows:
Proposal (1)
— Election of Directors: You may vote “FOR” any
one, or all, of the nominees, or withhold your vote for any one or
more of the nominees. As the nominees are elected by a plurality of
the votes cast, withheld votes and abstentions will not affect the
outcome of this proposal. This proposal is considered a non-routine
matter and brokers will not have discretionary authority to vote
shares for which they have not received instructions;
and
Proposal (2)
— Ratification of Independent Registered Public Accounting
Firm: You may vote “FOR” or “AGAINST” or
abstain from voting. The affirmative vote of the holders of a
majority of the shares of Common Stock entitled to vote and
represented at the Annual Meeting, in person or by proxy, is
required to approve the ratification of UHY as our independent
registered public accountants for the fiscal year ending December
31, 2019. Abstentions will have the same effect as a vote
“AGAINST” the ratification. Under applicable SEC rules,
this proposal is considered a routine matter and brokers will have
the discretionary authority to vote shares of Common Stock for
which they have not received instructions.
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” Proposal Nos. (1) and (2).
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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 pursuant to the following actions:
providing written
or electronic notice of revocation;
submitting a proxy
of a later date; or
voting in person at
the Annual Meeting.
A
written notice of revocation should be sent to Blue Dolphin Energy
Company, Attention: Secretary, 801 Travis Street, Suite 2100,
Houston, Texas 77002. Depending on how you hold your shares, you
can submit a proxy of a later date via the Internet, by telephone,
by fax, or by mail.
To
assist you with casting your vote, we have attempted to answer key
questions you may have as a stockholder related to the proposals
you are being asked to consider. Please review the frequently asked
questions (FAQs) section, which is included as part of this proxy
statement. If you have any additional questions, please contact
Blue Dolphin, Investor Relations at (713) 568-4725.
Blue
Dolphin will bear all costs of this solicitation. Proxies will be
solicited primarily by mail, but may also be solicited in person,
by telephone or other electronic means by directors, officers and
employees of Blue Dolphin in the ordinary course of business, for
which they will not
receive additional
compensation
. Blue Dolphin has requested that brokers,
nominees, fiduciaries and other custodians send proxy materials to
the beneficial owners of
Common
Stock,
for which Blue Dolphin will reimburse them for their
reasonable out-of-pocket expenses.
Remainder
of Page Intentionally Left Blank
4
The
FAQs presented in this section are to assist you in understanding
the proposals you are being asked to vote upon for the Annual
Meeting. The items addressed may not answer all questions that may
be important to you as a stockholder. For additional information,
please refer to the more detailed discussion contained elsewhere in
this proxy statement or contact Blue Dolphin, Investor Relations at
(713) 568-4725.
Procedural Matters
1.
Why
am I receiving this proxy statement?
You are
receiving this proxy statement because you hold shares of Blue
Dolphin Common Stock as of the Record Date for the Annual
Meeting.
2.
What
does it mean if I receive more than one proxy?
If you
receive more than one proxy form, it means that you hold shares of
Common Stock in more than one account. For example, you may own
your shares of Common Stock individually, jointly with your spouse,
as trustee of a trust, or as custodian for a minor. To ensure that
all of your shares of Common Stock are voted, you will need to sign
and return each proxy form received because they are held in a
different form of ownership.
3.
Who
is entitled to attend and vote at the Annual Meeting?
If you
owned shares of Common Stock as of the close of business on
November 29, 2019, you are entitled to notice of, and to vote at,
the Annual Meeting or any adjournment or postponement of the Annual
Meeting. As of the Record Date, there were approximately 12,327,365
shares of Common Stock and outstanding.
4.
When
and where will the Annual Meeting be held?
The
Annual Meeting will be held on Friday, December 20, 2019 at 10:00
a.m. Central Time at Blue Dolphin’s principal office, which
is located at 801 Travis Street, 21
st
Floor, Houston,
Texas 77002.
5.
What
do I need to do now?
After
carefully reading and considering the information contained in this
proxy statement, please vote your shares of Common Stock as
described below. You are entitled to one (1) vote for each share of
Common Stock you own as of the Record Date.
6.
How
do I vote if I am a registered stockholder?
If your
shares of Common Stock are registered directly in your name with
our transfer agent, Securities Transfer Corporation, you are
considered, with respect to those shares, the stockholder of record
or a “registered stockholder.” Registered stockholders
may vote as follows: (i) by mail by completing, signing and dating
each proxy form received and returning it in the enclosed prepaid
envelope, (ii) by fax by completing, signing and dating each proxy
form received and faxing to (202) 521-3464, (iii) via the Internet
at
https://www.iproxydirect.com/BDCO
by following the instructions, or (iv) in person by attending the
Annual Meeting. If voting by mail, fax, or the Internet, your
voting instructions must be received by 11:59 p.m. Eastern/10:59
p.m. Central Time on the date prior to the date of the Annual
Meeting. Voting by mail, fax, or the Internet will not prevent you
from voting in person at the Annual Meeting. You are encouraged to
submit a proxy by mail, fax, or the Internet even if you plan to
attend the Annual Meeting in person to ensure that your shares of
Common Stock are present in person or represented by proxy at the
Annual Meeting.
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7.
How
do I vote if I am a beneficial stockholder?
If your
shares of Common Stock are held by a brokerage firm, bank, trust or
other nominee, you are considered the “beneficial
stockholder” of the shares of Common Stock being held in
“street name.” These proxy materials are being
forwarded to you by your broker, bank or other holder of record who
is considered, with respect to those shares of Common Stock, the
stockholder of record. As the beneficial stockholder, you have the
right to direct your broker, bank or other holder of record on how
to vote your shares of Common Stock and you are invited to attend
the Annual Meeting. Your broker, bank, trustee or nominee is
obligated to provide you with a voting instruction form for voting
purposes.
As a
beneficial stockholder, you cannot vote your shares of Common Stock
directly and must instead instruct the brokerage firm, bank, trust
or other nominee on how to vote your shares of Common Stock. With
specific instructions on how to vote, your brokerage firm, bank,
trust or other nominee will be permitted to vote shares of Common
Stock on your behalf for any matter, including non-routine matters
under SEC Rules. Proposal (1), regarding the election of directors,
is considered a non-routine matter. Without instructions on how to
vote, your brokerage firm, bank, trust or other nominee will only
be permitted to vote shares of Common Stock on your behalf for
routine matters under applicable SEC rules. Proposal (2), regarding
the ratification of UHY as our independent registered public
accounting firm for the year ending December 31, 2019, is
considered a routine matter.
Therefore, it is important
that you promptly follow the directions provided by your brokerage
firm, bank, trust or other nominee regarding how to instruct them
to vote your shares of Common Stock.
If you wish to vote in person at the
Annual Meeting, you must obtain a legal proxy form from the
brokerage firm, bank, trust or other nominee and present it to the
inspector of election with your ballot.
If you hold some
shares of Common Stock as a registered stockholder and some shares
of Common Stock as a beneficial stockholder, the shares of Common
Stock cannot be combined for voting purposes because the shares of
Common Stock held beneficially list the brokerage firm, bank, trust
or other nominee as the stockholder of record.
8.
What
if I fail to instruct my brokerage firm, bank, trust or other
nominee how to vote?
Because
your brokerage firm, bank, trust or other nominee does not have
discretionary authority to vote on non-routine matters, failure to
provide your broker or other nominee with voting instructions on
how to vote your shares of Common Stock will result in a broker
non-vote for Proposal (1).
9.
What
are the proposals that will be voted on at the Annual
Meeting?
You are
being asked to consider and vote upon proposals to: (1) elect five
(5) directors, (2) ratify the selection of UHY as our independent
registered public accounting firm for the year ending December 31,
2019, and (3) transact any other business that may properly come
before the Annual Meeting and any adjournment or postponement
thereof.
10.
How
does Blue Dolphin’s Board recommend that I vote on the
proposals?
