Document:

ex10_2.htm

Exhibit 10.2

XOMA CORPORATION

AMENDED AND RESTATED

1998 EMPLOYEE STOCK PURCHASE PLAN

(Amended and Restated through December 31, 2011)

 

1.           Purpose.  The purpose of this XOMA Corporation 1998 Employee Share Purchase Plan (the “Plan”) is to provide employees of XOMA Corporation, a Delaware corporation (the “Company”), with an opportunity to purchase common stock of the Company (“Common Stock”) through accumulated payroll deductions.  It is the intention of the Company to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”).  The provisions of the Plan, accordingly, shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code.

 

2.           Definitions.

 

(a)           “Board” shall mean the Board of Directors of the Company.

 

(b)           “Committee” shall mean the Compensation Committee of the Board or such other committee selected by the Board to administer the Plan.

 

(c)           “Compensation” shall mean total cash compensation received by the Employee from the Company, including regular pay, overtime pay, and bonuses, and shall also include any pretax Employee cash or deferred contributions to a plan maintained by the Company which qualifies under Section 401(k) of the Code and any pretax Employee contributions to a plan maintained by the Company which qualifies under Section 125 of the Code.

 

(d)           “Employee” shall mean any individual who is an employee of the Company for purposes of tax withholding under the Code whose customary employment with the Company is at least twenty (20) hours per week and more than five (5) months in any calendar year.  For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company.  Where the period of leave exceeds ninety (90) days and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated on the ninety-first (91st) day of such leave.

 

(e)           “Enrollment Date” shall mean the first day of each Offering Period.

 

(f)           “Exercise Date” shall mean the last day of each Offering Period.

 

  

  

  

(g)           “Fair Market Value” shall mean, as of any date, the value of the Common Stock determined as follows:

 

	
  

	
(1)

	
If the Common Stock is listed on any established stock exchange or a national market system, including without limitation The NASDAQ Global Market, its Fair Market Value shall be the closing selling price for the Common Stock, as quoted on such exchange (or the exchange with the greatest volume of trading in Common Stock) or system on the date of such determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

 

	
  

	
(2)

	
If the Common Stock are quoted on The NASDAQ Stock Market (but not on The NASDAQ Global Market), its Fair Market Value shall be the closing selling price for the Common Stock on the date of such determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

 

	
  

	
(3)

	
In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Committee.

 

(h)           “Offering Periods” shall mean consecutive three (3) month periods commencing once every calendar quarter beginning on the first Trading Day on or after January 1, April 1, July 1 and October 1 of each year and ending on the last Trading Day prior to the end of such three (3) month period.

 

(i)           “Purchase Price” shall mean with respect to new Offering Periods under the Plan commencing on or after January 1, 2005, the Purchase Price for such Offering Periods shall be an amount equal to 95% of the Fair Market Value of a share of Common Stock on the Exercise Date for that Offering Period.

 

(j)           “Reserves” shall mean the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised and the number of shares of Common Stock which have been authorized for issuance under the Plan but not yet placed under option.

 

(k)           “Trading Day” shall mean a day on which national stock exchanges (including without limitation The NASDAQ Global Market) are open for trading.

 

3.           Eligibility.

 

(a)           Any person who is an Employee on a given Enrollment Date shall be eligible to participate in the Plan.

 

  

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(b)           Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) if, immediately after the grant, such Employee would own shares (together with shares owned by any other person or entity that would be attributed to such Employee pursuant to Section 424(d) of the Code) of the Company (including, for this purpose, all shares of stock subject to any outstanding options to purchase such stock, whether or not currently exercisable and irrespective of whether such options are subject to the favorable tax treatment of Section 421(a) of the Code) possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any parent (within the meaning of Section 424(e) of the Code) or subsidiary (within the meaning of Section 424(f) of the Code), or (ii) which permits his or her rights to purchase stock under all Offering Periods and all employee stock purchase plans (within the meaning of Section 423 of the Code) of the Company and its parents and subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the Fair Market Value of the stock at the time such option is granted) for each calendar year in which such option is outstanding at any time.  The limitation described in clause (ii) of the preceding sentence shall be applied in a manner consistent with Section 423(b)(8) of the Code.

 

4.           Offering Periods.  The Plan shall be implemented by concurrent Offering Periods with a new Offering Period commencing on the first Trading Day of each calendar quarter, or on such other date as the Committee shall determine, with such Offering Periods extending for twenty-four (24) months, or such other length as the Committee shall determine.  The Committee shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without stockholder approval if such change is announced at least fifteen (15) days prior to the scheduled beginning of the first Offering Period to be affected thereafter.

