- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 22, 2004
PARALLEL PETROLEUM CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-13305 75-1971716
(State or other jurisdiction (Commission File (IRS Employer
of Incorporation or organization) Number) Identification No.)
1004 N. Big Spring, Suite 400, Midland, Texas 79701
(Address of Principal Executive Offices) (Zip Code)
432-684-3727
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
Item 5. Other Events.
On June 22, 2004, Parallel Petroleum Corporation held its annual
meeting of stockholders at which Parallel's stockholders:
. elected six directors;
. approved the 2004 Non-Employee Director Stock Grant Plan; and
. approved the reappointment of BDO Seidman, LLP as independent
auditors.
Election of Directors
At the annual meeting, Parallel's stockholder's elected the following
individuals to serve as directors until the next annual meeting of stockholders
and until their successors are duly elected and qualified:
Thomas R. Cambridge
Dewayne E. Chitwood
Larry C. Oldham
Martin B. Oring
Ray M. Poage
Jeffrey G. Shrader
On April 28, 2004, our Corporate Governance and Nominating Committee
adopted a mandatory retirement policy for non-employee directors. Under this
policy, a non-employee director may not stand for re-election following the date
on which he or she attains the age of 72. As a result of the adoption of this
policy, Charles R. Pannill, a director of the Company since 1982, did not stand
for re-election at the 2004 annual meeting.
Approval of 2004 Non-Employee Director Stock Grant Plan
Parallel's stockholders also approved the 2004 Non-Employee Directors
Stock Grant Plan (the "Plan") at the meeting. Under the Plan, we will begin
paying an annual retainer fee to each non-employee director in the form of
common stock having a value of $25,000.
The following is a summary of the material features of the Plan:
Purpose of the Plan
The purpose of the Plan is to promote the best interests of Parallel
and its stockholders by providing a means to retain and attract qualified
non-employee directors and to provide opportunities for stock ownership by such
directors which will promote the alignment of the interests of such directors
with the interests of Parallel's stockholders, in terms of both risk and reward.
In addition, by awarding
1
<page>
stock and reducing the cash compensation paid to non-employee directors, we will
preserve cash for our operations.
Administration
The Plan is administered by the Compensation Committee. Although the
Compensation Committee has authority to adopt such rules and regulations for
carrying out the Plan as it may deem proper, the Committee's administrative
functions will largely be ministerial in view of the Plan's explicit provisions
described below, including those related to eligibility and predetermination of
the timing, pricing and amount of grants. The interpretation by the Compensation
Committee of any provision of the Plan is final.
Participation
Directors of Parallel who are not employees are eligible to participate
in the Plan. Under the Plan, each non-employee director will receive an annual
retainer fee consisting of shares of common stock that will be automatically
granted on the first day of July in each year, commencing on July 1, 2004. The
actual number of shares received is determined by dividing $25,000 by the
average daily closing price of the common stock on the Nasdaq Stock Market for
the ten consecutive trading days commencing fifteen trading days before the
first day of July of each year.
Stock Subject to the Plan
The total number of shares available for grant is 116,000 shares of
common stock, subject to adjustment as described below. Shares delivered under
the Plan will be made available from authorized but unissued shares, treasury
shares, or a combination thereof. If there is a change in the common stock by
reason of a merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, combination of shares, exchange of shares, change in
corporate structure or otherwise, the aggregate number of shares available under
the Plan will be appropriately adjusted in order to avoid dilution or
enlargement of the rights intended to be made available under the Plan.
Amendment, Suspension and Termination of the Plan
Our board of directors may suspend, terminate or amend the Plan at any
time or from time to time in any manner that the board may deem appropriate;
provided that, without approval of the stockholders, no revision or amendment
shall change the eligibility of directors to receive stock grants, the number of
shares of common stock subject to any grants or the Plan itself, or materially
increase the benefits accruing to participants under the Plan, and Plan
provisions relating to the amount, price and timing of grants of stock may not
be amended.
2
<page>
Transfer Restrictions
Shares acquired under the Plan are non-assignable and non-transferable
other than by will or the laws of descent and distribution and may not be sold,
pledged, hypothecated, assigned or transferred until the non-employee director
holding such stock ceases to be a director, except that the Compensation
Committee may permit a transfer of stock subject to the condition that the
Compensation Committee receive evidence satisfactory to it that the transfer is
being made for essentially estate and/or tax planning purposes or a gratuitous
or donative purpose and without consideration.