The
Board has determined that each of the proposals presented in the
proxy statement are in the best interests of you -- our stockholder
-- and unanimously recommends that you vote “FOR” each
proposal presented in the proxy statement.
11.
How
many votes are required to approve an adjournment or postponement
of the Annual Meeting to a later time, if necessary or appropriate,
to obtain a quorum or solicit additional proxies in favor of the
proposals?
If a
quorum is not met, the Board may submit a proposal to adjourn or
postpone the Annual Meeting to a later date or dates until a quorum
is met. If a quorum is met but there are insufficient votes to
adopt the proposals, our By-Laws require the affirmative vote of a
majority of the votes cast in order to adjourn or postpone the
Annual Meeting to a later time. Withheld votes, abstentions and
broker non-votes will have no effect on this matter.
12.
How
are votes counted?
The
inspector of election that is appointed for the Annual Meeting will
count the votes. Such person will separately count
“FOR,” “WITHHELD” and “AGAINST”
votes, as well as abstentions and broker non-votes.
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13.
What
constitutes a quorum for the Annual Meeting?
The
presence, in person or by proxy, of stockholders representing a
majority of the shares of Common Stock entitled to vote at the
Annual Meeting will constitute a quorum for the Annual Meeting.
Shares of Common Stock held by registered stockholders that submit
a properly executed proxy form will be counted as part of the
quorum. Shares of Common Stock held by beneficial stockholders that
either provide their brokerage firm, bank, trust or other nominee
with voting instructions or obtain a legal proxy form for voting in
person at the Annual Meeting will be counted as part of the
quorum.
14.
Am
I entitled to appraisal rights?
Under
Delaware law, stockholders are not entitled to appraisal rights
with respect to any of the proposals presented at the Annual
Meeting.
15.
What
happens if I sell my shares of Blue Dolphin Common Stock before the
Annual Meeting?
The
date of record to determine whether stockholders are entitled to
vote at the Annual Meeting is earlier than the date of the Annual
Meeting. If you transfer or sell your shares of Common Stock after
the Record Date but before the Annual Meeting, you will, unless
special arrangements are made, retain your right to vote at the
Annual Meeting.
16.
Who
can answer further questions?
For
additional questions, please contact Blue Dolphin, Investor
Relations at (713) 568-4725. For assistance in submitting proxies
or voting shares of Common Stock, registered stockholders should
contact Securities Transfer Corporation by phone at (469) 633-0101
or visit their website at
http://www.stctransfer.com
.
Beneficial stockholders should contact their brokerage firm, bank,
trust or other nominee for additional information.
Selection of UHY as Independent Registered Public Accounting
Firm
17.
How long has UHY been our independent registered public accounting
firm?
UHY has
been engaged as our independent registered public accounting firm
since 2002. Although ratification of UHY as our independent
registered public accounting firm by our stockholders is not
required by our By-Laws, the Board believes that submitting this
matter to a vote reflects good corporate practice.
18.
What happens if UHY’s selection is not ratified?
In the
event of a negative vote on such ratification, the Audit Committee
of the Board (the “Audit Committee”) will consider
whether it is appropriate to select another independent registered
public accounting firm. Even if this appointment is ratified, the
Audit Committee, in its discretion, may direct the appointment of a
different independent registered public accounting firm at any time
during the year if the Audit Committee determines that such a
change would be in our best interest and that of our
stockholders.
Remainder of Page Intentionally Left Blank
7
Director Nominees
The
Board has affirmatively determined that each of Ryan A. Bailey,
Amitav Misra, and Christopher T. Morris, each an outside director,
is considered an “Independent Director” as such term is
defined by OTCQX and SEC rules. Jonathan P. Carroll, our Chief
Executive Officer and President, and Herbert N. Whitney, are not
considered independent directors. The independent members of the
Board have nominated Messrs. Bailey, Misra, Morris, Carroll and
Whitney to serve as directors until the next annual meeting of
stockholders. Each director that has been nominated (each a
“Director Nominee”) shall serve as a director 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
Director Nominee has consented to being nominated and has expressed
a willingness to serve if elected. The Board has no reason to
believe that any of the Director Nominees will be unable or
unwilling to serve if elected. However, should any Director 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 Director Nominee
designated by the Board.
This
table shows, as of the Record Date, each Director Nominee’s
name, age, principal occupation and directorships during the past
five (5) years, as well as their relevant knowledge and experience
that led to their nomination to the Board:
8
|
Name, Age
Principal Occupation and Directorships During Past 5
Years
|
|
Knowledge and Experience
|
|
|
|
|
|
Jonathan P. Carroll
, 58
Blue
Dolphin Energy Company
Chairman of the Board
(since 2014)
Chief Executive Officer, President,
Assistant Treasurer and Secretary
(since 2012)
Lazarus
Energy Holdings, LLC (“LEH”)
President
(since 2006)
and
Majority Owner
Together,
LEH and Jonathan Carroll own 82.1% of our outstanding Common Stock
as of the Record Date.
Mr.
Carroll has served on Blue Dolphin’s Board since 2014. He is
currently Chairman of the Board. Since 2004, he has served on the
Board of Trustees of the Salient Fund Group, and has served on the
compliance, audit and nominating committees of several of
Salient’s private and public closed-end and mutual funds. Mr.
Carroll previously served on the Board of Directors of the General
Partner of LRR Energy, L.P. (NYSE: LRE) from January 2014 until its
merger with
Vanguard
Natural Resources, LLC in October 2015.
|
|
Mr.
Carroll earned a Bachelor of Arts degree in Human Biology and a
Bachelor of Arts degree in Economics from Stanford University, and
he completed a Directed Reading in Economics at Oxford University.
Based on his educational and professional experiences, Mr. Carroll
possesses particular knowledge and experience in business
management, finance and business development that strengthen the
Board’s collective qualifications, skills and
experience.
|
|
|
|
|
|
Ryan A. Bailey
, 44
Pacenote
Capital
Managing Partner
(since August 2019)
and Co-founder
Children’s
Health System of Texas
Head of Investments
(2014 to August 2019)
The
Meadows Foundation
Investment Officer/Interim Chief Investment Officer
(2006 to
2014)
Mr.
Bailey was appointed to Blue Dolphin’s Board in November
2015. He is currently a member of the Audit and
Compensation Committees. He also serves as an advisor
and mentor to Texas Wall Street Women, a non-profit member
organization; is a member of the advisory board of Solovis, Inc.,
an investment software company; and serves as a Board member for
the Texas Hedge Fund Association.
|
|
Mr.
Bailey earned a Bachelor of Arts in Economics from Yale University
and completed a graduate course in tax planning from the Yale
School of Management. He holds professional
credentialing as a Chartered Financial Analyst (CFA), Financial
Risk Manager (FRM), Chartered Alternative Investment Analyst (CAIA)
and Chartered Market Technician (CMT). Based on his educational and
professional experiences, Mr. Bailey possesses particular knowledge
and experience in finance, financial analysis and modeling,
investment management, risk assessment and strategic planning that
strengthen the Board’s collective qualifications, skills and
experience.
|
|
|
|
|
Remainder
of Page Intentionally Left Blank
9
|
Name, Age
Principal Occupation and Directorships During Past 5
Years
|
|
Knowledge and Experience
|
|
|
|
|
|
Amitav Misra
, 42
Arundo
Analytics, Inc.
General Manager Americas (
since 2018
)
Vice President of Marketing
(since 2017)
Cardinal
Advisors
Partner
(2014 to 2017)
and
Founder
Taxa,
Inc.
President, Director and Chief Operating Officer
(2012 to
2014)
EnerNOC,
Inc.
Channel Manager
(2011 to 2012)
Mr.
Misra has served on Blue Dolphin’s Board since
2014. He is currently a member of the Audit and
Compensation Committees. Mr. Misra serves as an advisor
to several energy, technology and private investment
companies. He is also a director of the Houston Center
for Literacy, a non-profit organization.
|
|
Mr.
Misra earned a Bachelor of Arts in Economics from Stanford
University and holds FINRA Series 79 and Series 63 licenses. Mr.