 

5.           Participation.

 

(a)           An eligible Employee may become a participant in the Plan by completing a subscription agreement authorizing payroll deductions in a form prepared by the Company and filing it with the Company’s Human Resources Department at least one (1) day prior to the applicable Enrollment Date for a particular Offering Period, unless a different time for filing the subscription agreement is set by the Committee for all eligible Employees with respect to a given Offering Period.

 

(b)           Payroll deductions for a participant shall commence on the first payroll date following the Enrollment Date and shall end on the last payroll date in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10 hereof.

 

  

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6.           Payroll Deductions.

 

(a)           At the time a participant files his or her subscription agreement, he or she shall elect to have payroll deductions made on each payday during the Offering Period in an amount not exceeding twenty percent (20%) (or such other lesser percentage, applied uniformly to all participants, as an executive officer of the Company shall set), in whole multiples of one percent (1%), of the Compensation which he or she receives on each payday during the Offering Period.  The aggregate amount of payroll deductions for all concurrent Offering Periods shall not exceed twenty percent (20%) (or such lesser percentage, applied uniformly to all participants, as an executive officer of the Company shall set).

 

(b)           All payroll deductions made for a participant shall be credited to his or her account under the Plan and will be withheld in whole percentages only.  A participant may not make any additional payments into such account.

 

(c)           Once an Offering Period has commenced, a participant may decrease, but not increase, the rate of his or her payroll deductions for that Offering Period once per calendar quarter by filing a new subscription agreement at least one (1) day prior to the beginning of the calendar quarter (or such other time set by the Committee for all eligible Employees with respect to a given Offering Period), which decrease shall become effective at the beginning of the next calendar quarter; provided, however, that a participant may discontinue his or her participation in the Plan, as provided in Section 10 hereof, at any time during the Offering Period prior to the Exercise Date.  During an Offering Period, a participant may elect to have new or additional payroll deductions made with respect to the next beginning Offering Period, by completing or filing with the Company an additional subscription agreement, at least one (1) day prior to the beginning of the next Offering Period (or such other time set by the Committee for all eligible Employees with respect to a given Offering Period), authorizing a payroll deduction rate with respect to the new Offering Period.  A participant’s subscription agreement shall remain in effect for other Offering Periods, but separate subscription agreements are required for each Offering Period.

 

(d)           Notwithstanding the foregoing, a participant’s payroll deductions for each Offering Period may be decreased to 0% at any time, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof.

 

(e)           At the time the option is exercised, in whole or in part, or at the time some or all of the shares of Common Stock issued under the Plan are disposed of, the participant must make adequate provisions for the Company’s federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of shares of the Common Stock.  At any time, the Company may, but will not be obligated to, withhold from the participant’s compensation the amount necessary for the Company to meet applicable withholding obligations.

 

  

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7.           Grant of Option.  On the Enrollment Date of each Offering Period, each eligible Employee participating in such Offering Period shall be granted an option to purchase on the Exercise Date of such Offering Period (at the applicable Purchase Price) up to a number of shares of Common Stock determined by dividing such Employee’s payroll deductions accumulated with respect to that Offering Period prior to such Exercise Date and retained in the participant’s account as of the Exercise Date by the applicable Purchase Price; provided, however, that in no event shall an Employee be permitted to purchase during each Offering Period and with respect to such Offering Period more than 3,333 shares of Common Stock; and provided, further, that such purchase shall be subject to the limitations set forth in Sections 3(b) and 12 hereof.  Exercise of the option with respect to that Offering Period shall occur as provided in Section 8 hereof, unless the participant has withdrawn pursuant to Section 10 hereof, and the option with respect to that Offering Period shall expire on the last day of the Offering Period.

 

8.           Exercise of Option.  Unless a participant has withdrawn from the Plan as provided in Section 10 hereof, his or her option for the purchase of Common Stock will be exercised automatically on the Exercise Date, and, subject to the limitations set forth in Sections 3(b), 7 and 12 hereof, the maximum number of full shares subject to option shall be purchased for such participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account with respect to that Offering Period.  Unless otherwise approved by the Committee, no fractional shares will be purchased.  Unless acquisition of fractional shares has been so approved, any payroll deductions accumulated in a participant’s account which are not sufficient to purchase a full share of Common Stock shall be retained in the participant’s account for the next expiring Offering Periods, subject to earlier withdrawal by the participant as provided in Section 10 hereof.  Any other monies left over in a participant’s account after the Exercise Date shall be returned to the participant.  During a participant’s lifetime, a participant’s option to purchase shares hereunder is exercisable only by the participant.

