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): September 23, 2004
PARALLEL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-13305 75-1971716
(Commission file number) (IRS employer identification number)
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)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into Material Definitive Agreement.
On September 22, 2004, the Compensation Committee of the Board of
Directors of Parallel Petroleum Corporation approved and adopted an incentive
and retention plan (the "Plan") for Parallel's officers and employees. On
September 24, 2004, the Board of Directors adopted the Plan upon recommendation
by the Committee.
The following is a summary of the material features of the Plan. This
summary does not purport to be complete and is qualified in its entirety by
reference to the terms of the Plan, which is attached to this Current Report on
Form 8-K as Exhibit 10.1.
Purpose
The purpose of the Plan is to advance the interests of Parallel and its
stockholders by providing officers and employees with incentive bonus
compensation which is linked to a corporate transaction. As defined in the Plan,
a corporate transaction means:
. an acquisition of Parallel by way of purchase, merger,
consolidation, reorganization or other business combination,
whether by way of tender offer or negotiated transaction, as a
result of which Parallel's outstanding securities are exchanged
or converted into cash, property and/or securities not issued by
Parallel;
. a sale, lease, exchange or other disposition by Parallel of all
or substantially all of its assets;
. the stockholders of Parallel approving a plan or proposal for the
liquidation or dissolution of Parallel; or
. any combination of any of the foregoing.
The Plan also recognizes the possibility of a proposed or threatened
transaction and the need to be able to rely upon officers and employees
continuing their employment, and that Parallel be able to receive and rely upon
their advice as to the best interests of Parallel and its stockholders without
concern that they might be distracted by the personal uncertainties and risks
created by any such transaction. In this regard, the Plan also provides for a
retention payment upon the occurrence of a change of control, as defined below.
Eligibility
All members of Parallel's "executive group" are participants in the
Plan. For purposes of the Plan, the "executive group" includes all executive
officers of Parallel and any other officer employee of Parallel selected by the
Compensation Committee in its sole discretion. In addition, the Committee may
designate other non-officer employees of Parallel as participants in the Plan
who will also be eligible to receive a performance bonus upon the occurrence of
a corporate transaction or a retention payment upon the occurrence of a change
of control.
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Performance and Retention Payments
Generally, the Plan provides for:
. the payment of a one-time performance bonus to eligible officers
and employees upon the occurrence of a corporate transaction; or
. a one time retention payment upon a change of control of
Parallel. A change of control is generally defined as the
acquisition of beneficial ownership of 60% or more of the voting
power of Parallel's outstanding voting securities by any person
or group of persons, or a change in the composition of the Board
of Directors of Parallel such that the individuals who, at the
effective date of the Plan, constitute the Board of Directors
cease for any reason to constitute at least a majority of the
Board of Directors.
In the case of a corporate transaction, the total amount of cash
available for performance bonuses is equal to the per share price received by
all stockholders minus a base price of $3.73 per share, multiplied by 1,080,362
shares. The $3.73 base price represents the volume weighted average closing
price per share of Parallel's common stock for the fiscal quarter ended December
31, 2003 and the 1,080,362 shares represents the weighted average number of
shares of common stock (basic) outstanding for the same period. As an example,
if the stockholders of the company received a per share price of $6.00 in a
merger, tender offer or other corporate transaction, the total amount of cash
available for payment to all plan participants would be [$6.00 - $3.73] x
1,080,362, or $2,452,422. If a change of control occurs, the total amount of
cash available for retention payments to all plan participants is equal to the
per share closing price of Parallel's common stock on the day immediately
preceding the change of control minus the base price of $3.73 per share,
multiplied by 1,080,362.
If a corporate transaction or change of control occurs, the
Compensation Committee will allocate for payment to each member of the executive
group such portion of the total performance bonus or retention payment as the
Compensation Committee determines in its sole discretion. After making these
allocations, if any part of the total performance bonus or retention payment
amount remains unallocated, the Compensation Committee may allocate any
remaining portion of the performance bonus or retention payment among all other
participants in the Plan. After all allocations of the performance bonus have
been made, each participant's proportionate share of the performance bonus or
retention payment will be paid in a cash lump sum.