Misra possesses particular knowledge and experience in economics,
business development, private equity, and strategic planning that
strengthen the Board’s collective qualifications, skills and
experience.
|
|
|
|
|
|
Christopher T. Morris
, 58
Impact
Partners LLC
President
(since 2017)
Tatum
(a Randstad Company)
New York Managing Partner
(2013 to 2017)
MPact
Partners LLC
President
(2011 to 2013)
Mr.
Morris has served on Blue Dolphin’s Board since 2012; he is
currently Chairman of the Audit and Compensation
Committees.
|
|
Mr.
Morris earned a Bachelor of Arts in Economics from Stanford
University and a Masters in Business Administration from the
Harvard Business School. Based on his educational and professional
experiences, Mr. Morris possesses particular knowledge and
experience in business management, finance, strategic planning and
business development that strengthen the Board’s collective
qualifications, skills and experience.
|
|
|
|
|
|
Herbert N. Whitney
, 79
Wildcat
Consulting, LLC
President
(since 2006)
and
Founder
Mr.
Whitney has served on Blue Dolphin’s Board since 2012. He
previously served on the Board of Directors of Blackwater Midstream
Corporation, the Advisory Board of Sheetz, Inc., as Chairman of the
Board of Directors of Colonial Pipeline Company, and as Chairman of
the Executive Committee of the Association of Oil
Pipelines.
|
|
Mr.
Whitney has more than 40 years of experience in pipeline
operations, crude oil supply, product supply, distribution and
trading, as well as marine operations and logistics having served
as the President of CITGO Pipeline Company and in various general
manager positions at CITGO Petroleum Corporation. He earned his
Bachelor of Science in Civil Engineering from Kansas State
University. Based on his educational and professional experiences,
he possesses extensive knowledge in the supply and distribution of
crude oil and petroleum products, which strengthens the
Board’s collective qualifications, skills and
expertise.
|
|
|
|
|
Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE
“FOR”
THE ELECTION OF ALL OF THE DIRECTOR NOMINEES.
10
|
|
For additional information related to this matter, refer to the
FAQs provided as part of this proxy statement.
For
purposes of determining whether to select UHY as our independent
registered public accounting firm to perform the audit of our
consolidated financial statements for the year ending December 31,
2019, the Audit Committee conducted a thorough review of
UHY’s performance. The Audit Committee
considered:
UHY’s
performance on previous audits, including the quality of the
engagement team and the firm’s experience, client service,
responsiveness and technical expertise;
the firm’s
leadership, management structure and client and employee
retention;
the firm’s
financial strength and performance; and
the appropriateness
of fees charged.
UHY has
acted as our principal independent registered public accounting
firm since 2002. We are asking our stockholders to ratify the
selection of UHY as our independent registered public accounting
firm for the fiscal year ended December 31, 2019. Although
ratification is not required by our By-Laws or otherwise, the Board
is submitting the selection of UHY to our stockholders for
ratification as a matter of good corporate practice. If the
selection is not ratified, the Audit Committee will consider
whether it is appropriate to select another independent registered
public accounting firm. Even if the selection is ratified, the
Audit Committee, in its discretion, may select a different
independent registered public accounting firm at any time during
the year if it determines that such a change would be in the best
interests of Blue Dolphin and our stockholders.
A
representative of UHY is expected to be available during the Annual
Meeting, with the opportunity to make a statement if he or she
decides to do so, and will respond to appropriate
questions.
Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE
RATIFICATION
OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
|
|
At the
date of this proxy statement, the Board was not aware of any matter
to be acted upon at the Annual Meeting other than those matters set
forth in Proposal Nos. (1) and (2) as described herein. If other
business comes before the Annual Meeting, the persons named on the
proxy will vote the proxy in accordance with their best
judgment.
Remainder
of Page Intentionally Left Blank
11
This
table shows, as of the Record Date, the name and age of each
executive officer, as well as their principal occupation during the
past five (5) years:
|
Name
|
|
Position
|
|
Since
|
|
Age
|
|
|
|
|
|
|
|
|
|
Jonathan
P. Carroll
|
|
Chief
Executive Officer, President, Assistant Treasurer, and Secretary
(Principal Executive Officer)
|
|
2012
|
|
58
|
|
|
|
|
|
|
|
|
|
Jonathan P. Carroll
was appointed Chairman of the Board of
Blue Dolphin in 2014, and he was appointed Chief Executive Officer,
President, Assistant Treasurer and Secretary of Blue Dolphin in
2012. He has also served as President of LEH since 2006 and is its
majority owner. Together, LEH and Jonathan Carroll own 82.1% of
Blue Dolphin’s Common Stock as of the Record
Date. Before founding LEH, Mr. Carroll was a private
investor focused on direct debt and equity investments, primarily
in distressed assets. Since 2004, he has served on the
Board of Trustees of Salient Fund Group, and has served on the
compliance, audit and nominating committees of several of
Salient’s private and public closed-end and mutual
funds. Mr. Carroll previously served on the Board of
Directors of the General Partner of LRR Energy, L.P. (NYSE: LRE)
from January 2014 until its merger with Vanguard Natural Resources,
LLC in October 2015. He earned a Bachelor of Arts degree in Human
Biology and a Bachelor of Arts degree in Economics from Stanford
University, and he completed a Directed Reading in Economics at
Oxford University.
|
|
|
Remainder
of Page Intentionally Left Blank
12
|
CORPOR
A
TE GOVERNANCE AND BOARD MATTERS
|
Board
The
Board consists of Messrs. Carroll, Bailey, Misra, Morris and
Whitney, with Mr. Carroll serving as Chairman. During 2018, the
Board met four (4) times and acted by written consent once. All
directors participated in the meetings and acted by written
consent. The Board has two standing committees, the Audit Committee
and the Compensation Committee.
Audit Committee
The
Audit Committee consists of Messrs. Morris, Bailey, and Misra, with
Mr. Morris serving as Chairman. During 2018, the Audit Committee
met four (4) times. The Board has affirmatively determined that all
members of the Audit Committee are independent under OTCQX and SEC
rules and that each of Messrs. Morris and Bailey qualifies as an
Audit Committee Financial Expert. The Audit Committee's duties
include overseeing financial reporting and internal control
functions. The Audit Committee’s written charter is available
on our corporate website (
http://www.blue-dolphin-energy.com
).
Compensation Committee
The
Compensation Committee consists of Messrs. Morris, Bailey, and
Misra, with Mr. Morris serving as Chairman. During 2018, the
Compensation Committee did not meet. The Board has affirmatively
determined that all members of the Compensation Committee are
independent under OTCQX rules. The Compensation Committee’s
duties include setting and overseeing our compensation policies, as
well as reviewing and recommending to the Board for its approval
all compensation for the Chief Executive Officer, other senior
executives, and directors. The Compensation Committee’s
written charter is available on our corporate website (
http://www.blue-dolphin-energy.com
).
Nominating Committee
Given
the small size of the Board, the Board adopted a “Board
Nomination Procedures” policy in lieu of appointing a
standing nominating committee. Using the “Board Nomination
Procedures” policy, the Audit Committee, which is comprised
of independent directors, uses the policy to perform in a similar
function as a standing nominating committee. The policy is used by
the independent directors when choosing nominees to stand for
election. The Board will consider for possible nomination qualified
nominees recommended by stockholders in accordance with Blue
Dolphin’s Certificate of Incorporation. As addressed in the
“Board Nomination Procedures” policy, the manner in
which independent directors evaluate nominees for director as
recommended by a stockholder is the same as that for nominees
received from other sources. (See “Director Nomination and
Stockholder Proposals by Stockholders for Annual Meeting of
Stockholders” in this proxy statement for more
information).
The
Board endeavors to nominate qualified directors that will make
important contributions to the Board and to Blue Dolphin. The Board
generally requires that nominees be persons of sound ethical
character, be able to represent all stockholders fairly, have
demonstrated professional achievements, have meaningful experience,
and have a general appreciation of the major business issues facing
Blue Dolphin. The Board also
considers issues of diversity and background in its selection
process, recognizing that it is desirable for its membership to
have differences in viewpoints, professional experiences,
educational backgrounds, skills, race, gender, age and national
origin.