 

9.           Issuance; Delivery; Restriction.  The shares of Common Stock purchased for a participant on the last day of an Offering Period shall be deemed to have been issued by the Company for all purposes as of the Exercise Date.  Prior to such date, none of the rights and privileges of a stockholder of the Company shall exist with respect to such shares of Common Stock.  The registrar for the Company shall be instructed to make entries on its books and records evidencing that shares of Common Stock issued hereunder have been duly issued as of each pertinent Exercise Date; provided, however, that an employee may in the alternative elect in writing to receive a stock certificate representing the amount of such shares so acquired; and provided, further, that, regardless of whether an employee elects to receive such stock certificates, the Committee may direct the Company to distribute stock certificates representing the amount of shares acquired to any or all employees.  Notwithstanding the foregoing, delivery of certificates representing shares of Common Stock or transfer to or for the account of any participant under the Plan may be conditioned upon the agreement of such participant to allow federal income tax withholdings as may be required to be made by the Company.

 

  

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10.           Withdrawal; Termination of Employment.

 

(a)           A participant may withdraw all but not less than all the payroll deductions credited to his or her account and not yet used to exercise his or her option under the Plan with respect to each Offering Period at any time prior to the last business day of the Offering Period by giving written notice to the Company in a form prepared by the Company.  All of the participant’s payroll deductions credited to his or her account will be paid to such participant promptly after receipt of notice of withdrawal and such participant’s option for the Offering Period will be automatically terminated, and no further payroll deductions for the purchase of shares will be made during the Offering Period with respect to such Offering Period.  If a participant withdraws from the Plan with respect to one Offering Period during an Offering Period, he or she may resume participation for a subsequent Offering Period by delivering to the Company a new subscription agreement at least fifteen (15) days prior to the Enrollment Date for such Offering Period and he or she may continue in the Plan with respect to other Offering Periods that have already begun.

 

(b)           Upon a participant’s ceasing to be an Employee, for any reason, he or she will be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such participant’s account during the current Offering Periods but not yet used to exercise the option will be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto under Section 14 hereof, and such participant’s option will be automatically terminated.

 

(c)           A participant’s withdrawal from an Offering Period will not have any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or in subsequent and all other Offering Periods.

 

11.           Interest.  No interest or other increment shall accrue or be payable with respect to any of the payroll deductions of a participant in the Plan.

 

12.           Shares.

 

(a)           The maximum number of shares of Common Stock which shall be made available for sale under the Plan shall be 233,333 shares, subject to adjustment upon changes in capitalization of the Company as provided in Section 18 hereof.  Such shares of Common Stock may be authorized but unissued shares or shares purchased in the open market.

 

(b)           If on a given Exercise Date the number of shares of Common Stock with respect to which options are to be exercised exceeds the number of shares then available under the Plan, the Committee shall make a pro-rata allocation of the shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable, and the balance of the payroll deductions accumulated in the participant’s account shall be returned to the participant.

 

  

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(c)           No participant will have an interest or voting right in shares of Common Stock covered by his or her option until such option has been exercised.

 

(d)           Shares of Common Stock to be delivered to a participant under the Plan will be registered in the name of the participant or in the name of the participant and his or her spouse.

 

13.           Administration.  The Plan shall be administered by the Committee.  The Committee shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan.  Every finding, decision and determination made by the Committee shall, to the full extent permitted by law, be final and binding upon all parties.  Members of the Committee shall not be permitted to participate in the Plan.

 

14.           Designation of Beneficiary.

 

(a)           A participant may file a written designation of a beneficiary who is to receive any shares of Common Stock and cash, if any, from the participant’s account under the Plan in the event of such participant’s death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such participant of such shares or cash.  In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant’s account under the Plan in the event of such participant’s death prior to exercise of the option.  If a participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective.

 

(b)           Such designation of beneficiary may be changed by the participant at any time by written notice.  In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s death, the Company shall deliver such shares of Common Stock or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

 

15.           Transferability.  Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive Common Stock under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 14 hereof) by the participant.  Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof.

 

  

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16.           Use of Funds.  All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.

 

17.           Reports.  Individual accounts will be maintained for each participant in the Plan.  Statements of account will be given to participating Employees at least annually, within such time as the Committee may reasonably determine, which statements will set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any.