Unfunded Obligation
The Plan is entirely unfunded and the Plan makes no provision for
segregating any of Parallel's assets for payment of any amounts under the Plan.
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Rights Nontransferable
A participant's rights under the Plan are not transferable.
Administration
The Plan is administered by the Compensation Committee of the Board of
Directors of Parallel. The Committee has the power, in its sole discretion, to
take such actions as may be necessary to carry out the provisions and purposes
of the Plan. The Compensation Committee has the authority to control and manage
the operation and administration of the Plan and has the power to:
. designate the officers and employees of Parallel and its
subsidiaries who participate in the Plan, in addition to the
"Executive Group";
. maintain records and data necessary for proper administration of
the Plan;
. adopt rules of procedure and regulations necessary for the proper
and efficient administration of the Plan;
. enforce the terms of the Plan and the rules and regulations it
adopts;
. employ agents, attorneys, accountants or other persons; and
. perform any other acts necessary or appropriate for the proper
management and administration of the Plan.
Termination
The Plan automatically terminates and expires on the date participants
receive a performance bonus or retention payment.
Accounting Treatment
Parallel will account for the Plan under the provisions of Statement of
Financial Accounting Standards No. 5, Accounting for Contingencies ("SFAS No.
5"). Under the provisions of SFAS No. 5, recognizing loss contingencies as
liabilities in Parallel's financial statements is dependent upon the likelihood
of an event or events occurring or not occurring in the future. SFAS No. 5
further stipulates that the likelihood of loss contingencies occurring should be
categorized as either probable, possible, or remote. If the likelihood of the
event occurring or not occurring is determined to be probable and the amount of
the liability is readily determinable, Parallel will record the liability and
related expense in the financial statements. If the likelihood of an event
occurring or not occurring is determined to be possible, disclosure will only be
made of the contingency in the notes
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to Parallel's financial statements. If the likelihood of an event occurring or
not occurring is determined to be remote, no disclosure will be made. Parallel
has determined that the likelihood of the occurrence of a corporate transaction
or a change of control, as defined in the Plan, is possible, and the ultimate
liability to Parallel is not readily determinable because of the inability to
predict Parallel's stock price on the future date of any corporate transaction
or change of control. Therefore, the terms and conditions of the Plan will be
disclosed in Parallel's financial statements, but no liability will be recorded
until such time as a corporate transaction or a change of control becomes
probable and the amount of the liability becomes determinable.
A copy of the Plan is filed as Exhibit 10.1 to this Current Report on
Form 8-K.
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Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description
----------- ---------------
10.1 Parallel Petroleum Corporation
Incentive and Retention Plan
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SIGNATURE
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 thereunto duly authorized.
Dated: September 28, 2004
PARALLEL PETROLEUM CORPORATION
By: /s/ Larry C. Oldham
------------------------------
Larry C. Oldham, President and Chief
Executive Officer
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Exhibit 10.1
PARALLEL PETROLEUM CORPORATION
INCENTIVE AND RETENTION PLAN
Purpose
The purpose of the Parallel Petroleum Corporation Incentive and
Retention Plan (the "Plan") is to advance the interests of Parallel Petroleum
Corporation, a Delaware corporation, and its stockholders by providing certain
officers and employees with incentive bonus compensation which is linked to the
sale of the Company (as defined in Article I hereof) or all or substantially all
of the assets of the Company, a merger or business combination or other
transaction. In addition, recognizing the possibility of a proposed or
threatened transaction, the aggregate effect of which may be a Corporate
Transaction or a Change of Control (both as defined in Article I hereof), the
Board of Directors of the Company and the Compensation Committee of the Board
have determined that it is imperative that the Company be able to rely upon
participating officers and employees to continue in their employment by the
Company or its Subsidiaries (as defined in Article I hereof), and that the
Company be able to receive and rely upon their advice as to the best interests
of the Company and its stockholders without concern that they might be
distracted by the personal uncertainties and risks created by any such
transaction.
ARTICLE I
DEFINITIONS
In addition to the terms defined in the preamble and elsewhere in this
Plan, the following definitions are applicable throughout this Plan:
"Affiliate" means with respect to any Person, any other Person who is,
or would be deemed to be, an "affiliate" or an "associate" of such Person within
the respective meanings given to such terms in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), as in effect on the date of
this Agreement.