Director Attendance at Annual Meeting
Given the small size of the Board, director attendance at our
annual meeting of stockholders is encouraged but not
required.
Mr. Carroll was the only director present at the
2018 annual meeting of stockholders.
13
Leadership Structure
Blue
Dolphin is led by Mr. Carroll, who has served as Chairman of the
Board since 2014 and as our Chief Executive Officer and President
since 2012. Having a single leader for the Company is commonly
utilized by other public companies in the United States, and we
believe it is effective for Blue Dolphin as well. This leadership
structure demonstrates to our personnel, customers and stockholders
that we are under strong leadership, with a single person setting
the tone and having primary responsibility for managing our
operations, and eliminates the potential for confusion or
duplication of efforts. We do not believe that appointing an
independent Board chairman, or a permanent lead director, would
improve upon the performance of the Board.
Risk Oversight
Our
Board is involved in overseeing Blue Dolphin’s risk
management. The two standing Board committees provide appropriate
risk oversight. The Audit Committee oversees the accounting and
financial reporting processes, as well as compliance, internal
control, legal and risk matters. The Compensation Committee
oversees compensation policies, including the approval of
compensation for directors and management. We believe that the
processes established to report and monitor systems for material
risks applicable to us are appropriate and effective.
Code of Ethics and Code of Conduct
In
compliance with the Sarbanes-Oxley Act of 2002, the Board adopted a
code of ethics policy and a code of conduct policy. The Audit
Committee established procedures to enable anyone who has a concern
about our conduct, policies, accounting, internal control over
financial reporting, and/or auditing matters to communicate that
concern directly to the Chairman of the Audit Committee. The code
of ethics and code of conduct policies are available to any
stockholder, without charge, upon written request to Blue Dolphin
Energy Company, Attention: Audit Committee Chairman, 801 Travis
Street, Suite 2100, Houston, Texas 77002 or such other contact
information for the Audit Committee Chairman that we may post on
our website from time to time. Our code of ethics and code of
conduct policies are also available on our website (
http://www.blue-dolphin-energy.com
).
Any amendments or waivers to provisions of our code of ethics or
code of conduct will be disclosed on Form 8-K as filed with the SEC
and/or posted on our website.
14
Communicating with Directors
As the
Board does not receive a large volume of correspondence from
stockholders, at this time, there is no formal process by which
stockholders can communicate with the Board. Instead, any
stockholder who desires to contact the Board or specific members of
the Board may do so by writing to: Blue Dolphin Energy Company,
Attention: Secretary for the Board, 801 Travis Street, Suite 2100,
Houston, Texas 77002. Currently, all communications addressed in
such manner are sent directly to the indicated directors. In the
future, if the Board adopts a formal process for determining how
communications are to be relayed to directors, that process will be
disclosed on Form 8-K as filed with the SEC and/or posted on our
website (
http://www.blue-dolphin-energy.com
).
|
AU
D
IT COMMITTEE REPORT
|
The
duties and responsibilities of the Audit Committee are set forth in
a written charter adopted by the Board. The Audit Committee is
comprised solely of independent directors who have the requisite
financial experience and expertise and meet the requirements of
OTCQX rules and SEC Rule 10A-3. The Audit Committee reviews and
reassesses its written charter annually and recommends any changes
to the Board for approval. In addition, the Audit Committee
periodically reviews relevant requirements of the Sarbanes-Oxley
Act of 2002, as well as proposed and adopted rules of the SEC
regarding Audit Committee procedures and responsibilities to ensure
compliance. The Audit Committee charter is available on our website
(
http://www.blue-dolphin-energy.com
).
The
Audit Committee’s primary duties and responsibilities are
to:
assess the
integrity of our financial reporting process and systems of
internal control regarding accounting;
assess the
independence and performance of our independent registered public
accounting firm; and
provide an avenue
of communication between our independent registered public
accounting firm, management, and the Board.
For the
fiscal year ended December 31, 2018, management represented to the
Audit Committee that: (i) our consolidated financial statements
were prepared in accordance with accounting principles generally
accepted by the United States of America and (ii)
our internal control
over financial reporting were effective. UHY, our independent
registered public accounting firm, performed an audit as of
December 31, 2018, that determined that our consolidated financial
statements were free of material misstatement. As a smaller
reporting company, we are not required to have an audit of our
internal control over financial reporting. However, UHY’s
audit as of December 31, 2018, included consideration of internal
control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances. The Audit
Committee reviewed and discussed with management and UHY our
audited consolidated financial statements and our internal control
over financial reporting for the fiscal year ended December 31,
2018.
Pursuant
to Public Company Accounting Oversight Board guidance,
UHY:
communicates to the
Audit Committee its responsibilities in relation to the audit and
establishes an understanding of the terms of the audit engagement
with the audit committee;
obtains information
from the Audit Committee relevant to the audit;
communicates to the
Audit Committee an overview of the overall audit strategy and
timing of the audit; and
provides the Audit
Committee with timely observations arising from the audit that are
significant to the financial reporting process.
15
With
regard to determining UHY’s performance and independence for
the fiscal year ended December 31, 2018, the Audit Committee
reviewed:
Performance
UHY’s
performance on previous audits, including the quality of the
engagement team and the firm’s experience, client service,
responsiveness and technical expertise;
UHY’s
leadership, management structure, and client and employee
retention;
UHY’s
financial strength and performance; and
the appropriateness
of fees charged by UHY.
Independence
the relationships
between UHY and Blue Dolphin, as well as any relationships between
UHY and our management and directors;
whether any
relationship with or service provided by UHY: (i) creates a mutual
or conflicting interest with us, (ii) places UHY in the position of
auditing its own work, (iii) results in UHY acting as management or
an employee of us, or (iv) places UHY in a position of being an
advocate for us; and
whether UHY
provides any prohibited non-audit services to us.
The
Audit Committee discussed with UHY its performance and independence
for the fiscal year ended December 31, 2018. Based on its findings,
the Audit Committee determined that the services provided by UHY
are satisfactory and UHY is independent.
The
Audit Committee holds a meeting at least quarterly in which
management and UHY participate. Following the Audit Committee
meeting, independent members of the Board meet separately in an
executive session with representatives from UHY. As a result, an
avenue of communication between UHY, management, and the Board is
accomplished on a regular basis.
This
table shows fees paid to UHY for the periods
indicated:
|
|
December 31,
|
|
|
|
2018
|
2017
|
|
|
|
|
|
Audit
fees
|
$
137,888
|
$
229,568
|
|
Audit-related
fees
|
-
|
|
|
Tax
fees
|
-
|
|
|
All
other fees
|
-
|
|
|
|
|
|
|
|
$
137,888
|
$
229,568
|
Audit
fees for 2018 and 2017 related to the audit of our consolidated
financial statements and the review of our quarterly reports that
are filed with the SEC. The Audit Committee must pre-approve all
audit and non-audit services provided to us by our independent
registered public accounting firm.
Based
on discussions with management and UHY, as well as review of
UHY’s report to the Audit Committee, the Audit Committee
recommended to the Board that our audited consolidated financial
statements for the fiscal year ended December 31, 2018, be included
in the Annual Report, as filed with the SEC.
The
Audit Committee:
Christopher
T. Morris, Chairman
Ryan
A. Bailey
Amitav
Misra
16
|
C
OMPENSATION DISCUSSION AND
ANALYSIS
|
Executive Compensation Policy and Procedures
LEH
operates and manages all of our properties pursuant to an Amended
and Restated Operating Agreement (the “Operating
Agreement”). Under the Operating Agreement, LEH provides us
with personnel, among other services, in capacities equivalent to
Chief Executive Officer and Chief Financial Officer. All Blue
Dolphin personnel work for and are paid directly by
LEH.
