Exhibit 10.5
AMENDMENT NO. ONE
TO
THE BEARD COMPANY
2003-2 DEFERRED STOCK COMPENSATION PLAN
Adopted: September 30, 2003
Amended: February 13, 2004
AMENDMENT NO. ONE
TO
THE BEARD COMPANY
2003-2 DEFERRED STOCK COMPENSATION PLAN
Page
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ARTICLE I Purpose and Effective Date................................... 1
ARTICLE II Definitions.................................................. 1
ARTICLE III Shares Available Under the Plan.............................. 3
ARTICLE IV Administration............................................... 3
ARTICLE V Eligibility.................................................. 3
ARTICLE VI Deferral Elections In Lieu of Cash Payments.................. 3
ARTICLE VII Settlement of Stock Units.................................... 4
ARTICLE VIII Unfunded Status.............................................. 5
ARTICLE IX Designation of Beneficiary................................... 5
ARTICLE X Adjustment Provisions........................................ 5
ARTICLE XI Compliance with Rule 16b-3................................... 6
ARTICLE XII General Provisions........................................... 6
AMENDMENT NO. ONE
TO
THE BEARD COMPANY
2003-2 DEFERRED STOCK COMPENSATION PLAN
ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.1 Purpose. The Beard Company 2003-2 Deferred Stock Compensation Plan (the
"Plan") is intended to advance the interests of the Company and its shareholders
by providing a means to attract and retain highly-qualified persons to serve as
Officers and Directors and to promote ownership by Officers and Directors of a
greater proprietary interest in the Company, thereby aligning such interests
more closely with the interests of shareholders of the Company.
1.2 Effective Date. This Plan, as amended, shall become effective September
30, 2003 subject to approval of the shareholders of the Company by the
affirmative vote of a majority of shares of the Company present, or represented,
and entitled to vote on the subject matter, at the 2004 Annual Meeting of
Shareholders of the Company at which a quorum is present or by a written consent
of the holders of a majority of the Company's then outstanding shares.
ARTICLE II
DEFINITIONS
The following terms shall be defined as set forth below:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Compensation" means all or part of the cash remuneration payable to an
Officer in his or her capacity as an Officer.
2.3 "Committee" means the Compensation Committee of the Board.
2.4 "Company" means The Beard Company, an Oklahoma corporation, or any
successor thereto.
2.5 "Deferral Date" means the date Fees or Compensation would otherwise
have been paid to the Participant.
2.6 "Director" means any individual who is a member of the Board.
2.7 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act include rules thereunder and
successor provisions and rules thereto.
2.8 "Fair Market Value" means the "Market Price" as defined in the
Certificate of Designations for the Company's outstanding Series A Convertible
Preferred Stock (the "Certificate"); provided, however, that in the event that
Fair Market Value is less than the "Conversion Price" as defined in the
Certificate, then the Fair Market Value shall be the average of (i) the last
sale of such security on any day there are sales of such securities on the OTC
Bulletin Board(R), or (ii) if there have been no sales on the OTC Bulletin
Board(R) on any day, the best asked price at the end of such day, in each such
case averaged over a period of 21 days consisting of the day as of which "Market
Price" is being determined and the 20 consecutive business days prior to such
day.
2.9 "Fees" means all or part of any retainer and/or fees payable to a
Director in his or her capacity as a Director.
2.10 "Officer" means any person so designated by the Board.
2.11 "Participant" means a Director or Officer who defers Fees or
Compensation under Article VI of this Plan.
2.12 "Reconciliation Events" means certain events which cause the amount of
Fees or Compensation actually paid during a period to differ from the amount of
Fees credited pursuant to Section 6.4, including, but not limited to, the
following: an increase or decrease in Fees paid, additional meetings held,
missed attendance at certain meetings, newly elected directors and Terminations
of Service.
2.13 "Secretary" means the Corporate Secretary or any Assistant Corporate
Secretary of The Beard Company.
2.14 "Shares" means shares of the common stock of The Beard Company, par
value $.001333 per share, or of any successor corporation or other legal entity
adopting this Plan.
2.15 "Stock Units" means the credits to a Participant's Stock Unit Account
under Article VI of this Plan, each of which represents the right to receive one
Share upon settlement of the Stock Unit Account.
2.16 "Stock Unit Account" means the bookkeeping account established by the
Company pursuant to Section 6.4.
2.17 "Termination Date" means the date the Plan terminates pursuant to
Section 12.8.
2.18 "Termination of Service" means termination of service as a Director or
Officer in any of the following circumstances:
(a) Where the Participant voluntarily resigns or retires;
(b) Where a Director is not re-elected (or elected in the case of an
appointed Director) to the Board by the shareholders, or an Officer is not
re-elected as an Officer by the Board; or
(c) Where the Participant dies.
ARTICLE III
SHARES AVAILABLE UNDER THE PLAN
Subject to adjustment as provided in Article X, the maximum number of
Shares that may be distributed in settlement of Stock Unit Accounts under this
Plan shall not exceed 400,000. Such Shares may include authorized but unissued
Shares or treasury Shares.
