Exhibit 10.4
PARALLEL PETROLEUM CORPORATION
2008 LONG-TERM INCENTIVE PLAN
OUTSIDE DIRECTOR RESTRICTED STOCK AGREEMENT
Pursuant to the Parallel Petroleum Corporation 2008 Long-Term Incentive Plan
(the “Plan”) as adopted by Parallel Petroleum Corporation, a Delaware
corporation (the “Company”), and its Subsidiaries,
 
(the “Participant”)
is granted a Restricted Stock Award in accordance with Section 6.4 of the Plan.
     1. Terms of Award. The number of shares of Common Stock awarded under this
Award Agreement (this “Agreement”) is ___ shares (the “Awarded Shares”). The
Date of Grant of this Award is ___.
     2. Subject to Plan. This Agreement is subject 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 assigned to
them in the Plan. This Agreement 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. Except as specifically provided in this Agreement and subject
to certain restrictions and conditions set forth in the Plan, the Awarded Shares
shall be vested as follows:
(a) Twenty-five percent (25.0%) of the total Awarded Shares shall vest on the
Date of Grant, provided the Participant is providing services to the Company or
a Subsidiary on that date.
(b) Twenty-five percent (25.0%) of the total Awarded Shares shall vest on the
first anniversary of the Date of Grant, provided the Participant is providing
services to the Company or a Subsidiary on that date.
(c) Twenty-five percent (25.0%) of the total Awarded Shares shall vest on the
second anniversary of the Date of Grant, provided the Participant is providing
services to the Company or a Subsidiary on that date.
(d) The remaining twenty-five percent (25.0%) of the total Awarded Shares shall
vest on the third anniversary of the Date of Grant, provided the Participant is
providing services to the Company or a Subsidiary on that date.
Notwithstanding the foregoing, 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, the total Awarded Shares not
previously vested shall thereupon immediately become vested in full, without
regard to the vesting limitations set forth above.

 

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     4. Forfeiture of Awarded Shares. Awarded Shares that are not vested in
accordance with Section 3 shall be forfeited on the date of the Participant’s
Termination of Service. Upon forfeiture, all of the Participant’s rights with
respect to the forfeited Awarded Shares shall cease and terminate, without any
further obligations on the part of the Company.
     5. Restrictions on Awarded Shares. Awarded Shares that are not vested in
accordance with Section 3 and which are subject to forfeiture in accordance with
Section 4 shall be subject to the terms, conditions, provisions, and limitations
of this Section 5.
     (a) Subject to the provisions of the Plan and the other terms of this
Agreement, from the Date of Grant until the date the Awarded Shares are vested
in accordance with Section 3 and no longer subject to forfeiture in accordance
with Section 4 (the “Restriction Period”), the Participant shall not be
permitted to sell, transfer, pledge or assign shares any of the Awarded Shares.
     (b) Except as provided in paragraph (a) above, the Participant shall have,
with respect to his or her Awarded Shares, all of the rights of a stockholder of
the Company, including the right to vote the shares, and the right to receive
any dividends thereon.
     6. Legend. A legend in substantially the following form shall be placed on
all certificates representing Awarded Shares:
On the face of the certificate:
“Transfer of this stock is restricted in accordance with conditions printed on
the reverse of this certificate.”
On the reverse:
“The shares of stock evidenced by this certificate are subject to and
transferable only in accordance with that certain Parallel Petroleum Corporation
2008 Long-Term Incentive Plan, a copy of which is on file at the principal
office of the Company in Midland, Texas. No transfer or pledge of the shares
evidenced hereby may be made except in accordance with and subject to the
provisions of said Plan. By acceptance of this certificate, any holder,
transferee or pledgee hereof agrees to be bound by all of the provisions of said
Plan.”
“The shares of stock of this Corporation represented by this certificate have
not been registered under the Securities Act of 1933, as amended (the “Act”),
and may not be offered for sale, sold or otherwise transferred except pursuant
to an effective registration statement under the Act or an opinion of counsel
satisfactory to the Corporation to the effect that registration under the Act is
not required.”
     All Awarded Shares owned by the Participant shall be subject to the terms
of this Agreement and shall be represented by a certificate or certificates
bearing the foregoing legend.

