EXHIBIT 10.5
TEXOIL, INC.
1995 STOCK COMPENSATION PLAN
1. PURPOSE OF THE PLAN
Effective April 1, 1995, the Board of Directors of Texoil, Inc., a Nevada
corporation (the "COMPANY"), reduced the base salary or compensation of certain
of the Company's employees and consultants by 30% (the "SALARY REDUCTION") to
conserve the Company's financial resources. The purpose of this 1995 Stock
Compensation Plan ("PLAN") is to provide the Company's employees and consultants
the opportunity to be paid the amount by which their compensation has been so
reduced in shares of the Company's common stock, par value $.01 per share
("COMMON STOCK").
2. ADMINISTRATION
The Plan shall be administered by the Compensation Committee of the
Company's Board of Directors ("BOARD") or such other committee as the Board
shall appoint from time to time to administer the Plan (the "COMMITTEE"). The
Committee shall consist of two or more persons each of whom shall be a
"disinterested person" within the meaning of Rule 16b-3(c)(2)(i) promulgated
under Section 16 of the Securities Exchange Act of 1934, as amended ("1934
ACT").
The Committee shall have full authority to administer the Plan, including
authority to interpret and construe any provision of the Plan or any
Participation Agreement (defined below) entered into pursuant hereto, and to
adopt such rules and regulations for administering the Plan as it may deem
necessary. Decisions of the Committee shall be final and binding on all parties.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated from and against any cost or
expense (including attorneys' fees) or liability (including any sum paid in
settlement of a claim with the approval of the Committee) arising out of any
action, omission or determination relating to the Plan, unless, in either case,
such action, omission or determination was taken or made by such member,
director or employee in bad faith and without reasonable belief that it was in
the best interests of the Company.
3. STOCK RESERVED FOR THE PLAN
The shares subject to the Plan shall consist of 100,000 authorized but
unissued shares of Common Stock or previously issued shares reacquired and held
by the Company, and such number of shares shall be and hereby is reserved for
issuance pursuant to the Plan. Any of such shares which may remain unissued
upon the Plan's termination shall cease to be reserved for purposes of the Plan.
If and whenever the Company shall effect a subdivision or consolidation of
shares of Common Stock or the payment of a stock dividend on Common Stock
without receipt of consideration by the Company, the number of shares of Common
Stock subject to the Plan shall be proportionately increased or reduced,
respectively.
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4. PLAN PARTICIPATION
Any employee or consultant of the Company whose compensation has been
reduced by the Board to conserve the Company's financial resources is eligible
to participate in the Plan. Each such employee and consultant may participate
in the Plan for so long as he or she is employed or engaged by the Company and
the Plan is in effect. Such election to participate must be made by entering
into an agreement with the Company to be bound by the Plan's terms and
conditions, and containing such other provisions as the Committee deems
necessary or appropriate (the "PARTICIPATION AGREEMENT"). Each eligible
employee or consultant who is a party to an effective Participation Agreement is
referred to herein as a "PARTICIPANT."
5. STOCK PAYMENTS
Each Participant shall be issued a number of shares of Common Stock equal
to the quotient of 30% of the amount of his or her gross base salary for a given
month before giving effect to the Salary Reduction, divided by the Fair Market
Value of one share of Common Stock for that month. Subject to the stockholder
approval provisions of Section 12 below, Common Stock issuable under the Plan
shall be issued as of the last day of each calendar month during the term of the
Plan. Each issuance of Common Stock under the Plan is referred to as a "STOCK
PAYMENT." "FAIR MARKET VALUE" of one share of Common Stock for any given month
shall be:
(a) the quotient of (i) the total sum, for all business
days during the subject month, of the product of (1) the
last reported sales price for a share of Common Stock on
each business day of the month in respect of which a Stock
Payment is to be made, as such price is quoted on the
National Association of Securities Dealers Automated
Quotation System ("NASDAQ") in respect of NASDAQ Small Cap
Market securities, multiplied by (2) the NASDAQ trading
volume of the Common Stock on each such business day,
divided by (ii) the total sum of the NASDAQ trading volume
of the Common Stock for all such business days during the
subject month; or
(b) if not so quoted, the average of the average of the
closing bid and asked prices for a share of Common Stock on
each business day of the month in respect of which a Stock
Payment is to be made, as quoted by the National Quotation
Bureau's "Pink Sheets" or the National Association of
Securities Dealers' OTC Bulletin Board System; or
(c) if the price of a share of Common Stock shall not be so
reported, the Fair Market Value of a share of Common Stock
shall be determined by the Committee in its absolute
discretion.