ARTICLE IV
ADMINISTRATION
4.1 This Plan shall be administered by the Board's Compensation Committee,
or such other committee or individual as may be designated by the Board.
Notwithstanding the foregoing, no Director who is a Participant under this Plan
shall participate in any determination relating solely or primarily to his or
her own Shares, Stock Units or Stock Unit Account.
4.2 It shall be the duty of the Committee to administer this Plan in
accordance with its provisions and to make such recommendations of amendments or
otherwise as it deems necessary or appropriate.
4.3 The Committee shall have the authority to make all determinations it
deems necessary or advisable for administering this Plan, subject to the
limitations in Section 4.1 and other explicit provisions of this Plan.
ARTICLE V
ELIGIBILITY
Each Director and Officer of the Company shall be eligible to defer Fees
and Compensation under Article VI of this Plan.
ARTICLE VI
DEFERRAL ELECTIONS IN LIEU OF CASH PAYMENTS
6.1 General Rule. Each Director or Officer may, in lieu of receipt of Fees
or Compensation, defer such Fees or Compensation in accordance with this Article
VI.
6.2 Timing of Election. Each eligible Director or Officer who wishes to
defer Fees or Compensation under this Plan must make an irrevocable written
election at least six (6) months prior to the beginning of the date on which the
Fees or Compensation would otherwise be paid; provided, however, that with
respect to any election made by a newly-elected or appointed Director or Officer
("New Participant Elections"), the Company shall hold such deferred Fees or
Compensation (without interest) and credit them pursuant to Section 6.4 on or as
of the date which follows by six months such deferral election. An election by a
Director or an Officer previously in effect September 30, 2003 shall be deemed
to be continuing and therefore applicable to Fees or Compensation to be paid in
periods unless the Director or Officer revokes or changes such election by
filing a new election form thirty (30) days prior to the next payment date for
Fees or Compensation.
6.3 Form of Election. An election shall be made in a manner satisfactory to
the Secretary. Generally, an election shall be made by completing and filing the
specified election form with the Secretary of the Company within the period
described in Section 6.2. At minimum, the form shall require the Director or
Officer to specify the following:
(a) a percentage (for Directors in 25% increments, and for Officers
not less than 10% and in 5% increments thereafter), not to exceed an
aggregate of 100% of the Fees or Compensation to be deferred under this
Plan; and
(b) the manner of settlement in accordance with Section 7.2.
6.4 Establishment of Stock Unit Account. The Company will establish a Stock
Unit Account for each Participant. All Fees or Compensation deferred pursuant to
this Article VI shall be credited to the Participant's Stock Unit Account as of
the Deferral Date and converted to Stock Units as follows: The number of Stock
Units shall equal the deferred Fees or Compensation divided by the Fair Market
Value of a Share on the Deferral Date, with fractional units calculated to three
(3) decimal places.
6.5 Credit of Dividend Equivalents. As of each dividend payment date with
respect to Shares, each Participant shall have credited to his or her Stock Unit
Account an additional number of Stock Units equal to: the per-share cash
dividend payable with respect to a Share on such dividend payment date
multiplied by the number of Stock Units held in the Stock Unit Account as of the
close of business on the record date for such dividend divided by the Fair
Market Value of a Share on such dividend payment date. If dividends are paid on
Shares in a form other than cash, then such dividends shall be notionally
converted to cash, if their value is readily determinable, and credited in a
manner consistent with the foregoing and, if their value is not readily
determinable, shall be credited "in kind" to the Participant's Stock Unit
Account.
6.6 Reconciliations. The Company shall record all Reconciliation Events
and, as soon as reasonably practicable after the end of each calendar quarter or
after a Termination of Service, make appropriate adjustments to each
Participant's Stock Unit Account to reflect such Reconciliation Events;
provided, however, the Fair Market Value used to determine such adjustments
shall be the same Fair Market Value used to determine the number of Stock Units
credited to such Participant's Stock Unit Account.
ARTICLE VII
SETTLEMENT OF STOCK UNITS
7.1 Settlement of Account. The Company will settle a Participant's Stock
Unit Account in the manner described in Section 7.2 as soon as administratively
feasible following the earlier of (i) notification of such Participant's
Termination of Service or (ii) the Termination Date.
7.2 Payment Options. An election filed under Article VI shall specify
whether the Participant's Stock Unit Account is to be settled by delivering to
the Participant (or his or her beneficiary) the number of Shares equal to the
number of whole Stock Units then credited to the Participant's Stock Unit
Accounts, in (a) a lump sum, or (b) substantially equal annual installments over
a period not to exceed ten (10) years. If, upon lump sum distribution or final
distribution of an installment, less than one whole Stock Unit is credited to a
Participant's Stock Unit Account, cash will be paid in lieu of fractional shares
on the date of such distribution.
7.3 Continuation of Dividend Equivalents. If payment of Stock Units is
deferred and paid in installments, the Participant's Stock Unit Account shall
continue to be credited with dividend equivalents as provided in Section 6.5.