 

18.           Adjustments Upon Changes in Capitalization.

 

(a)           Changes in Capitalization.  The Reserves, the maximum number of shares of Common Stock an Employee is permitted to purchase in any Offering Period under Section 7, and the price per share of Common Stock covered by each option under the Plan which has not yet been exercised shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been effected without receipt of consideration. Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive.  Except as expressly provided herein, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an option.

 

(b)           Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Offering Period will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Committee.

 

(c)           Consolidation, Merger or Asset Sale.  In the event of a proposed sale of all or substantially all of the assets of the Company, or the consolidation or merger of the Company with or into another corporation, all options under the Plan shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Committee determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, to shorten the Offering Periods then in progress by setting new Exercise Dates (“New Exercise Dates”).  If the Committee shortens

 

  

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the Offering Period then in progress in lieu of assumption or substitution in the event of an consolidation, merger or sale of assets, the Committee shall notify each participant in writing, at least fifteen (15) days prior to the New Exercise Dates, that the Exercise Dates for his or her option have been changed to the New Exercise Dates and that his or her options will be exercised automatically on the New Exercise Dates, unless prior to such dates he or she has withdrawn from the Offering Periods as provided in Section 10 hereof.  For purposes of this paragraph, options granted under the Plan shall be deemed to be assumed if, following the sale of assets, consolidation or merger, the options confer the right to purchase, for each option share subject to the option immediately prior to the sale of assets, consolidation or merger, the consideration (whether stock, cash or other securities or property) received in the sale of assets, consolidation or merger by holders of Common Stock for each share of Common Stock held on the effective date of the transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Common Stock); provided, however, that if such consideration received in the sale of assets, consolidation or merger was not solely common stock of the successor corporation or its parent (as defined in Section 424(e) of the Code), the Committee may, with the consent of the successor corporation and the participant, provide for the consideration to be received upon exercise of the options to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Common Stock in the sale of assets, consolidation or merger.

 

19.           Amendment or Termination.

 

(a)           The Board may at any time and for any reason terminate or amend the Plan.  Except as provided in Section 18 hereof, no such termination may adversely affect options previously granted; provided, however, that Offering Periods may be terminated by the Board on any Exercise Date if the Board determines that the termination of the Plan is in the best interests of the Company and its stockholders.  Except as provided in Section 18 hereof, no amendment may make any change in any option theretofore granted which adversely affects the rights of any participant.  To the extent necessary to comply with [Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended], or Section 423 of the Code (or any successor rule or provision or any other applicable law or regulation), the Company shall obtain stockholder approval in such a manner and to such a degree as required.

 

(b)           Without stockholder consent and without regard to whether any participant rights may be considered to have been adversely affected, the Committee shall be entitled to change the Offering Periods, limit the frequency or number of changes in the amount withheld during the Offering Periods, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond with amounts withheld from the participant’s Compensation, and establish such other limitations or procedures as the Committee finds, in its sole discretion, advisable and consistent with the Plan.

 

  

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20.           Notices.  All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

 

21.           Conditions Upon Issuance of Shares.  Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.  As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.

 

22.           Change of Domicile. The Plan has been amended and restated to give effect to the Company’s change of its jurisdiction of incorporation from Bermuda to Delaware (the “Domestication”), effective December 31, 2011 (the “Domestication Effective Date”).  Until surrendered and exchanged, each certificate delivered to an Employee pursuant to the Plan and evidencing outstanding shares immediately prior to the Domestication Effective Date shall, for all purposes of the Plan and the Common Stock, continue to evidence the identical amount and number of outstanding shares of Common Stock at and after the Domestication Effective Date.  After the Domestication Effective Date, the Company may make such modifications in the certificates evidencing (and the form of) such shares as it deems necessary to reflect the substance of the changes to the Plan relating to the Domestication, but no such modifications shall be necessary to reflect the substance thereof.

 

23.           Term of Plan.  The Plan shall become effective on February 25, 1998 (the “Effective Date”), subject to its approval by the stockholders of the Company within twelve (12) months after its adoption by the Board.  It shall continue in effect until terminated under Section 19 hereof.  The Plan was amended, effective as of May 20, 1998, by the Board of Directors to clarify the limits of contributions.  The Plan was restated by the Board of Directors on February 24, 1999, effective December 31, 1998, to reflect the change of domicile of the Company from Delaware to Bermuda.  The Plan was again restated by the Board of Directors on July 26, 2000, effective June 30, 2000, to make certain administrative corrections.  The Plan was restated by the Board of Directors effective December 31, 2011 to reflect the change of domicile of the Company from Bermuda to Delaware.