Compensation for Named Executives
This
table shows compensation paid to our principal executive officer,
principal financial officer, and the most highly compensated
executive officers other than the principal executive officer and
principal financial officer whose annual salary exceeded $100,000
(collectively, the “Named Executive Officers”) pursuant
to the Operating Agreement for services rendered to Blue Dolphin
for the fiscal year ended December 31, 2018:
SUMMARY
COMPENSATION TABLE
|
Name
and Principal Position
|
Year
|
Salary
|
Total
|
|
|
|
|
|
|
Jonathan
P. Carroll
|
2018
|
$
-
|
$
-
|
|
Chief
Executive Officer and President
|
2017
|
$
-
|
$
-
|
|
|
|
|
|
|
Tommy L. Byrd
(1)
|
2018
|
$
100,000
|
$
100,000
|
|
Chief
Financial Officer
|
2017
|
$
100,000
|
$
100,000
|
|
|
|
|
|
(1)
Mr. Byrd worked for
and was paid directly by LEH. However, a portion of his
compensation was billed to Blue Dolphin at cost pursuant to the
Operating Agreement. Mr. Byrd resigned effective December 31,
2018.
The
Compensation Committee reviews and recommends to the Board for its
approval all compensation for the Chief Executive Officer and other
senior executives.
Compensation Risk Assessment
LEH’s
approach to compensation practices and policies applicable to our
non-executive personnel is consistent with the base pay market
median for each position. LEH believes its practices and policies
in this regard are not reasonably likely to have a material adverse
effect on us.
Outstanding Equity Awards
None.
Director Compensation Policy and Procedures
Under
the Operating Agreement, LEH provides us with personnel, among
other services, in capacities equivalent to Chief Executive Officer
and Chief Financial Officer. Mr. Carroll, our Chief Executive
Officer and President, does not receive any compensation for his
service as a director. The Compensation Committee reviews and
recommends to the Board for its approval all compensation for the
directors.
17
Compensation for Non-Employee Directors
The
annual retainer payable to non-employee directors serving on the
Board is $40,000 per year. Payments are made in Common Stock and
cash on a quarterly rotating basis.
Cash Fees
.
Cash fees reflect
the amount of cash compensation earned for Board and committee
service. For service on the Board,
non-employee directors
are entitled to receive cash payments in the amount of $10,000 for
services rendered in the second and fourth quarters of each
year.
Additional
compensation is paid to non-employee directors for serving on the
Audit Committee. The chairman of the Audit Committee receives an
additional annual retainer of $5,000 in cash in the second and
fourth quarters of each year. Members of the Audit Committee
receive an additional annual retainer of $2,500 in cash in the
second and fourth quarters of each year. Non-employee directors
serving on the Compensation Committee do not receive additional
compensation. Non-employee directors are reimbursed for reasonable
out-of-pocket expenses related to in-person meeting
attendance.
Stock Awards
. For service on
the Board, non-employee directors are entitled to receive Blue
Dolphin Common Stock with a fair market value of $10,000 for
services rendered in the first and third quarters of each year. The
number of shares of Common Stock issued is determined by the
closing price of Blue Dolphin’s Common Stock on the last
trading day in the respective quarterly period in which services
were rendered. The shares of Common Stock are subject to resale
restrictions applicable to restricted securities and securities
held by affiliates under federal securities
laws.
Director
fees are recognized quarterly as incurred and are included in
accrued expenses and other current liabilities in our consolidated
balance sheets. Messrs. Morris, Bailey and Misra have received
no payments in cash since 2015 and common stock since October 2018.
The below table shows the compensation that each director was
entitled to receive for his Board and committee service for the
year ended December 31, 2018.
|
Name
|
Cash Fees
|
Stock
Awards
(1)(2)
|
Total
|
|
|
|
|
|
|
Christopher
T. Morris
|
$
25,000
|
$
20,000
|
$
45,000
|
|
Ryan
A. Bailey
|
22,500
|
20,000
|
42,500
|
|
Amitav
Misra
|
22,500
|
20,000
|
42,500
|
|
Herbert
N. Whitney
|
-
|
-
|
-
|
|
|
|
|
|
|
|
$
70,000
|
$
60,000
|
$
130,000
|
|
(1)
|
At
December 31, 2018, Messrs. Morris, Bailey, Misra and Whitney had
awards of restricted Common Stock totaling 75,026, 60,676, 66,767
and 9,683 shares, respectively.
|
|
(2)
|
In accordance with SEC rules, the grant date fair value of
non-employee director stock awards is calculated by multiplying the
number of shares of Common Stock awarded by the closing price of
Blue Dolphin’s Common Stock on the grant date, which was
$0.60 at March 31, 2018. Based on the calculation, the aggregate
grant date fair value of non-employee director stock awards for
services rendered for the first quarter of 2018 was
$10,000.
|
18
Compensation Committee Interlocks and Insider
Participation
Only
one of our directors, Jonathan P. Carroll, also serves as an
executive officer. Mr. Carroll does not serve on any of our
standing committees.
None of
our executive officers serve on the board of directors of another
entity whose executive officers serve on our Board. None of our
officers or LEH’s personnel, other than Mr. Carroll,
participated in the deliberations of our Board or our Compensation
Committee concerning executive officer or director
compensation.
Family Relationships between Directors and Executive
Officers
As of
the Record Date, there were no relationships between any of our
directors or executive officers and any other director or executive
officer of Blue Dolphin.
Based
on discussions with management and review of the Compensation
Discussion and Analysis, the Compensation Committee consisting of
Messrs. Morris, Bailey, and Misra, recommended to the Board that
the Compensation Discussion and Analysis be included in the
Annual Report and 2019 proxy statement.
The
Compensation Committee:
Christopher
T. Morris, Chairman
Ryan
A. Bailey
Amitav
Misra
Security Ownership of Certain Beneficial Owners
This
table shows information with respect to persons or groups known to
us to be the beneficial owners of more than five percent (5%) of
our Common Stock as of the Record Date. Unless otherwise indicated,
each named party has sole voting and dispositive power with respect
to such shares.
|
Title
of Class
|
Name
of Beneficial Owner
|
Amount and Nature of Beneficial Ownership
|
Percent of
Class
(1)
|
|
|
|
|
|
|
Common
Stock
|
Lazarus
Energy Holdings, LLC
|
8,426,456
|
68.4
%
|
|
801
Travis Street, Suite 2100
|
|
|
|
|
Houston,
Texas 77002
|
|
|
|
|
|
|
|
|
(1)
Based upon
12,327,365 shares of Common Stock issued and outstanding and 0
shares of Common Stock issuable upon exercise of stock options,
each as of the Record Date.
19
Security Ownership of Management
This
table shows information as of the Record Date with respect to: (i)
directors, (ii) executive officers and (iii) directors and
executive officers as a group beneficially owning our Common Stock.
Unless otherwise indicated, each of the following persons has sole
voting and dispositive power with respect to such
shares.
|
Title of Class
|
Name of Beneficial Owner
|
Amount and Nature of Beneficial Ownership
|
Percent of
Class
(1)
|
|
|
|
|
|
|
Common
Stock
|
Jonathan P. Carroll
(2)
|
10,115,151
|
82.1
%
|
|
Common
Stock
|
Christopher
T. Morris / Mpact Partners, LLC
|
75,026
|
*
|
|
Common
Stock
|
Amitav
Misra
|
66,767
|
*
|
|
Common
Stock
|
Ryan
A. Bailey
|
60,676
|
*
|
|
Common
Stock
|
Herbert
N. Whitney
|
9,683
|
---
|
|
|
|
|
|
|
Directors/Nominees
and Executive Officers as a Group (5 Persons)
|
10,327,303
|
83.8
%
|
|
|
|
|
|
|
(1)
Based upon
12,327,365 shares of Common Stock issued and outstanding and 0
shares of Common Stock issuable upon exercise of stock options,
each as of the Record Date.
(2)
Includes 8,426,456
shares issued to LEH. Mr. Carroll and his affiliates have an
approximate 60% ownership interest in LEH.
