Exhibit 10.2
PARALLEL PETROLEUM CORPORATION
2008 LONG-TERM INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
1. Grant of Option .
Pursuant to the Parallel Petroleum Corporation 2008 Long-Term
Incentive Plan (the “ Plan ”), as adopted
by Parallel Petroleum Corporation, a Delaware corporation (the
“ Company ”), the Company grants to
(the “
Participant ”)
an
option (sometimes referred to herein as the (“ Stock
Option ”) to purchase from the Company a total of
full shares of Common Stock, $0.01 par value per share, of the
Company (the “ Optioned Shares ”) at an
“ Option Price ” equal to $
per share (being the Fair Market Value per share of the Common
Stock on this Date of Grant), in the amounts, during the periods
and upon the terms and conditions set forth in this
Agreement.
The “ Date of
Grant ” of this Stock Option is
. The “ Option Period ” shall commence on
the Date of Grant and shall expire on the date immediately
preceding the tenth (10 th ) anniversary
of the Date of Grant. The Stock Option granted under this Agreement
is not intended to be, and shall not be treated as, an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the “ Code
”). This Stock Option is intended to comply with the
provisions governing nonqualified stock options under the final
Treasury Regulations issued on April 17, 2007, in order to
exempt this Stock Option from application of Section 409A of
the Code.
2. Subject to Plan .
This Stock Option and its exercise are subject in all respects to
the terms and conditions of the Plan, and the terms of the Plan
shall control to the extent not otherwise inconsistent with the
provisions of this Agreement. The capitalized terms used herein
that are defined in the Plan shall have the same meanings defined
for and assigned to them in the Plan. In addition, this Stock
Option is subject to any rules promulgated pursuant to the Plan by
the Board or the Committee and communicated to the Participant in
writing.
3. Vesting; Time of
Exercise . Except as otherwise provided in the Plan or as
specifically provided elsewhere in this Agreement, this Stock
Option shall be vested and exercisable no sooner than as
follows:
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| Exercise Date |
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Number of Shares |
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1.
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One (1) year from the Date of
Grant |
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25.00% of the total Optioned Shares
under the Stock Option |
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2.
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Two (2) years from the Date of
Grant |
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An additional 25.00% of the total
Optioned Shares under the Stock Option |
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3.
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Three (3) years from the Date of
Grant |
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An additional 25.00% of the total
Optioned Shares under the Stock Option |
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4.
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Four (4) years from the Date of
Grant |
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The remaining 25.00% of the total
Optioned Shares under the Stock Option |
provided , however , that in the event of: (i) a
Change of Control, (ii) the Participant’s death, or
(iii) the Participant’s Termination of Service by reason
of Total and Permanent Disability, all shares of Common Stock under
this Stock Option which have not previously vested and become
exercisable shall automatically be accelerated and become vested
and exercisable in full, without regard to the vesting limitations
set forth above.
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4. |
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Term; Forfeiture . |
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(a) |
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Except as otherwise provided in this Agreement, to the extent
the unexercised portion of this Stock Option relates to Optioned
Shares that are not vested on the date of Participant’s
Termination of Service, the Stock Option will terminate on such
date. The unexercised portion of this Stock Option that relates to
Optioned Shares that are vested will terminate at the first to
occur of the following: |
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(i) |
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5 p.m. on the date the Option Period terminates; |
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(ii) |
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5 p.m. on the date which is twelve (12) months following
the date of the Participant’s Termination of Service with the
Company or a Subsidiary by reason of the Participant’s death
or Total and Permanent Disability; |
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(iii) |
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Immediately upon the Participant’s Termination for Cause
(as defined herein); |
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(iv) |
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5 p.m. on the date which is three (3) months following the
date of the Participant’s Termination of Service for any
reason other than as set forth in subparagraphs (a)(ii) or (a)(iii)
above of this Section 4 . |
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(v) |
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5 p.m. on the date the Company causes any portion of the Stock
Option to be forfeited pursuant to Section 7
hereof. |
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(b) |
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For purposes of Sections 3 and 4 , “
Cause ” shall mean (i) the
Participant’s commission of a dishonest or fraudulent act in
connection with the Participant’s service to the Company, or
the misappropriation of Company property; (ii) the
Participant’s conviction of, or plea of nolo contendere to, a
felony or crime involving dishonesty; (iii) the
Participant’s inattention to duties, unsatisfactory
performance, or failure to perform the Participant’s duties
hereunder, provided in each case the Company gives the Participant
written notice and thirty (30) days to correct the
Participant’s performance to the Company’s
satisfaction; (iv) a substantial failure to comply with the
Company’s policies; (v) a material and willful breach of
the Participant’s fiduciary duties in any material respect,
provided in each case the Company gives the Participant written
notice and thirty (30) days to correct; (vi) the
Participant’s failure to comply in any material respect with
any legal written directive of the Board; or (vii) any act or
omission of the Participant which is of substantial detriment to
the Company because of the Participant’s intentional failure
to comply with any statute, rule or regulation, except any act or
omission believed by the Participant in good faith to have been in
or not opposed to the best interest of the Company (without intent
of the Participant to gain, directly or indirectly, a profit to
which the Participant was not legally entitled). Any determination
of whether the Participant should be terminated for Cause pursuant
to this Agreement shall be made in the sole, good faith discretion
of the Board, and shall be binding upon all parties affected
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5. Who May Exercise .
Subject to the terms and conditions set forth in Sections 3
and 4 above, this Stock Option may be exercised during the
lifetime of the Participant only by the Participant or by the
Participant’s guardian or legal representative. If the
Participant’s Termination of Service is due to death or Total
and Permanent Disability prior to the termination date specified in
Section 4(a)(i) hereof, the following persons may
exercise this Stock Option on behalf of the Participant at any time
prior to the earlier of the dates specified in
Sections 4(a)(i), (ii) or (v) hereof: (i) if
the Participant has a Total and Permanent Disability, the
Participant or the guardian of the Participant; or (ii) if the
Participant dies, the personal representative of the
Participant’s estate or the person who acquired the right to
exercise this Stock Option by bequest or inheritance or by reason
of the death of the Participant; provided that this Stock Option
shall remain subject to the other terms of this Agreement, the
Plan, and applicable laws, rules and regulations.
6. Restrictions on
Exercise . This Stock Option may be exercised in whole or in
part, but only with respect to full shares of Common Stock, and no
fractional share of stock shall be issued. In no event may this
Stock Option be exercised or shares of Common Stock be issued
pursuant to this Agreement if any registration under state or
federal securities laws required under the circumstances has not
been accomplished.
7. Manner of Exercise .
Subject to such administrative regulations as the Committee may
from time to time adopt, the Stock Option may be exercised by the
delivery of written notice to the Committee setting forth the
number of shares of Common Stock with respect to which the Stock
Option
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