 

 

 

-10-bdco8kex101010312.htm

 

EMPLOYMENT AGREEMENT

 

 

This Employment Agreement effective as of January 2, 2012 (this “Agreement”) is entered into by and between BLUE DOLPHIN ENERGY COMPANY, a Delaware corporation (the “Company”), and Thomas J. McReynolds, Jr. (the “Executive”).

 

1. Employment.  On the terms and subject to the conditions set forth herein, the Company hereby employs the Executive and the Executive hereby accepts employment with the Company.

 

2. Duties and Responsibilities. Subject to the terms of this Agreement, the Company will employ the Executive as the Chief Financial Officer, CFO,and Senior Vice President, SVP, of the Company and the Executive will perform the duties, functions and services as are customarily or otherwise reasonably incidental to that position and such other duties, functions and services with respect to the Company, and the other subsidiaries of the Company (the “Group”) as may be determined by the Board of Directors of the Company or the applicable Group member.  The Executive shall be based in Houston, Texas.

 

3. Compensation and Other Executive Benefits.  As compensation for the Executive’s services hereunder during the Employment Term (as defined in Section 4), the Company will during the Employment Term:

 

(a) pay to the Executive an annual base salary (the “Base Salary”) of $200,000 in accordance with the then current payroll policies of the Company, which Base Salary will be subject to increase (but not decrease) at the discretion of the Company;

 

(b) pay to the Executive bonuses from time to time as determined by the Board of Directors of the Company, in its sole and absolute discretion, which bonuses shall be based on a calendar year performance and paid on or about the 31st of March the following year;

 

(c) subject to the right of the Company to amend or terminate any employee benefit, compensation or welfare plan, (i) afford the Executive the right to participate in (A) such medical and dental plans as the Company makes available to its exempt salaried employees generally during the Employment Term and (B) any employee and/or group benefit plans that the Company makes available to its exempt salaried employees generally during the Employment Term (including, without limitation, disability, accident, medical, life insurance and hospitalization plans) and (ii) subject to the requirements of the business expense reimbursement policies and procedures of the Company as in effect from time to time, reimburse the Executive for the reasonable out-of-pocket expenses he incurs in the course of performing his duties hereunder, including parking and use of a cell phone.

 

  

  

  

 

(d) give the Executive 15 days of paid vacation each calendar year under current Company policy.  These days expire December 31 of each year with no payment for any unused days, and 15 new days shall become available on January 1 of each year. Should the Company plan change to allow for unused days to be carried over to the next calendar year, the Executive’s rights will mirror the Company’s plan;

 

(e) give the Executive 40 hours per year for personal time, and

 

(f) grant to Executive pursuant to the terms of that certain stock option agreement dated the date hereof the option to acquire a number of shares of the common stock of the Company equal to 100,000 divided by the average share price the first 5 trading days after consummation of the Nixon Blue Dolphin transaction and pursuant to the terms and subject to the conditions provided in such stock option agreement. The options will vest over three years in equal amounts on the first, second andthird anniversary dates of the effective date of this agreement. Additional participation in the stock option plan is at the discretion of the CEO and the Board of Directors.

 

4. Term.  The term of the Executive’s employment under this Agreement (the “Employment Term”) will be for a term of three (3) years commencing on the date of this Agreement (the “Initial Term”), with the term thereafter extending for successive one year periods provided, however, that either party may elect for the Employment Term to terminate effective any time subsequent to the expiration of the Initial Term if such party provides written notice of such termination at least six (6) months in advance of such termination.

 

5. Change of Control   In the event there is a Change in Control  (as defined in the 2000 Stock Incentive Plan of the Company) subsequent to the Change in Control that will take place as a result of the issuance of shares to Lazarus Energy Holding or as a result of the possible distribution of LEH’s share in BDCO to its current owners, the Executive shall be entitled to a severance pay equal to two times the Base Salary in the event that he elects within 90 days of such Change in Control not to thereafter continue his employment with the Company.In the event the Executive elects within 90 days of such Change in Control not to continue his employment, the Post Employment Restrictive Period (hereinafter defined) will be reduced to half.In addition, all options currently held by the Executive shall become fully vested and exercisable.