*
Less than
1%.
Blue
Dolphin and certain of its subsidiaries are party to several
agreements with LEH and its affiliates. Management believes that
these related-party transactions were consummated on terms
equivalent to those that prevail in arm's-length transactions.
Related-party transactions consist of the following
parties:
LEH
. LEH is our controlling shareholder. Jonathan Carroll,
Chairman of the Board, Chief Executive Officer, and President of
Blue Dolphin, is the majority owner of LEH. Together, LEH and
Jonathan Carroll owned 82.1% of our Common Stock at September 30,
2019. Related-party agreements with LEH include: (i) the Operating
Agreement with Blue Dolphin and Lazarus Energy, LLC
(“LE”), (ii) a Jet Fuel Sales Agreement with LE, (iii)
a Loan Agreement with Blue Dolphin Pipe Line Company
(“BDPL”), (iv) an Amended and Restated Promissory Note
with Blue Dolphin, and (v) an office sublease-agreement with Blue
Dolphin Services Co. (“BDSC”).
Ingleside Crude, LLC (“Ingleside”)
. Ingleside is
a related party of LEH and Jonathan Carroll. Blue Dolphin is party
to an Amended and Restated Promissory Note with
Ingleside.
Lazarus Texas Refinery I, LLC
(“
LTRI
”). LTRI is a related party
of LEH and Jonathan Carroll. During the quarter ended September 30,
2019, LE purchased refurbished refinery equipment from LTRI for use
at the Nixon Facility.
Lazarus Marine Terminal I, LLC (“LMT”)
. LMT is a
related party of LEH and Jonathan Carroll. LE was party to a Dock
Tolling Agreement with LMT that was terminated during the quarter
ended September 30, 2019.
Jonathan Carroll
. Jonathan Carroll is Chairman of the Board,
Chief Executive Officer, and President of Blue Dolphin.
Related-party agreements with Jonathan Carroll include: (i) Amended
and Restated Guaranty Fee Agreements with LE and Lazarus Refining
& Marketing, LLC (“LRM”) and (ii) an Amended and
Restated Promissory Note with Blue Dolphin. The guaranty fee
agreements and the promissory note relate to LE and LRM loans that
are guaranteed by the U.S. Department of Agriculture (the
“USDA”).
20
Currently,
we depend on LEH and its affiliates (including Jonathan Carroll and
Ingleside) for financing when revenue from operations and
borrowings under bank facilities are insufficient to meet our
liquidity needs. Such borrowings are reflected in our consolidated
balance sheets in accounts payable, related party, and/or long-term
debt, related party.
Operations Related Agreements
.
Operating Agreement
. LEH operates and manages all Blue
Dolphin properties pursuant to the Operating Agreement. The
Operating Agreement, which was restructured in 2017 following
cessation of crude supply and marketing activities under the Crude
Supply Agreement and Joint Marketing Agreement with GEL Tex
Marketing, LLC (“GEL”), expires: (i) on April 1, 2020,
(ii) upon written notice by either party to the Operating Agreement
of a material breach by the other party, or (iii) upon 90
days’ notice by the Board if the Board determines that the
Operating Agreement is not in our best interest. The Board plans to
review the Operating Agreement during the first quarter of 2020 to
evaluate renewal.
LEH
receives a management fee calculated as 5% of certain of our direct
operating expenses. During the fourth quarter of 2018, the
management fee was changed to be calculated based on year to date
operating expenses incurred, regardless of whether they were paid
for by LEH or LE. The management fee was previously reflected
within refinery operating expenses in our consolidated statements
of operations. The management fee is currently reflected as the
‘LEH operating fee’ in our consolidated statements of
operations.
Jet Fuel Sales Agreement
. LE sells jet fuel to LEH pursuant
to a Jet Fuel Sales Agreement. LEH resells the jet fuel purchased
from LE to a government agency. LEH bids for jet fuel contracts are
evaluated under preferential pricing terms due to its HUBZone
certification. The Jet Fuel Sales Agreement terminates on the
earliest to occur of: (a) a one-year term expiring March 31, 2020
plus a 30-day carryover or (b) delivery of a maximum quantity of
jet fuel as defined therein. Sales to LEH under the Jet Fuel Sales
Agreement are reflected within refinery operations revenue in our
consolidated statements of operations.
Dock Tolling Agreement
. In May 2016, LE entered a Dock
Tolling Agreement with LMT to facilitate loading and unloading of
petroleum products by barge at LMT’s dock facility in
Ingleside, Texas. The Dock Tolling Agreement had a five-year term.
Under the agreement, LE paid LMT a flat reservation fee monthly.
The reservation fee included tolling volumes up to 84,000 gallons
per day. Excess tolling volumes were subject to an increased per
gallon rate. The Dock Tolling Agreement was terminated effective
July 1, 2019. Amounts expensed as tolling fees under the Dock
Tolling Agreement are reflected in cost of goods sold in our
consolidated statements of operations.
Office Sub-Lease Agreement
. In January 2018, BDSC entered
into an Office Space Agreement with LEH to lease office space at
our headquarters building in Houston, Texas. The Office Space
Agreement has a term of sixty-eight (68) months expiring on August
31, 2023. Under the Office Space Agreement, LEH’s base rent
is approximately $0.02 million per month. The Office Space
Agreement includes rent abatement periods.
Refinery Equipment Purchase
. In July 2019, LE purchased two
(2) refurbished heat exchangers from LTRI. The total purchase price
was $160,000. The cost is reflected in accounts payable, related
party in our consolidated balance sheets.
Financial Agreements
.
We currently rely on LEH and its
affiliates (including Jonathan Carroll) to fund our working capital
requirements. LEH and its affiliates (Ingleside and Jonathan
Carroll) have provided working capital to Blue Dolphin in the form
of a term loan and non-cash advances (such as conversion of
accounts payable to debt under promissory notes). There can be no
assurance that LEH and its affiliates will continue to fund our
working capital requirements. Outstanding principal and accrued
interest owed under these financial agreements are reflected in
long-term debt, related party, current portion in our consolidated
balance sheets.
21
BDPL Loan Agreement (
In Default
)
. BDPL has a 2016 loan agreement and
related security agreement with LEH as lender (the “BDPL Loan
Agreement”). The BDPL Loan Agreement is currently in default
due to non-payment. Key terms of the BDPL Loan Agreement are as
follow:
|
Principal
Amount:
|
$4.0
million
|
|
Maturity
Date:
|
August
2018
|
|
Principal
and Interest Payment:
|
$500,000
annually
|
|
Interest
Rate:
|
16.00%
|
The
proceeds of the BDPL Loan Agreement were used for working capital.
There are no financial maintenance covenants associated with the
BDPL Loan Agreement. The BDPL Loan Agreement is secured by certain
property owned by BDPL. Outstanding principal owed to LEH under the
BDPL Loan Agreement is reflected in long-term debt, related party,
current portion in our consolidated balance sheets. Accrued
interest under the BDPL Loan Agreement is reflected in accrued
interest payable, related party, current portion in our
consolidated balance sheets. To date, there have been no payments
under the BDPL Loan Agreement.
Promissory Notes (
In Default
)
. Working capital provided to Blue
Dolphin in the form of non-cash advances whereby accounts payable,
related party was converted to debt under promissory notes are
reflected below. The promissory notes matured in January 2019.
Interest, which is compounded annually, is still accruing at a rate
of 8.00% and is reported as part of the outstanding balance.
Promissory notes to LEH, Ingleside and Jonathan Carroll, which are
reflected within long-term debt, related party, are currently in
default.
●
June LEH Note
. The June LEH Note
reflects amounts owed to LEH at September 30, 2019 under the
Amended and Restated Operating Agreement.
●
March Ingleside Note
. The March
Ingleside Note reflects amounts owed to Ingleside at September 30,
2019 under the Amended and Restated Tank Lease
Agreement.