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     7. Delivery of Certificates. Certificates for Awarded Shares free of
restriction under this Agreement shall be delivered to the Participant promptly
after, and only after, the Restriction Period shall expire without forfeiture in
respect of such shares of Common Stock. Certificates for shares of Common Stock
forfeited pursuant to Section 4 shall be promptly returned to the Company by the
Participant. In connection with the issuance of a certificate for Restricted
Stock, the Participant shall endorse such certificate in blank or execute a
stock power in a form satisfactory to the Company in blank and deliver such
certificate and executed stock power to the Company. The parties acknowledge
that remedies at law will be inadequate remedies for breach of this Section 7
and consequently agree that this Section 7 shall be enforceable by specific
performance. The remedy of specific performance shall be cumulative of all of
the rights and remedies at law or in equity of the parties under this Section 7.
     8. Non-Assignability. Except as otherwise provided herein, the Awarded
Shares are not assignable or transferable by the Participant in any form or
fashion except by will or by the laws of descent and distribution.
     9. Voting. The Participant, as record holder of the Awarded Shares, has the
exclusive right to vote, or consent with respect to, such Awarded Shares until
such time as the Awarded Shares are transferred in accordance with this
Agreement; provided, however, that this Section 9 shall not create any voting
right where the holders of such Awarded Shares otherwise have no such right.
     10. Adjustment of Number of Shares and Related Matters. The number of
shares of Common Stock covered by the Awarded Shares shall be subject to
adjustment in accordance with Articles 11 – 13 of the Plan.
     11. Participant’s Representations. Notwithstanding any of the provisions
hereof to the contrary, the Participant hereby agrees that he will not acquire
any Awarded Shares, and that the Company will not be obligated to issue any
Awarded Shares to the Participant hereunder, if the issuance of such shares
shall constitute a violation by the Participant or the Company of any provision
of any law or regulation of any governmental authority. Any determination in
this connection by the Company shall be final, binding, and conclusive. The
obligations of the Company and the rights of the Participant are subject to all
applicable laws, rules, and regulations.
     12. Investment Representation. Unless the Awarded Shares are issued to the
Participant in a transaction registered under applicable federal and state
securities laws, by his execution hereof, the Participant represents and
warrants to the Company that all Awarded Shares are being acquired by the
Participant for investment purposes only for his own account and not with any
intent for resale or distribution in violation of federal or state securities
laws. Unless the Awarded Shares are issued to him in a transaction registered
under the applicable federal and state securities laws, all certificates issued
with respect to the Awarded Shares shall bear an appropriate restrictive
investment legend and shall be held indefinitely, unless they are subsequently
registered under the applicable federal and state securities laws or the
Participant obtains an opinion of counsel, in form and substance satisfactory to
the Company and its counsel, that such registration is not required.
     13. Participant’s Acknowledgments. The Participant acknowledges receipt of
a copy of the Plan, which is annexed hereto, and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Award
subject to all the terms and provisions thereof. The Participant hereby agrees
to accept as binding, conclusive, and final all decisions or interpretations of
the Board or the Committee upon any questions arising under the Plan or this
Agreement.
     14. Law Governing. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Texas (excluding any
conflict of laws rule or principle of Texas