Term of Plan
The Plan commenced on June 22, 2004 and will remain in effect until
terminated by the board, although no additional shares of common stock may be
issued after the 116,000 shares subject to the Plan have been issued.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
10.1 2004 Non-Employee Director Stock Grant Plan
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PARALLEL PETROLEUM CORPORATION
By:/s/ Larry C. Oldham
---------------------------------
Larry C. Oldham, Chief Executive
Officer and President
Dated: June 28, 2004
4
Exhibit 10.1
PARALLEL PETROLEUM CORPORATION 2004 NON-EMPLOYEE DIRECTOR
STOCK GRANT PLAN
SECTION 1. PURPOSE
The loyal and dedicated service of qualified non-employee Directors is
essential to the progress of Parallel Petroleum Corporation (the "Company"). The
Parallel Petroleum Corporation 2004 Non-Employee Director Stock Grant Plan (the
"Plan") has been adopted to better enable the Company to retain and attract
qualified non-employee Directors to serve on the Company's Board of Directors
and to encourage stock ownership by non-employee Directors and promote the
alignment of the interests of such Directors with the interests of the
stockholders of the' Company, in terms of both risk and reward.
SECTION 2. ADMINISTRATION
The Plan will be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board" or "Board of
Directors"). Grants of the Company's common stock, par value $.01 per share (the
"Stock"), and the amount of the Stock granted will be automatic, as provided in
Section 5 of this Plan. The Committee shall have such powers as are delegated to
it by this Plan and, subject to the express provisions of this Plan, this shall
include the power to prescribe rules and regulations relating to the Plan, and
to make all determinations necessary or advisable for administering the Plan.
The Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan in a manner and to the extent it shall deem expedient
to carry it into effect. All questions of interpretation of the Plan will be
determined by the Committee and such determinations will be final and binding
upon all persons having an interest in the Plan. The Committee may act (a) by
majority vote of its members meeting in person or by telephone or (b) by consent
in writing signed by all of the members of the Committee. Three members of the
Committee shall constitute a quorum for the transaction of business at a
meeting. The members of the Committee shall be appointed or approved by, and
will serve at the pleasure of, the Board. The Board may in its discretion from
time to time remove members from or add members to, the Committee. Members of
the Committee shall not receive any additional compensation for administration
of this Plan.
SECTION 3. PARTICIPATION
Each Director of the Company who is not an employee of the Company or
any subsidiary of the Company (a "Non-employee Director") is eligible to
participate in the Plan.
1
<page>
SECTION 4. STOCK SUBJECT TO THE PLAN
An aggregate of 116,000 shares of Stock are authorized for issuance
under this Plan, subject to adjustment under Section 7 of this Plan. The shares
of Stock deliverable upon the grant of such shares may be made available from
authorized but unissued shares or shares reacquired by the Company, including
shares purchased in the open market or in private transactions, or a combination
thereof, and shall be fully paid and non-assessable when issued. This Plan at
all times shall be entirely unfunded and the Company shall not be required to
reserve or otherwise set aside shares of Stock or any other assets for the
payment of its obligations hereunder. This Plan shall create only a contractual
obligation on the part of the Company as to such amounts and shall not be
construed as creating a trust or fiduciary relationship between the Company, the
Board, the Committee, and any other person.
SECTION 5. GRANTS OF STOCK
On July 1, 2004, and continuing on the first day of July of each
succeeding year, each Non-employee Director shall automatically, without further
action by the Committee, receive a grant of shares of common stock of the
Company having an aggregate Market Value of $25,000.00. Notwithstanding anything
to the contrary herein, if at any time the number of shares of Stock otherwise
issuable to the Non-employee Directors exceeds the number of authorized shares
of Stock remaining available under the Plan, the available shares shall be
allocated among the Non-employee Directors in proportion to the number of shares
they would otherwise be entitled to receive. No fractional shares of Stock will
be issued pursuant to any grant, but in lieu thereof, fractional shares will be
rounded down to the nearest whole number of shares. "Market Value" per share of
common stock shall be the average of the daily closing prices on the Nasdaq
Stock Market for the ten consecutive trading days commencing fifteen trading
days before the first day of July of each year.
SECTION 6. LIMITATION OF RIGHTS
6.1. No Right to Continue as a Director. Neither this Plan, the award
of any Stock, nor any other action taken pursuant to this Plan constitutes or is
evidence of any agreement or understanding, express or implied, that the Company
will retain a Non-employee Director for any period of time or at any particular
rate of compensation.
6.2. No Rights to Receive Stock After Eligibility Ceases. A Director
has no rights to receive Stock under the Plan, and will not receive any Stock,
or any part thereof once he or she (i) becomes an employee of the Company or any
subsidiary of the Company; or (ii) ceases to be a Director for any reason;
provided, however, in the event of a Non-employee Director's death before the
issuance to the Non-employee Director of all of his or her Stock, the balance of
the Stock shall be transferred to the beneficiary or beneficiaries designated in
writing by the Non-
2
<page>
employee Director, or if no designation has been made, to the estate of the
Non-employee Director.
6.3. Rights of the Company. The Plan shall not affect in any way the
right or power of the Company to issue additional shares of stock; to make
adjustments, reclassifications, reorganizations or changes in its capital or
business structure; to participate in a merger, consolidation or share exchange
with another entity; or to dissolve, liquidate, or sell or transfer all or any
part of its business or assets.