 

6. Termination of Employment.

(a)           For Due Cause.  If the Company has Due Cause (as hereinafter defined) to terminate the Executive’s employment, the Company will be entitled to terminate the Executive’s employment at any time by delivering written notice of that termination to the Executive, in which event (i) that termination will be effective immediately on the delivery of that notice, (ii) the Company will pay to the Executive his Base Salary accrued and unpaid to the date of that termination and (iii) all the rights and benefits the Executive may have under the employee benefit, bonus and/or stock option plans and programs of the Company, if any, will be determined in accordance with the terms and conditions of those plans and programs.  “Due Cause” means:  (i) the Executive has committed a willful serious act, such as fraud, embezzlement or theft, against any member of the Group, intending to enrich himself at the expense of the Group; (ii) the Executive has been indicted of a felony charge or entered a plea of nolo contendere or been convicted of a misdemeanor charge involving moral turpitude; (iii) the Executive has engaged in conduct that has caused demonstrable and serious injury, monetary or otherwise, to any member of the Group; (iv) the Executive, in carrying out his duties hereunder, has been guilty of willful gross negligence or willful gross misconduct; (v) the Executive has refused to carry out his duties hereunder in gross dereliction of those duties or (vi) the Executive has materially breached this Agreement.

 

 

  

  

  

(b)           Death.  If the Executive dies, (i) the Executive’s employment will terminate on the date of his death, (ii) the Company will pay to the Executive’s estate the Executive’s Base Salary accrued and unpaid through the end of the month in which he dies and (iii) all rights and benefits the Executive (or his estate) may have under the employee benefit, bonus and/or stock option plans and programs of the Company, if any, will be determined in accordance with the terms and conditions of those plans and programs.

(c)           Disability.  If the Executive suffers a Disability (as hereinafter defined), (i) the Executive’s employment will terminate on the date on which the Company determines that the Disability has occurred, (ii) the Company will pay to the Executive his Base Salary accrued and unpaid through the end of the month in which his employment is terminated because of that Disability and (iii) all the rights and benefits the Executive may have under the employee benefit, bonus and/or stock option plans and programs of the Company, if any, will be determined in accordance with the terms and conditions of those plans and programs.  “Disability” means the inability or incapacity (by reason of a medically determinable physical or mental impairment) of the Executive to perform the duties and responsibilities then assigned to him hereunder for a period that can be reasonably expected to last more than 180 days.  That inability or incapacity will be documented to the reasonable satisfaction of the Company by appropriate correspondence from registered physicians reasonably satisfactory to the Company.

(d)           Voluntary Termination By Executive.  The Executive may voluntarily terminate his employment at any time by providing at least 30 days’ prior written notice to the Company.  In the event of such a voluntary termination, (i) the Company will pay to the Executive his Base Salary accrued and unpaid to the date his employment terminates and (ii) all the rights and benefits the Executive may have under the employee benefit, bonus and/or stock option plans and programs of the Company, if any, will be determined in accordance with the terms and conditions of those plans and programs.

(e)           Other Terminations.  The Company will be entitled to terminate the Executive’s employment at any time for any reason.  If the Company terminates the Executive’s employment for any reason other than Due Cause or the Executive's Disability, the Company will pay to the Executive 50% of his Base Salary if the termination occurs during the first 6 months after the effective date of this Agreement and if the termination occurs more than 6 months after the effective date of this Agreement the Company will pay him an amount equal to his Base Salary. The termination will be in accordance with the then current payroll policies of the Company and all the rights and benefits the Executive may have under the employee benefit, bonus and/or stock option plans and programs of the Company, if any, will be determined in accordance with the terms and conditions of those plans and programs.

 

 

  

  

  

 

7. Competition and Confidentiality.

 

(a)           The Executive acknowledges that:  (i) the Company, and other members of the Group are engaged in the business of providing services which include, but are not limited to, the ownership and operation of pipelines and other oil and gas facilities and oil and gas mineral interests, and the consideration and participation in Projects (as defined below  (the “Business”); (ii) the Executive’s work for the Company will give the Executive the trade secrets of and other confidential information concerning the Company and the other members of the Group; (iii) the Executive’s covenants in this Section 6 are essential to protect the Business and the goodwill of the Group and they impose a reasonable restraint on the Executive in light of the activities and business of the Group on the date hereof; and (iv) the Executive has the means to support himself and his dependents other than by engaging in the Business in contravention of this Section 7, and this Section 7 will not impair his ability to provide that support.