"Base Price" means the volume weighted average closing price of the
Company's common stock for the fiscal quarter ended December 31, 2003, or $3.73
per share.
"Base Shares" means the weighted average shares of common stock (basic)
of the Company outstanding for the fiscal quarter ended December 31, 2003, or
1,080,362 shares.
A person will be deemed the "Beneficial Owner" of any securities which
such Person or any of such Person's Affiliates would be deemed to beneficially
own, directly or indirectly,
within the meaning given to such term in Rule 13d-3 under the 1934 Act as in
effect on the date of this Agreement.
"Board" means the Board of Directors of the Company.
"Change of Control" means the occurrence of either one or both of the
following events:
(a) the acquisition of beneficial ownership (within the meaning of Rule
13d-3 under the 1934 Act) of an aggregate of 60% or more of the Voting Power of
the Company's outstanding Voting Securities by any person or group (as such term
is used in Rule 13d-5 under the 1934 Act) who beneficially owned less than 50%
of the Voting Power of the Company's outstanding Voting Securities on the date
of this Plan; provided, however, that notwithstanding the foregoing, an
acquisition shall not constitute a Change in Control hereunder if the acquiror
is (i) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company and acting in such capacity, or (ii) a Subsidiary of the
Company or a corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of Voting
Securities of the Company; or
(b) A change in the composition of the Board such that the individuals
who, as of the effective date of this Plan, constitute the Board (such Board
shall be hereinafter referred to as the "Incumbent Board") cease for any reason
(other than by way of voluntary resignation) to constitute at least a majority
of the Board; provided, however, that for purposes of this definition, any
individual who becomes a member of the Board subsequent to the effective date of
this Plan, whose election, or nomination for election, by the Company's
stockholders was approved by a vote of at least a majority of those individuals
who are members of the Board and who were also members of the Incumbent Board
(or deemed to be such pursuant to this proviso) shall be considered as though
such individual were a member of the Incumbent Board; and provided, further
however, that any such individual whose initial assumption of office occurs as a
result of or in connection with either an actual or threatened election contest
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so considered as a member
of the Incumbent Board.
"Change of Control Date" means the date on which a Change of Control
occurs.
"Committee" shall have the meaning given to such term in Section 2.1 of
this Plan.
"Company" means Parallel Petroleum Corporation or any Successor.
"Corporate Transaction" means the occurrence of any one or more of the
following events:
(a) an acquisition of the Company by any Person or group of Persons
(other than the Participants) by way of purchase, merger, consolidation,
reorganization or other business combination, whether by way of tender offer or
negotiated transaction, as a result of which the outstanding securities of the
Company are exchanged or converted into cash, property and/or
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securities not issued by the Company (other than a merger, consolidation or
reorganization the sole purpose of which is to change the Company's domicile
solely within the United States, and other than a merger, consolidation or
reorganization of the Company in which the holders of the securities of the
Company immediately prior to such transaction have the same proportionate
ownership of the securities of the surviving corporation immediately after such
transaction);
(b) a sale, lease, exchange or other disposition by the Company
(excluding disposition by way of pledge, hypothecation or foreclosure) to any
Person or group of Persons (other than the Participants) in one transaction or a
series of related transactions, of all or substantially all of the assets of the
Company;
(c) the stockholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company; or
(d) any combination of any of the foregoing.
"Executive Group" means all executive officers of the Company and any
other officer employee of the Company or its Subsidiaries selected by the
Compensation Committee in its sole discretion for participation in the Plan.
"Market Value" means, as of any specified date, an amount equal to the
per share closing price of the Company's common stock on the Nasdaq Stock Market
at the close of business on the day immediately preceding the Change of Control
Date. If the common stock is not publicly traded on the Nasdaq Stock Market at
the time a determination of its value is required to be made, the market value
of the common stock shall be the per share closing price reported on the stock
exchange composite tape of the exchange on which the common stock is then
publicly traded, or if the common stock is not publicly traded on any such other
exchange, the determination of fair market value of the common stock shall be
made by the Committee in such manner as it deems appropriate.