●
March Carroll Note
. The March Carroll
Note reflects amounts owed to Jonathan Carroll at September 30,
2019 under the guaranty fee agreements. See “Amended and
Restated Guaranty Fee Agreements” below for additional
information.
Amended and Restated Guaranty Fee Agreements
. Jonathan
Carroll was required to provide a guarantee for repayment of funds
borrowed and interest accrued under certain LE and LRM
USDA-guaranteed loans. For his personal guarantee, LE and LRM each
entered a Guaranty Fee Agreement with Jonathan Carroll whereby he
earns a fee equal to 2.00% per annum of the outstanding principal
balance owed under the loan agreements. Effective in April 2017,
the Guaranty Fee Agreements were amended and restated (the
“Amended and Restated Guaranty Fee Agreements”) to
reflect payment 50% in cash and 50% in Blue Dolphin Common Stock.
Amounts owed to Jonathan Carroll under Amended and Restated
Guaranty Fee Agreements are reflected within long-term debt,
related party, current portion in our consolidated balance sheets.
Guaranty fees are recognized monthly
as incurred and are included in interest and other expense in our
consolidated statements of operations.
As
previously disclosed, LE, Nixon Product Storage, LLC, and Blue
Dolphin, together with LEH, Carroll & Company Financial
Holdings, L.P. and Jonathan Carroll (collectively referred to
herein as the “Lazarus Parties”) were prohibited by GEL
from making payments to Jonathan Carroll under the Amended and
Restated Guaranty Fee Agreements. Now that the settlement between
GEL and the Lazarus Parties is final and effective, management has
resumed payments of the common stock component to Mr. Carroll under
the agreements. On November 14, 2019, Mr. Carroll received
1,351,851 shares of Common Stock, which represents payment of the
common stock component of the guaranty fees for the period May 2017
through October 2019. Mr. Carroll will receive payment of the
common stock component of the guaranty fees on a quarterly basis
going forward. Currently, management does not intend on paying Mr.
Carroll the cash portion due to Blue Dolphin’s working
capital deficits. The cash portion of guaranty fees owed to Mr.
Carroll will continue to be accrued and added to the principal
balance of the March Carroll Note.
22
Financial Statements Impact
.
Consolidated Balance Sheets
. Accounts payable, related party
to LMT associated with the Dock Tolling Agreement totaled $1.8
million and $1.5 million at September 30, 2019 and December 31,
2018, respectively. Accounts payable, related party to LTRI related
to the purchase of refinery equipment totaled $0.2 million and $0
at September 30, 2019 and December 31, 2018,
respectively.
Long-term
debt, related party, current portion and accrued interest payable,
related party, as of the dates indicated was as
follows:
|
|
September 30,
|
December 31,
|
|
|
2019
|
2018
|
|
|
(in
thousands)
|
|
|
LEH
|
|
|
|
June
LEH Note (in default)
|
$
868
|
$
611
|
|
BDPL
Loan Agreement (in default)
|
6,014
|
5,534
|
|
LEH
total
|
6,882
|
6,145
|
|
Ingleside
|
|
|
|
March
Ingleside Note (in default)
|
1,345
|
1,283
|
|
Jonathan
Carroll
|
|
|
|
March
Carroll Note (in default)
|
1,705
|
1,147
|
|
|
|
|
|
|
9,932
|
8,575
|
|
|
|
|
|
Less:
Long-term debt, related party, current portion, in
default
|
(7,918
)
|
(7,041
)
|
|
Less:
Accrued interest payable, related party (in default)
|
(2,014
)
|
(1,534
)
|
|
|
|
|
|
|
$
-
|
$
-
|
Consolidated Statements of Operations
. Revenue from related
parties was as follows:
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
2018
|
2019
|
2018
|
||||
|
|
(in thousands, except percent amounts)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
Refinery
operations
|
|
|
|
|
|
|
|
|
|
LEH
|
$
25,034
|
31.8
%
|
$
27,299
|
28.7
%
|
$
70,016
|
31.0
%
|
$
73,415
|
28.6
%
|
|
Other
customers
|
52,503
|
66.8
%
|
67,169
|
70.4
%
|
152,636
|
67.6
%
|
180,830
|
70.4
%
|
|
Tolling
and terminaling
|
|
|
|
|
|
|
|
|
|
Other
customers
|
1,096
|
1.4
%
|
1,075
|
0.9
%
|
3,253
|
1.4
%
|
2,659
|
1.0
%
|
|
|
|
|
|
|
|
|
|
|
|
|
$
78,633
|
100.0
%
|
$
95,543
|
100.0
%
|
$
225,905
|
100.0
%
|
$
256,904
|
100.0
%
|
Fees
associated with the Dock Tolling Agreement with LMT totaled $0.05
million for the three months ended September 30, 2019 compared to
$0.2 million for the three months ended September 30, 2018. Fees
associated with the Dock Tolling Agreement with LMT totaled $0.4
million and $0.6 million for the nine-month periods ended September
30, 2019 and 2018, respectively.
Lease
payments received under the office sub-lease agreement with LEH
totaled $0.01 million for the three months ended September 30, 2019
and 2018. Lease payments received under the office sub-lease
agreement with LEH totaled $0.03 million for the nine months ended
September 30, 2019 and 2018.
The LEH
operating fee totaled approximately $0.1 million in the three
months ended September 30, 2019 compared to $0.2 million for the
three months ended September 30, 2018. For both nine-month periods
ended September 30, 2019 and 2018, the LEH operating fee totaled
approximately $0.5 million.
23
Interest
expense associated with the BDPL Loan Agreement, Amended and
Restated Guaranty Fee Agreements, and related-party promissory
notes (the June LEH Note, the March Ingleside Note, and the March
Carroll Note) for the periods indicated was as
follows:
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
|
(in
thousands)
|
|||
|
|
|
|
|
|
|
Jonathan
Carroll
|
|
|
|
|
|
Guaranty
Fee Agreements
|
|
|
|
|
|
First
Term Loan Due 2034
|
$
110
|
$
114
|
$
333
|
$
344
|
|
Second
Term Loan Due 2034
|
46
|
47
|
138
|
141
|
|
March
Carroll Note (in default)
|
33
|
19
|
86
|
34
|
|
LEH
|
|
|
|
|
|
BDPL
Loan Agreement (in default)
|
||||
|
June
LEH Note (in default)
|
17
|
6
|
40
|
7
|
|
Ingleside
|
|
|
|
|
|
March
Ingleside Note (in default)
|
12
|
25
|
63
|
96
|
|
|
|
|
|
|
|
|
$
378
|
$
371
|
$
1,140
|
$
1,104
|
Section
16(a) of the Exchange Act requires our directors, executive
officers, and stockholders who own more than ten percent (10%) of
the Common Stock, to file reports of stock ownership and changes in
ownership with the SEC and to furnish us with copies of all such
reports as filed. Based solely on a review of the copies of the
Section 16(a) reports furnished to us, we are unaware of any late
filings made during 2018.
Remainder
of Page Intentionally Left Blank
24
Director Nominations and Proposals Process
We have
tentatively set the 2020 Annual Meeting of Stockholders for
December 16, 2020. Accordingly, stockholders should submit
nominations and proposals in accordance with the guidance set forth
below.
Director Nominations Deadline
Our
Amended and Restated 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 Blue Dolphin at least
ninety (90) calendar 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. In order to avoid controversy as
to the date on which a director nomination is received,
stockholders of record must make submissions to us at our principal
executive office by certified mail, return receipt requested. Blue
Dolphin’s mailing address is located at our principal office:
801 Travis Street, Suite 2100, Houston, Texas 77002. (See
“Corporate Governance and Board Matters – Nominating
Committee” in this proxy statement for more
information.)
We did
not receive any director nominee submissions by September 18, 2019,
the deadline for the 2019 Annual Meeting.
Stockholder Proposals Deadline
Pursuant
to SEC requirements, stockholders of record must submit stockholder
proposals for inclusion in the printed proxy materials to us at
least one hundred and twenty (120) calendar days before the date we
released the previous year’s proxy statement for our annual
meeting of stockholders. However, if the date of the annual meeting
has been changed by more than thirty (30) days from the date of the
previous year’s meeting, then stockholders must submit their
proposals a reasonable time before Blue Dolphin begins to print and
send its proxy materials. We did not receive any stockholder
proposal submissions.