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law that might refer the governance, construction, or interpretation of this
Agreement to the laws of another state).
     15. No Right to Continue Service. Nothing herein shall be construed to
confer upon the Participant the right to continue in the service of the Company
or interfere with or restrict in any way the right of the Company to discharge
the Participant at any time (subject to any contract rights of the Participant).
     16. Legal Construction. In the event that any one or more of the terms,
provisions, or agreements that are contained in this Agreement shall be held by
a court of competent jurisdiction to be invalid, illegal, or unenforceable in
any respect for any reason, the invalid, illegal, or unenforceable term,
provision, or agreement shall not affect any other term, provision, or agreement
that is contained in this Agreement and this Agreement shall be construed in all
respects as if the invalid, illegal, or unenforceable term, provision, or
agreement had never been contained herein.
     17. Covenants and Agreements as Independent Agreements. Each of the
covenants and agreements that is set forth in this Agreement shall be construed
as a covenant and agreement independent of any other provision of this
Agreement. The existence of any claim or cause of action of the Participant
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of the covenants and
agreements that are set forth in this Agreement.
     18. Entire Agreement. This Agreement and the Plan supersede any and all
other prior understandings and agreements, either oral or in writing, between
the parties with respect to the subject matter hereof and constitute the sole
and only agreements between the parties with respect to the said subject matter.
All prior negotiations and agreements between the parties with respect to the
subject matter hereof are merged into this Agreement. Each party to this
Agreement acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by any party or by anyone acting
on behalf of any party, which are not embodied in this Agreement or the Plan and
that any agreement, statement or promise that is not contained in this Agreement
or the Plan shall not be valid or binding or of any force or effect.
     19. Parties Bound. The terms, provisions, and agreements that are contained
in this Agreement shall apply to, be binding upon, and inure to the benefit of
the parties and their respective heirs, executors, administrators, legal
representatives, and permitted successors and assigns, subject to the limitation
on assignment expressly set forth herein. No person or entity shall be permitted
to acquire any Awarded Shares without first executing and delivering an
agreement in the form satisfactory to the Company making such person or entity
subject to the restrictions on transfer contained in Section 5 hereof.
     20. Modification. No change or modification of this Agreement shall be
valid or binding upon the parties unless the change or modification is in
writing and signed by the parties; provided, however, that the Company may
change or modify this Agreement without the Participant’s consent or signature
if the Company determines, in its sole discretion, that such change or
modification is necessary for purposes of compliance with or exemption from the
requirements of Section 409A of the Code or any regulations or other guidance
issued thereunder. Notwithstanding the preceding sentence, the Company may amend
the Plan to the extent permitted by the Plan.
     21. Headings. The headings that are used in this Agreement are used for
reference and convenience purposes only and do not constitute substantive
matters to be considered in construing the terms and provisions of this
Agreement.

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     22. Gender and Number. Words of any gender used in this Agreement shall be
held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise.
     23. Notice. Any notice required or permitted to be delivered hereunder
shall be deemed to be delivered only when actually received by the Company or by
the Participant, as the case may be, at the addresses set forth below, or at
such other addresses as they have theretofore specified by written notice
delivered in accordance herewith:

  (a)   Notice to the Company shall be addressed and delivered as follows:

Parallel Petroleum Corporation
1004 North Big Spring, Suite 400
Midland, Texas 79701
Attn: Chief Executive Officer
Facsimile:  432-684-8057

  (b)   Notice to the Participant shall be addressed and delivered as set forth
on the signature page.

     24. Tax Requirements. The Participant is hereby advised to consult
immediately with his or her own tax advisor regarding the tax consequences of
this Agreement, the method and timing for filing an election to include this
Agreement in income under Section 83(b) of the Code, and the tax consequences of
such election. By execution of this Agreement, the Participant agrees that if
the Participant makes such an election, the Participant shall provide the
Company with written notice of such election in accordance with the regulations
promulgated under Code Section 83(b).
[Signature Page Follows]

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer, and the Participant, to evidence Participant’s
consent and approval of all the terms hereof, has duly executed this Agreement,
as of the date specified in Section 1 hereof.

                  COMPANY:    
 
                PARALLEL PETROLEUM CORPORATION    
 
           
 
  By:        
 
     
 
Name:    
 
      Title    
 
           

                  PARTICIPANT:    
 
                     
 
  Signature        
 
  Name:        
 
  Address:        

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