6.4. No Stockholder Rights. A Director does not have any rights
whatsoever as a stockholder with respect to any grant of Stock until the date of
the issuance of a stock certificate for the shares of Stock granted. No
adjustment will be made for dividends or other rights with respect to which a
record date occurs prior to the date Stock is issued to a Director.
6.5. Rights Not Assignable. Except for transfers of Stock permitted by
Section 9, the rights and benefits of a Non-employee Director under the Plan are
not transferable and shall not be subject in any manner to alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt to do so
shall be void. No such right or benefit, prior to receipt thereof pursuant to
the provisions of this Plan ,shall be in any manner liable for or subject to the
debts, contracts or liabilities of a Non-employee Director. During the lifetime
of a Director, Stock granted under the Plan will be issued only to that
Director.
SECTION 7. ADJUSTMENTS
If any change is made to the Stock by reason of merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, combination of
shares, exchange of shares, change in corporate structure or otherwise,
including, but not limited to, any change whereby the Stock is converted into or
exchanged for another class of shares or shares of another entity, appropriate
and comparable adjustments will be made to the number and kind of shares subject
to the Plan. All such adjustments will be made in such a manner as to avoid
dilution or enlargement of the rights of Directors under this Plan.
SECTION 8. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Board of Directors may at any time and from time to time suspend or
terminate this Plan or revise or amend it in any respect whatsoever; provided,
however, that without approval of the stockholders, no revision or amendment
shall change the selection or eligibility of directors to receive Stock grants
under this Plan, the number of shares of Stock subject to any such grants or the
Plan itself, or materially increase the benefits accruing to participants under
this Plan; and further provided that the Plan provisions relating to the amount,
price and timing of grants of Stock shall not be amended.
3
<page>
SECTION 9. TRANSFER RESTRICTIONS
The obligations of the Company to deliver shares of Stock under this
Plan shall be subject to all applicable laws, rules and regulations and such
approvals by any governmental agency as may be required, including, without
limitation, compliance with the Securities Act of 1933, as amended, The Nasdaq
Stock Market or any other national securities exchange upon which the Stock is
listed. Each share of Stock issued under this Plan shall be non-assignable and
non-transferable other than by will or the laws of descent and distribution and
may not be sold, pledged, hypothecated, assigned or transferred until the
Non-employee Director holding such Stock ceases to be a Director of the Company,
except that the Committee may permit a transfer of Stock subject to the
condition that the Committee receive evidence satisfactory to it that the
transfer is being made for essentially estate and/or tax planning purposes or a
gratuitous or donative purpose and without consideration (other than nominal
consideration or in exchange for an interest in a qualified transferee). In
connection with any issuance of Stock or transfer thereof, the person acquiring
the Stock shall, if requested by the Company, give assurances satisfactory to
the Company regarding such matters as the Company may deem desirable to assure
compliance with all legal requirements. The transfer restrictions in this
Section 9 shall not apply to transfers to the Company or transfers pursuant to a
court order.
SECTION 10. LIMITATION OF LIABILITY
No member of the Board or the Committee shall be liable for any
determination made in good faith with respect to the Plan or any Stock granted
under it. If a member of the Board or the Committee is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of anything done or not done by him or her in such capacity under or with
respect to the Plan, the Company shall indemnify such member to the fullest
extent permitted under the Company's governing instruments with respect to the
indemnification of Directors.
SECTION 11. WITHHOLDING
To the extent required by applicable federal, state, local or foreign
law, a Non-employee Director shall make arrangements satisfactory to the Company
for the payment of any withholding tax obligations that arise in connection with
the Plan. The Company shall not be required to issue any Stock under the Plan
until such obligations are satisfied. A Non-employee Director may satisfy any
such withholding obligation by (i) paying cash to the Company, (ii) having the
Company retain the number of shares of Stock or (iii) tendering to the Company
the number of shares of Stock, in either case, whose fair market value equals
the amount required to be withheld. The value of the shares of Stock to be
withheld, or delivered to the Company, shall be based on the market value of the
Stock on the date the amount of tax to be withheld is determined. Any shares of
common stock withheld shall not reduce the number of shares of common stock
authorized for issuance under this Plan, and any shares of common stock
delivered to the Company shall not be added to the shares of common stock
authorized for issuance under the Plan.
4
<page>
SECTION 12. EFFECTIVE DATE AND DURATION OF PLAN
This Plan shall become effective immediately following approval by the
Company's stockholders at the 2004 Annual Meeting of Stockholders and will
remain in effect until terminated by the Board; provided that no shares of Stock
shall be granted after the total number of shares authorized for issuance under
this Plan have been issued.
SECTION 13. GOVERNING LAW
The Plan will be governed, and its provisions construed, in accordance
with the laws of the State of Texas and applicable federal law, without regard
to conflicts of law.
5