As
noted above we expect our 2020 annual meeting to be held on
December 16, 2020, and we therefore will print and send proxy
materials on or around November 16, 2020. Accordingly, stockholder
proposals must be submitted a reasonable time before November 16,
2020. In order to avoid controversy as to the date on which a
stockholder proposal is received, stockholders of record must make
submissions to us at our principal executive office by certified
mail, return receipt requested.
Remainder
of Page Intentionally Left Blank
25
We are
subject to the informational requirements of the Exchange Act. We
file financial and other information with the SEC as required,
including but not limited to, proxy statements on Schedule 14A,
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and
Current Reports on Form 8-K. Investors may obtain any document that
we file with the SEC through the SEC’s conventional and
electronic reading rooms. These reading rooms are managed by the
SEC’s Office of Freedom of Information and Privacy Act
Operations.
|
Office
of Freedom of Information and Privacy Act Operations
|
Conventional
Reading Rooms
|
Electronic
Reading Rooms
|
|
100 F
Street, N.E.
Mail
Stop 2736
Washington,
D.C. 20549
(202)
551-8300
|
Headquarters
Office
100 F
Street, N.E.
Room
1580
Washington,
D.C. 20549
(202)
551-8090
|
Public
Company Information / SEC Comment and Response Letters
https://www.sec.gov/edgar/searchedgar/companysearch.html
SEC
Opinion, Policy Statements, and Staff Manuals
https://www.sec.gov/foia/efoiapg.htm
|
We also
make our SEC filings available on our website (
http://www.blue-dolphin-energy.com
)
.
Certain
statements included in this proxy statement and the accompanying
notice and letter to stockholders are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1935. Forward-looking statements represent management’s
beliefs and assumptions based on currently available information.
Forward-looking statements relate to matters such as our industry,
business strategy, goals, and expectations concerning our market
position, future operations, margins, profitability, capital
expenditures, liquidity and capital resources, commitments and
contingencies, and other financial and operating information. We
have used the words “anticipate,” “assume,”
“believe,” “budget,”
“continue,” “could,”
“estimate,” “expect,” “intend,”
“may,” “plan,” “potential,”
“predict,” “project,” “will,”
“future” and similar terms and phrases to identify
forward-looking statements.
Forward-looking
statements reflect our current expectations regarding future
events, results, or outcomes. These expectations may or may not be
realized. Some of these expectations may be based upon assumptions
or judgments that prove to be incorrect. In addition, our business
and operations involve numerous risks and uncertainties, many of
which are beyond our control, which could result in our
expectations not being realized, or materially affect our financial
condition, results of operations, and cash flows. Actual events,
results and outcomes may differ materially from our expectations
due to a variety of factors. Although it is not possible to
identify all of these factors, they include those described under
the heading “Risk Factors” in our Annual Report on Form
10-K and our Quarterly Reports on Form 10-Q as filed with the
SEC.
26
Brokers,
banks or other nominees may deliver only one (1) copy of this proxy
statement to multiple beneficial stockholders who share the same
address, unless that broker, bank or other nominee has received
contrary instructions from one or more of the beneficial
stockholders. Upon written or oral request, we will promptly
deliver a separate copy of this proxy statement to a beneficial
stockholder at a shared address to which a single copy of the
documents was delivered. Beneficial stockholders sharing an address
who are receiving multiple copies of proxy materials and annual
reports that wish to receive a single copy of such materials in the
future will need to contact their broker, bank or other nominee to
request that only a single copy of each document be mailed to all
beneficial stockholders at the shared address in the
future.
Registered
and beneficial stockholders who wish to receive a separate copy of
this proxy statement, now or in the future, should submit their
request to Blue Dolphin, Investor Relations at (713) 568-4725, or
submit a written request to Blue Dolphin Energy Company, Attention:
Investor Relations, 801 Travis Street, Suite 2100, Houston, Texas
77002.
|
By
Order of the Board
|
|
|
|
/s/
JONATHAN P. CARROLL
|
|
Jonathan
P. Carroll
|
|
Chairman
of the Board
|
Houston,
Texas
December
3, 2019
Remainder
of Page Intentionally Left Blank
27
|
BLUE DOLPHIN ENERGY COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL
MEETING OF STOCKHOLDERS – DECEMBER 20, 2019 AT 10:00 AM
CT
|
|
|
||||
|
CONTROL
ID:
|
|
|
|
|
|
|
|
REQUEST
ID:
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|||
|
This Proxy is Solicited on Behalf of the Board of Directors Blue
Dolphin Energy Company.
THIS PROXY WILL BE VOTED AS
DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED
“FOR” THE PROPOSALS WHEN APPLICABLE
. THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS.
THIS PROXY FORM IS VALID ONLY
WHEN SIGNED AND DATED ON THE REVERSE. THE SIGNER
ACKNOWLEDGES RECEIPT OF THE NOTICE OF THE ANNUAL MEETING OF
STOCKHOLDERS AND THE PROXY STATEMENT, REVOKES ALL PREVIOUS PROXIES
AND APPOINTS JONATHAN P. CARROLL AS PROXY WITH THE POWER TO APPOINT
HIS SUBSTITUTE, AND AUTHORIZES HIM TO REPRESENT AND TO VOTE, AS
DESIGNATED ON THE REVERSE, ALL OF THE SHARES OF COMMON STOCK OF
BLUE DOLPHIN ENERGY COMPANY HELD OF RECORD BY THE SIGNER AT THE
CLOSE OF BUSINESS ON NOVEMBER 29, 2019, AT THE ANNUAL MEETING AND
AT ANY ADJOURNMENT OR
POSTPONEMENTTHEREOF.
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(CONTINUED
AND TO BE SIGNED ON REVERSE SIDE.)
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VOTING
INSTRUCTIONS
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If
you vote by phone, fax or internet, please DO NOT mail your proxy
card.
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MAIL:
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Please mark, sign,
date, and return this Proxy Card promptly using the enclosed
envelope.
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FAX:
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Complete the
reverse portion of this Proxy Card and Fax to
202-521-3464.
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INTERNET:
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https://www.iproxydirect.com/BDCO
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PHONE:
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1-866-752-VOTE(8683)
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28
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ANNUAL
MEETING OF THE STOCKHOLDERS OF
BLUE DOLPHIN ENERGY COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
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PLEASE
COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE:
☒
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Proposal
1
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FOR
ALL
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AGAINST
ALL
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FOR
ALL
EXCEPT
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Election
of Directors:
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◻
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◻
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◻
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Jonathan
P. Carroll
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◻
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CONTROL
ID:
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Ryan
A. Bailey
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◻
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REQUEST
ID:
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Amitav
Misra
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◻
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Christopher
T. Morris
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Herbert
N. Whitney
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◻
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◻
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Proposal
2
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FOR
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AGAINST
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ABSTAIN
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Ratify
the selection of UHY LLP (“UHY”) as our independent
registered public accounting firm for the fiscal year ending
December 31, 2019.
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◻
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◻
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◻
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Proposal
3
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FOR
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AGAINST
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ABSTAIN
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Transact
any other business that may properly come before the Annual
Meeting.
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MARK
“X” HERE IF YOU PLAN TO ATTEND THE MEETING:
◻
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THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE
ELECTION OF ALL OF THE DIRECTOR NOMINEES AND “FOR” THE
RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM.
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MARK HERE FOR
ADDRESS CHANGE ◻ New Address (if
applicable):
____________________________
____________________________
____________________________
IMPORTANT:
Please sign exactly as your
name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized
person.
Dated:
________________________, 2012
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(Print Name of
Stockholder and/or Joint Tenant)
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(Signature of
Stockholder)
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(Second Signature
if held jointly)
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29
TABLE OF CONTENTS