7.4 In Kind Dividends. If any "in kind" dividends were credited to the
Participant's Stock Unit Account under Section 6.5, such dividends shall be
payable to the Participant in full on the date of the first distribution of
Shares under Section 7.2.
ARTICLE VIII
UNFUNDED STATUS
The interest of each Participant in any Fees or Compensation deferred under
this Plan (and any Stock Units or Stock Unit Account relating thereto) shall be
that of a general creditor of the Company. Stock Unit Accounts, and Stock Units
(and, if any, "in kind" dividends) credited thereto, shall at all times be
maintained by the Company as bookkeeping entries evidencing unfunded and
unsecured general obligations of the Company.
ARTICLE IX
DESIGNATION OF BENEFICIARY
Each Participant may designate, on a form provided by the Committee, one or
more beneficiaries to receive the Shares described in Section 7.2 in the event
of such Participant's death. The Company may rely upon the beneficiary
designation last filed with the Committee, provided that such form was executed
by the Participant or his or her legal representative and filed with the
Committee prior to the Participant's death.
ARTICLE X
ADJUSTMENT PROVISIONS
In the event any recapitalization, reorganization, merger, consolidation,
spin-off, combination, repurchase, exchange of shares or other securities of the
Company, stock split or reverse split, or similar corporate transaction or event
affects Shares such that an adjustment is determined by the Board or Committee
to be appropriate to prevent dilution or enlargement of Participants' rights
under this Plan, then the Board or Committee will, in a manner that is
proportionate to the change to the Shares and is otherwise equitable, adjust the
number or kind of Shares to be delivered upon settlement of Stock Unit Accounts
under Article VII.
ARTICLE XI
COMPLIANCE WITH RULE 16b-3
Subject to Section 6.2, it is the intent of the Company that this Plan
comply in all respects with applicable provisions of Rule 16b-3 under the
Exchange Act in connection with the deferral of Fees and Compensation.
ARTICLE XII
GENERAL PROVISIONS
12.1 No Right to Continue as an Officer or Director. Nothing contained in
this Plan will confer upon any Participant any right to continue to serve as an
Officer or Director.
12.2 No Shareholder Rights Conferred. Nothing contained in this Plan will
confer upon any Participant any rights of a shareholder of the Company unless
and until Shares are in fact issued or transferred to such Participant in
accordance with Article VII.
12.3 Change to the Plan. The Board may amend, alter, suspend, discontinue,
extend, or terminate the Plan without the consent of shareholders or
Participants, except that any such action will be subject to the approval of the
Company's shareholders at the next annual meeting of shareholders having a
record date after the date such action was taken if such stockholder approval is
required by any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Shares may then be listed or
quoted, or if the Board determines in its discretion to seek such shareholder
approval; provided, however, that, without the consent of an affected
Participant, no such action may materially impair the rights of such Participant
with respect to any Stock Units credited to his or her Stock Unit Account.
12.4 Consideration; Agreements. The consideration for Shares issued or
delivered in lieu of payment of Fees or Compensation will be the service of the
Officer or Director during the period to which the Fees or Compensation paid in
the form of Shares related.
12.5 Compliance with Laws and Obligations. The Company will not be
obligated to issue or deliver Shares in connection with this Plan in a
transaction subject to the registration requirements of the Securities Act of
1933, as amended, or any other federal or state securities law, any requirement
under any listing agreement between the Company and any national securities
exchange or automated quotation system or any other laws, regulations, or
contractual obligations of the Company, until the Company is satisfied that such
laws, regulations, and other obligations of the Company have been complied with
in full. Certificates representing Shares delivered under the Plan will be
subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations, and other obligations of the Company, including
any requirement that a legend or legends be placed thereon.
12.6 Limitations on Transferability. Stock Units and any other right under
the Plan that may constitute a "derivative security" as generally defined in
Rule 16a-1(c) under the Exchange Act will not be transferable by a Participant
except by will or the laws of descent and distribution (or to a designated
beneficiary in the event of a Participant's death); provided, however, that such
rights may be transferred to one or more trusts or other beneficiaries during
the lifetime of the Participant in connection with the Participant's estate
planning, but only if and to the extent then permitted under Rule 16b-3 and
consistent with the registration of the offer and sale of Shares on Form S-8 or
a successor registration form of the Securities and Exchange Commission. Stock
Units and other rights under the Plan may not be pledged, mortgaged,
hypothecated, or otherwise encumbered, and shall not be subject to the claims of
creditors.
12.7 Governing Law. The validity, construction, and effect of the Plan and
any agreement hereunder will be determined in accordance with the laws of the
State of Oklahoma, without giving effect to principles of conflicts of laws, and
applicable federal law.
12.8 Plan Termination. Unless earlier terminated by action of the Board or
Executive Committee of the Board, the Plan will remain in effect until the
earlier of (i) such time as no Shares remain available for delivery under the
Plan and the Company has no further rights or obligations under the Plan or (ii)
September 30, 2013.