6. TRANSFER RESTRICTIONS
No right of any Participant hereunder is assignable except by will or by
the laws of descent and distribution. Transactions under the Plan are intended
to comply with all applicable conditions of Rule 16b-3 or its successors under
the 1934 Act. To the extent any provision of the Plan or action by the Committee
fails to so comply, such provision or action shall be deemed null and void to
the extent permitted by applicable law and deemed advisable
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by the Committee. Notwithstanding any other provision of the Plan, until the
expiration of six months and one day after the date upon which Common Stock is
issued under the Plan, no such Common Stock issued to any person subject to
Section 16(b) shall be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of except by will or by the laws of descent and distribution.
Any stock certificate(s) issued in respect of a Stock Payment to a person who is
subject to Section 16(b) will set forth these transfer restrictions. Any
attempted disposition in violation of this Section 6 shall be null and void.
7. RIGHTS AS A STOCKHOLDER
No person shall have any rights as a stockholder with respect to any shares
of Common Stock issuable under the Plan until the date of the issuance of a
stock certificate with respect to such shares.
8. CERTAIN SECURITIES MATTERS
(a) Notwithstanding any other provision of the Plan,
(i) the Company shall not be obligated to cause to be issued or
delivered any certificate evidencing shares of Common Stock issuable under the
Plan unless and until the Company is advised by its counsel that the issuance
and delivery of such certificate is in compliance with all applicable laws and
regulations promulgated by governmental authority and all requirements of any
securities exchange or quotation system on which shares of Common Stock are then
traded or quoted; and
(ii) the Company shall be under no obligation to register, qualify or
perfect an exemption from registration under federal or applicable state
securities laws and regulations any shares of Common Stock issuable under the
Plan. The Committee may require, as a condition to the issuance and delivery of
certificates evidencing shares of Common Stock issuable under the Plan, that the
recipient of such shares make such covenants, agreements and representations,
and that such certificates bear such legends, as the Committee, in its sole
discretion, deems necessary or desirable to comply with federal and applicable
state securities laws and regulations.
(b) Without limiting the generality of Section 8(a)(ii), to the extent
that the issuance of shares of Common Stock under the Plan has not been
registered under the Securities Act of 1933, as amended (the "1933 ACT"), each
Participant, by executing and delivering to the Company a Participation
Agreement, hereby represents and warrants to the Company as of the date of each
Stock Payment, that his or her acquisition of Common Stock as a Stock Payment is
solely for his or her own account for investment, and is not being acquired for
the account of any other person or with a view toward resale, assignment,
fractionalization, or distribution thereof. To the extent that the issuance of
any shares of Common Stock as a Stock Payment has not been registered under
applicable law, any document, instrument or certificate evidencing such Common
Stock will bear a conspicuous legend stating that the Common Stock has not been
registered under the 1933 Act or under any applicable state securities laws, and
that the Common Stock cannot be offered for sale, sold, transferred, pledged or
otherwise hypothecated except in accordance with the registration requirements
of the 1933 Act or such state laws or
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upon delivery to the Company of an opinion of legal counsel satisfactory to the
Company that an exemption from registration is available.
(c) The Company will use commercially reasonable efforts to cause to be
filed before December 31, 1995 a registration statement on a Form S-8 or Form
S-3 (or comparable successor forms) covering the resale of Common Stock issuable
under the Plan.