 

Accordingly, the Executive covenants that he will not, at any time during the Employment Term or the period of two years after the termination of the Executive’s employment pursuant to Section 6(a), or (d) (the “Post-employment Restricted Period”), either directly or indirectly, through one more affiliates:  (i) engage as an officer, director or in any other managerial capacity or as an owner, co-owner or other investor of or in, whether as an employee, independent contractor, consultant or advisor, or as a sales representative, dealer or distributor of any kind, in any business selling any products or providing any services in competition with the Business or the Group within the 30 mile radius area surrounding any facility in which any member of the Group is then engaged in providing that product or service (the “Territory”); (ii) call on or otherwise solicit any natural person who is at that time employed by any member of the Group in any managerial capacity with the purpose or intent of attracting that person from the employ of the Group; (iii) call on, solicit or perform services for, either directly or indirectly, any person that at that time is, or at any time within one year prior to that time was, a customer of any member of the Group within any Territory, for the purpose of soliciting or selling any product or service in competition with the Group within that Territory, and/or (iv) .engage in any acquisition, capital project, joint venture, investment or endeavor relating to the oil and gas industry which has been evaluated, investigated, contemplated or considered by the Company or any Group member at any time during the Employment Term, whether or not known to the Executive prior to the date hereof (a “Project”).  In consideration of the foregoing, the Company hereby agrees to provide to the Executive access to its Confidential Information (as hereinafter defined) and to pay the Executive compensation subsequent to the termination of his employment to the extent provided in Section 6(e).

 

 

  

  

  

 

Nothing herein shall prohibit the Executive from owning an interest in Seminole Energy Services LLC or being a passive owner of not more than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as the Executive has no active participation in the business of such corporation.

 

(b)           The Executive acknowledges that:  (i) the Group has a legitimate business interest in the protection of its Confidential Information (as hereinafter defined); and (ii) the Group’s Confidential Information is a valuable asset worthy of and subject to protection by the Group.  Accordingly, the Executive covenants that:  (i) during the Employment Term and thereafter, the Executive will keep confidential all Confidential Information of the Group that is known to him and, except with the specific prior written consent of the Company or as required to be disclosed by law or the order of any agency, court or other governmental authority, not disclose that Confidential Information to any person except members of the Group and their employees, accountants, counsel and other designated representatives.  It is hereby understood and agreed that, during the Employment Term, the Executive may use the Confidential Information for the benefit of the Company and of the Group in connection with the ordinary course performance of his duties hereunder. “Confidential Information” of the Group means all know-how, trade secrets and other confidential or nonpublic information prepared for, by or on behalf of, or in the possession of, any member of the Group, including (i) nonpublic proprietary information, (ii) other information derived from reports, investigations, research, studies, work in progress, codes, marketing, sales or service programs, capital expenditure projects, cost summaries, equipment, product or system designs or drawings, pricing or other formulae, contract analyses, financial information, projections, customer lists, agreements with vendors, joint venture agreements, confidential filings with any agency, court or other governmental authority, (iii) any information which relates to any Project,  and (iv) all other concepts, methods, techniques and processes of doing business, ideas or information that can be used in the operation of a business or other enterprise and is sufficiently valuable, or potentially valuable, and secret to afford an actual or potential economic advantage over others.  Confidential Information does not include any information that currently is generally available to and generally known by the public or, through no fault of the Executive, hereafter becomes generally available to and generally known by the public.

 

 (c)           At any time at the request of the Company and promptly upon the termination of the Executive’s employment for any reason without the requirement of any request therefor, the Executive will deliver to the Company all the following then in the Executive’s possession or subject to disposition by the Executive:  (i) the originals and all copies of all Confidential Information; (ii) the originals and all copies of all books, business forms, drawings, files, lists, memoranda, notebooks, notes, records and other documents (including all thereof stored in computer memories or on disks, on microfiche or by any other means) which relate to the Business or any member of the Group, whether compiled, made or prepared by the Executive or by any other person; and (iii) all devices, equipment, tools and other tangible property owned or leased by any member of the Group.

 

 

  

  

  

 

(d)           It is the desire and intent of each of the parties that the covenants and agreements of the Executive in Sections 7(a), (b), and (c) (the “Restrictive Covenants”) be enforced to the fullest extent permissible under all applicable laws and public policies. However, in the event Executive resigns his employment on the basis that the Company and/or a member of the Group materially breached one or more provisions within this Agreement, such material breach(es) by the Company and/or any member of the Group shall render the Restrictive Covenants as provided for in Section 7(a) of this Agreementvoid and unenforceable, and bar the legal and equitable enforcement of these Restrictive Covenants by the Company and/or any member of the Group against the Executive. Accordingly, if any particular portion of any Restrictive Covenant is adjudicated to be invalid or unenforceable, that Restrictive Covenant will be deemed amended (i) to reform the particular portion to provide for such maximum restrictions as will be valid and enforceable or, if that is not possible, then (ii) to delete therefrom the portion thus adjudicated to be invalid or unenforceable.  The Restrictive Covenants will inure to the benefit of any successor or successors to the Company and each other member of the Group.