"Participant" means a member of the Executive Group and any other
employee of the Company selected by the Compensation Committee in its sole
discretion for participation in the Plan.
"Performance Bonus" means a positive amount determined in accordance
with the following formula:
[Transaction Proceeds - Base Price] x Base Shares
"Person" means any natural person, corporation, trust, company,
organization, association, partnership or other entity of any kind, and any
successors or assigns thereof, and shall also include any group of Persons
acting jointly or in concert.
"Proportionate Share" means the amount of the Performance Bonus or
Retention Payment allocated to each Participant upon the occurrence of a
Corporate Transaction or Change
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of Control, as the case may be, as provided for in Section 4.1 and Section 4.2
of this Plan.
"Retention Payment" means a positive amount determined in accordance
with the following formula:
[Market Value - Base Price] x Base Shares
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Company or another Subsidiary.
"Successor" means any Person into or with which Parallel shall be
merged, consolidated or otherwise combined, or any Person which acquires all or
substantially all the assets of Parallel and in connection therewith assumes all
or substantially all of Parallel's obligations and liabilities, including
Parallel's obligations under this Agreement.
"Transaction Date" means the date on which a Corporate Transaction is
consummated. If a Corporate Transaction occurs in a manner providing for
multiple closings or steps, the Transaction Date will be deemed to be the date
on which the first closing or step is consummated and the Corporate Transaction
will be deemed to have been consummated in its entirety on such Transaction
Date.
"Transaction Proceeds" means the amount determined in clause (i), (ii)
or (iii), whichever is applicable, as follows: (i) the price per share of common
stock offered to stockholders of the Company in any merger, consolidation, share
exchange, reorganization, combination, sale of assets, liquidation or
dissolution transaction, (ii) the price per share of common stock offered to
stockholders of the Company in any tender offer or exchange offer, or (iii) if a
transaction occurs other than as described in clause (i) or (ii), the per share
price determined in good faith by the Committee. If the consideration offered to
holders of common stock of the Company in any transaction consists of anything
other than cash, the Committee shall determine in good faith the fair cash
equivalent of the portion of the consideration offered which is other than cash.
"Voting Securities" means all securities of a company entitling the
holders thereof to vote in an annual election of directors (without
consideration of the rights of any class of stock other than the common stock to
elect directors by a separate class vote); and a specified percentage of the
"Voting Power" of a company means such number of the Voting Securities as will
enable the holders thereof to cast such percentage of all the votes which could
be cast in an annual election of directors (without consideration of the rights
of any class of stock other than the common stock to elect directors by a
separate class vote).
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ARTICLE II
ADMINISTRATION
2.1 Administration by Compensation Committee. Subject to the terms of
this Article II, this Plan shall be administered by the Compensation Committee
(the "Committee") of the Board of Directors of the Company.
2.2 Committee Action. A majority of the Committee shall constitute a
quorum, and the act of a majority of the members of the Committee present at a
meeting at which a quorum is present shall be the act of the Committee. Any
action taken by the Committee may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by all of the members of the Committee.
2.3 Committee's Powers. The Committee shall have the power, in its sole
discretion, to take such actions as may be necessary to carry out the provisions
and purposes of this Plan and shall have the authority to control and manage the
operation and administration of this Plan. In order to effectuate the purposes
of this Plan, the Committee shall have the discretionary power and authority to
construe and interpret this Plan, to supply any omissions therein, to reconcile
and correct any errors or inconsistencies, to decide any questions in the
administration and application of this Plan, and to make equitable adjustments
for any mistakes or errors made in the administration of the Plan. All such
actions or determinations made by the Committee, in good faith, shall not be
subject to review by anyone, but shall be final, binding and conclusive on all
persons ever interested hereunder.