9. CERTAIN TAX MATTERS
Whenever shares of Common Stock are to be issued under the Plan, the
Company shall have the right to require the Participant to remit to the Company
in cash an amount sufficient to satisfy federal, state and local withholding tax
requirements, if any, attributable to such issuance before delivering any
certificate(s) for such shares. Participants who are subject to Section 16(b)
of the 1934 Act (a "Subject Participant") may not recognize income with respect
to a Stock Payment for federal income tax purposes until expiration of six
months and one day after the Stock Payment is made ("Restriction Period"). A
Subject Participant would not recognize any income for federal tax purposes at
the time Common Stock is issued as a Stock Payment, and the Company would not be
entitled to a deduction at such time. Upon expiration of the Restriction
Period, a Subject Participant would recognize ordinary income and the Company
would be entitled to a deduction in an amount equal to the fair market value of
the Common Stock as of the date of such expiration. Alternatively, within 30
days after the date upon which Common Stock is issued as a Stock Payment, a
Subject Participant may be able to file an appropriate election under Section
83(b) of the Internal Revenue Code of 1986, as amended, with the Internal
Revenue Service. The 83(b) election would result in a Subject Participant's
receipt of ordinary income in an amount equal to the fair market value of the
Common Stock on the date on which Common Stock is issued as a Stock Payment (as
opposed to the date upon which the Restriction Period expires). With respect to
Subject Participants, the Company may have discretion to defer federal income
tax withholding until recognition of income is required. The provisions of this
Section 9 are qualified in their entirety by all applicable laws, rules and
regulations as in effect from time to time. Participants are advised to consult
with qualified tax advisors concerning their participation in the Plan.
10. NO EMPLOYMENT RIGHTS
Neither this Plan nor any Participation Agreement confers upon any
Participant any right with respect to the continuation of his or her employment
by the Company or interferes in any way with the right of the Company, subject
to the terms of any separate employment to the contrary, at any time to
terminate such employment or to change the compensation of a Participant. If a
Participant's employment with the Company is terminated, such Participant shall
be entitled to receive all shares of Common Stock issuable to him or her
hereunder as a Stock Payment(s) for the period before the effective date of
termination.
11. AMENDMENT OF THE PLAN
The Board may at any time suspend or discontinue the Plan or revise or
amend it in any respect whatsoever, provided, however, that (a) without approval
of the holders of a majority of the Company's outstanding voting securities
present in person or by proxy and entitled to vote
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at an annual or special meeting of stockholders (or such greater percentage as
may be required by applicable law or the Company's articles of incorporation),
no revision or amendment shall (i) increase the number of shares of Common Stock
that may be issued under the Plan, (ii) materially increase the benefits
accruing to eligible Plan participants, or (iii) materially modify the
requirements as to eligibility for participation in the Plan, and (b) no such
amendment or termination shall adversely affect any vested right of a
Participant to receive shares of Common Stock pursuant hereto.
12. EFFECTIVE DATE AND TERM OF PLAN; STOCKHOLDER APPROVAL
The Plan is effective as of April 1, 1995, subject to approval of the Plan
by the Company's stockholders in accordance with applicable law and the
requirements of Rule 16b-3 under the 1934 Act at the next annual stockholders
meeting ("1995 Annual Meeting") which currently is scheduled for July 10, 1995.
Notwithstanding any other provision of the Plan, no Common Stock shall be issued
under the Plan unless and until the Company's stockholders so approve the Plan.
If the Company's stockholders so approve the Plan, then the Common Stock which
would have been issued under the Plan during the period between April 1, 1995
through the end of the calendar month which immediately precedes the date of the
1995 Annual Meeting shall be (i) calculated on the same monthly basis as if such
stockholder approval had occurred on April 1, 1995, and (ii) issued as of the
date of the 1995 Annual Meeting. No Common Stock shall be issuable under the
Plan in respect of any period after March 31, 1996.
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