 

(e)           The Executive acknowledges that (i) the Restrictive Covenants are expressly for the benefit of the Company and the other members of the Group, (ii) one or more of the members of the Group would be irreparably injured by a violation of any of the Restrictive Covenants and (iii) the members of the Group would have no adequate remedy at law in the event of such violation.  Therefore, the Executive acknowledges and agrees that injunctive relief, specific performance or any other appropriate equitable remedy (without any bond or other security being required) are appropriate remedies to enforce compliance by the Executive with the Restrictive Covenants, and that all members of the Group are third party beneficiaries of this Agreement.

 

8. No Conflicts.  The Executive represents and warrants that the Executive is under no contractual or other restriction or obligation that will (a) limit the Executive’s activities on behalf of the Company or (b) prohibit or inhibit disclosure or use by the Executive of any information in possession of the Executive that directly or indirectly relates to the operation or business of the Company or the services to be rendered by the Executive, under this Agreement or otherwise.

 

9. Notices.  All notices, requests, demands and other communications given under or by reason of this Agreement must be in writing and will be deemed given when delivered in person or when mailed, by certified mail (return receipt requested), postage prepaid, addressed as follows (or to such other address as a party may specify by notice pursuant to this provision):

 

(a)           If to the Company:

Blue Dolphin Energy Company

801 Travis, Suite 2100

Houston, Texas 77002

Attn:    Ivar Siem

 

 

  

  

  

 

(b)           If to the Executive:

Thomas J. McReynolds, Jr.

6613 Wanita Place

Houston, TX 77007

10. Governing Law.  This Agreement will be governed by and construed in accordance with the substantive laws of the State of Texas and the venue for all disputes will be Harris County, Texas.

 

11. Additional Instruments.  The Executive and the Company will execute and deliver any and all additional instruments and agreements that may be necessary or proper to carry out the purposes of this Agreement.

 

12. Entire Agreement and Amendments.  This Agreement contains the entire agreement of the Executive and the Company relating to the matters contained herein and supersedes all prior agreements and understandings, oral or written, between the Executive and the Company with respect to the subject matter hereof.  This Agreement may not be amended or modified except by an agreement in writing signed by the party against whom enforcement of any waiver or modification is sought.

 

13. Headings.  The headings of Sections and subsections hereof are included solely for convenience and will not control the interpretation of any of the provisions hereof.

 

14. Tax Withholding.  Notwithstanding any other provision hereof, the Company may withhold from amounts payable hereunder all federal, state, local and foreign taxes that are required to be withheld by applicable laws or regulations.

 

15. Separability.  If any provision of this Agreement is rendered or declared illegal, invalid or unenforceable by reason of any existing or subsequently enacted legislation or by the final judgment of any court of competent jurisdiction, the Executive and the Company will promptly meet and negotiate substitute provisions for those rendered or declared illegal or unenforceable to preserve the original intent of this Agreement to the extent legally possible, but all other provisions of this Agreement shall remain in full force and effect.

 

16. Assignments.  The rights and obligations of the Executive under this Agreement are personal to him, and none of those rights, benefits or obligations will be subject to voluntary or involuntary alienation, assignment or transfer, except as otherwise contemplated hereby.

 

17. Effect of Agreement.  Subject to the provisions of Section 15 with respect to assignments, this Agreement will be binding on the Executive and his heirs, executors, administrators, legal representatives and assigns and on the Company and its successors and assigns, except as otherwise contemplated hereby.  The Executive acknowledges that the provisions of Section 6 are for the benefit of all of the members of the Group, in addition to the Company.

 

 

  

  

  

 

 

18. Execution.  This Agreement may be executed in multiple counterparts, each of which will be deemed an original and all of which will constitute one and the same agreement.

 

19. Waiver of Breach.  The waiver by either party to this Agreement of a breach of any provision of the Agreement by the other party will not operate or be construed as a waiver by the waiving party of any subsequent breach by the other party.

 

IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement effective as of the date first above written.

 

 

	BLUE DOLPHIN ENERGY COMPANY    	EXECUTIVE 
	 	 
	 	 
	By: __________________________________	__________________________________________ 
	Name:________________________________   	Thomas J. McReynolds, Jr. Title: _________________

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