In construing this Plan and in exercising its powers, the Committee
will attempt to ascertain the purpose of any provision in question, and when the
purpose is known or reasonably ascertainable, the purpose will be given effect
to the extent feasible. Likewise, the Committee is authorized to determine all
questions with respect to the individual rights of all Participants under this
Plan (which need not be identical), including, but not limited to, all issues
with respect to eligibility. The Committee shall have all powers necessary or
appropriate to accomplish its duties under this Plan including, but not limited
to, the power and duty to:
(a) designate the officers and employees of the Company and
its Subsidiaries who shall participate in this Plan, in addition to the
"Executive Group";
(b) maintain complete and accurate records and data in the
manner necessary for proper administration of this Plan;
(c) adopt rules of procedure and regulations necessary for the
proper and efficient administration of this Plan, provided the rules and
regulations are not inconsistent with the terms of this Plan as set out herein.
The Committee shall exercise its discretion hereunder in a nondiscriminatory
manner;
(d) enforce the terms of this Plan and the rules and
regulations it adopts;
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(e) employ agents, attorneys, accountants or other Persons
(who also may be employed by or represent the Company) for such purposes as the
Committee considers necessary or desirable in connection with its duties
hereunder; and
(f) perform any and all other acts necessary or appropriate
for the proper management and administration of this Plan.
ARTICLE III
PARTICIPATION
All members of the Executive Group are Participants in this Plan and
are eligible to receive a Proportionate Share of the Performance Bonus or
Retention Payment upon the occurrence of a Corporate Transaction or a Change of
Control as provided in this Plan. The Committee may from time to time select and
designate (with the advice and assistance of the Executive Group, if requested
by the Committee) other non-officer employees of the Company and its
Subsidiaries as Participants in the Plan who shall also be eligible to receive a
Proportionate Share of the Performance Bonus or Retention Payment. Participants
in the Plan may also participate in other incentive or benefit plans of the
Company or any Subsidiary, subject to the terms and conditions of such plans.
ARTICLE IV
BONUS AND RETENTION PAYMENTS
4.1 Performance Bonus. Subject to the terms and conditions of Article
VIII of this Plan, on the Transaction Date, or as soon as practicable
thereafter, the Company shall set aside an amount equal to the Performance
Bonus. The Committee, with the assistance and non-binding recommendations of one
designee appointed by the Executive Group, shall then allocate for payment to
and among each member of the Executive Group such portion of the Performance
Bonus as the Committee shall determine in its sole discretion. After making such
allocations, and if and to the extent any part of the Performance Bonus remains
unallocated, the Committee, with the assistance and non-binding recommendations
of the designee appointed by the Executive Group, shall next allocate any such
remaining portion of the Performance Bonus among all other Participants in the
Plan. After all allocations of the Performance Bonus have been made, each
Participant's Proportionate Share of the Performance Bonus shall be paid in a
cash lump sum on the Transaction Date or as soon as practicable thereafter.
4.2 Retention Payment. Subject to the terms and conditions of Article
VIII of this Plan, on the Change of Control Date, or as soon as practicable
thereafter, the Company shall set aside an amount equal to the Retention
Payment. The Committee, with the assistance and non-binding recommendations of
one designee appointed by the Executive Group, shall then allocate for payment
to and among each member of the Executive Group such portion of the Retention
Payment as the Committee shall determine in its sole discretion. After making
such allocations, and if and to the extent any part of the Retention Payment
remains unallocated, the Committee, with the assistance and non-binding
recommendations of the designee appointed by the
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Executive Group, shall next allocate any such remaining portion of the Retention
Payment among all other Participants in the Plan. After all allocations of the
Retention Payment have been made, each Participant's Proportionate Share of the
Retention Payment shall be paid in a cash lump sum on the Change of Control Date
or as soon as practicable thereafter.
ARTICLE V
NONALIENATION
A Participant may not alienate, assign, pledge, encumber, transfer,
sell or otherwise dispose of any rights or benefits awarded hereunder prior to
the actual receipt thereof; and any attempt by any Participant to alienate,
assign, pledge, encumber, transfer, sell or otherwise dispose of any rights or
benefits prior to such receipt, or any levy, attachment, execution or similar
process upon any rights or benefits conferred hereunder will immediately be null
and void.
ARTICLE VI
UNFUNDED OBLIGATION
The Plan shall at all times be entirely unfunded and no provision shall
at any time be made with respect to segregating assets of the Company for
payment of any amounts hereunder. This Plan and any setting aside of amounts by
the Company with which to discharge its obligations hereunder shall not be
deemed to create a trust of any kind or a fiduciary relationship between the
Company and a Participant or any other Person. The benefits provided under this
Plan shall be a general, unsecured obligation of the Company payable solely from
the general assets of the Company, and neither any Participant nor any
Participant's beneficiaries or estate shall have any interest in any particular
assets of the Company or any Subsidiary by virtue of this Plan. Participants and
beneficiaries shall have only the rights of a general unsecured creditor of the
Company.
ARTICLE VII
REIMBURSEMENT OF EXPENSES
If, after the occurrence of a Corporate Transaction or a Change of
Control, a Participant brings any action, whether at law or in equity, to obtain
or enforce any payment, benefit or right provided by this Plan, such Participant
shall be entitled to recover reasonable attorneys' fees and related expenses
upon issuance by a court of competent jurisdiction of a final non-appealable
order to the effect that such Participant is the prevailing party.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The Company will have no obligation to pay or cause to be paid to any
Participant the Performance Bonus or Retention Payment described herein if (a)
the payment of the Performance Bonus or Retention Payment would, in the sole
determination of the Committee,
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cause the Company to be in violation or breach of any law, statute, rule or
regulation or any determination of an arbitrator or a court or other
governmental authority, or any covenant, limitation, prohibition or restriction
of any nature contained in any agreement to which the Company is a party or by
which it is bound, or (b) Participant dies, retires, resigns or is terminated or
removed by the Company as an officer or employee of the Company or any of its
Subsidiaries prior to the date on which a Corporate Transaction or Change of
Control occurs, as applicable, except that if a Corporate Transaction or Change
of Control occurs at any time during the period of one year following the date a
Participant ceases to be an employee or officer of the Company for any reason
(other than by reason of such Participant's termination of employment or removal
from office by the Company, whether with or without cause), such former
Participant (or such former Participant's estate) may, but shall not be entitled
to, be designated by the Committee in its sole discretion as a Participant
eligible to receive the Performance Bonus or Retention Payment, as applicable.
ARTICLE IX
PAYMENT OF OBLIGATION ABSOLUTE
Subject to the terms and conditions of Article VIII of this Plan, the
obligations of the Company to pay the Performance Bonus or Retention Payment
described in Article IV of this Plan shall be absolute and unconditional and
will not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right that the Company may
have against a Participant. In no event will a Participant be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to Participants under any of the provisions of this Plan, nor will the
amount of any payment hereunder be reduced by any compensation earned by
Participants as a result of employment by another employer.
ARTICLE X
NO RIGHT TO CONTINUED EMPLOYMENT
This Plan does not, and shall not be construed to, give any Participant
any right to remain in the employ of the Company or any Subsidiary. The Company
and its Subsidiaries reserve the right to terminate any employee or Participant
at any time, with or without cause.
ARTICLE XI
TERM OF PLAN
Unless earlier terminated in accordance with Section 12.5 of this Plan,
this Plan shall automatically terminate and expire upon the date on which all
Participants have received their respective Proportionate Share of the
Performance Bonus or their respective Retention Payment following the occurrence
of a Corporate Transaction or Change of Control, as the case may be. Upon
termination of this Plan, Participants shall have no rights, benefits or claims
under or pursuant to this Plan.
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ARTICLE XII
MISCELLANEOUS
12.1 No Adverse Actions. Upon the occurrence of a Corporate Transaction
or a Change of Control, no action, including, but not by way of limitation, the
amendment, suspension or termination of this Plan, shall be taken which would
adversely affect the rights of Participants or the operation of this Plan with
respect to the Performance Bonus or Retention Payment to which Participants may
have become entitled hereunder as a result of a Corporate Transaction or Change
of Control.
12.2 Simultaneous Transactions. If a transaction or event or series of
related transactions or events constitutes both a Corporate Transaction and a
Change of Control, then for purposes of this Plan, a Corporate Transaction shall
be deemed to have occurred.
12.3 Recapitalization or Reorganization.
(a) The existence of the Plan shall not affect in any way the right or
power of the Board or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of the Company,
any issue of debt or equity securities, the dissolution or liquidation of the
Company or any sale, lease, exchange or other disposition of all or any part of
its assets or business or any other corporate act or proceeding.
(b) If 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 Base Shares (i)
in the event of an increase of the number of outstanding shares of common stock
shall be proportionately increased, and the Base Price shall be proportionately
reduced, and (ii) in the event of a reduction in the number of outstanding
shares of common stock shall be proportionately reduced, and the Base Price
shall be proportionately increased.
(c) If the Company after the date hereof recapitalizes or otherwise
changes its capital structure, and such recapitalization or change in corporate
structure would in the opinion of the Committee materially affect the rights of
Participants, the Base Price and the number of Base Shares shall be adjusted in
such manner, if any, and at such time as the Committee, in good faith, may
determine to be equitable in the circumstances.
(d) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares of
stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefore, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, and in any case whether or not for fair value, shall not
affect, and no
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adjustment by reason thereof shall be made with respect to, the number of Base
Shares or the Base Price.
12.4 Construction of Agreement. Nothing in this Plan shall be construed
to amend any provision of any other plan or policy of the Company. This Plan is
not and nothing herein shall be deemed to create, a commitment of continued
service by any Participant as an officer or employee of Parallel or in any other
capacity. The benefits provided under this Plan are in addition to any other
compensation agreements or arrangements that the Company may have with the
Participants.
12.5 Amendment or Discontinuance. At any time and from time to time, by
action of the Board, subject to the limitations hereinafter provided, any or all
provisions of the Plan may be amended. Each amendment of the Plan shall be in
writing and shall become effective on the date specified therein. No amendment
of the Plan may be made which shall deprive any Participant of amounts that may
become payable with respect to events occurring after the date of this Plan;
provided, however, and notwithstanding the foregoing, the Plan may be amended
from time to time by the Board if, in the sole discretion of the Board, any such
amendment is necessary, advisable or required in order to comply with any law,
statute, rule or regulation or any determination of an arbitrator or a court or
other governmental entity.
The Plan may not be discontinued or terminated by the Board, but shall
continue until terminated as provided in Article XI; provided, however, and
notwithstanding the foregoing, the Plan may be discontinued or terminated by the
Board if, in the sole discretion of the Board, such discontinuation or
termination is necessary, advisable or required in order to comply with any law,
statute, rule or regulation or any determination of an arbitrator or a court or
other governmental entity.
12.6 Successors.
(a) This Plan is binding upon any Successor to the Company,
and any Person that acquires substantially all of the Company's assets or
substantially all its business (whether direct or indirect, by purchase, merger,
consolidation or otherwise), in the same manner and to the same extent that the
Company would be obligated under this Plan if no succession had taken place.
(b) This Plan inures to the benefit of, and is enforceable by,
a Participant's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If a Participant dies
after the occurrence of a Corporate Transaction or Change of Control, as the
case may be, but before the receipt of the Performance Bonus or Retention
Payment payable hereunder with respect to events occurring prior to death, such
Performance Bonus or Retention Payment shall be paid in accordance with the last
beneficiary designation executed by the Participant and filed with the Company.
If no beneficiary form has been filed with the Company, any payment due to a
Participant hereunder shall be paid to the deceased Participant's estate.
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12.7 Taxes. The Company will withhold from all payments due to a
Participant (or such Participant's beneficiary or estate) hereunder all taxes
which, by applicable federal, state, local or other law, the Company is required
to withhold therefrom.
12.8 Indemnification of Committee. No member of the Committee nor any
director, officer or employee of the Company or any Subsidiary acting on behalf
of the Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and each director, officer or employee of the Company
or any Subsidiary acting on its behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company with respect to any such action,
determination or interpretation.
12.9 Governing Law. This Plan will be governed by and construed in
accordance with the laws of the State of Texas.
12.10 Headings. The headings of the Sections herein are included solely
for reference convenience, and will not in any way affect the meaning or
interpretation of this Agreement.
12.11 Expenses of the Plan. All costs and expenses of the adoption and
administration of this Plan shall be borne by the Company and none of such
expenses shall be charged to any Participant.
12.12 Date of Plan. The effective date of this Plan is September 23,
2004, the date of adoption by the Board.
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