Document:

exv10w3

 

Exhibit 10.3

PARALLEL PETROLEUM CORPORATION

NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

     1. Purpose of the Plan. The purpose of the Parallel Petroleum Corporation Non-employee
Directors Stock Option Plan (the “Plan”) is to secure for Parallel Petroleum Corporation (the
“Company”) and its stockholders the benefits of the incentives inherent in increased common stock
ownership by members of the Board of Directors (the “Board”) of the Company who are not employees
of the Company (“Non-employee Directors”) or any of its subsidiaries and to provide a means whereby
Non-employee Directors of the Company may develop a sense of proprietorship and personal
involvement in the development and financial success of the Company, and to encourage them to
remain with and devote their best efforts to the business of the Company, thereby advancing the
interests of the Company and its stockholders. Accordingly, the Plan provides for granting to
Non-employee Directors the option (“Option”) to purchase shares of common stock of the Company
(“Stock”), as hereinafter set forth. Options granted under the Plan to Non-employee Directors are
not intended to be incentive stock options within the meaning of section 422 of the Internal
Revenue Code of 1986, as amended.

     2. Administration. The Plan shall be administered by the Board of Directors of the Company
(the “Board”) or by a committee (the “Committee”) of two or more directors of the Company appointed
by the Board. If a Committee is not appointed by the Board, the Board shall act as and be deemed to
be the Committee for all purposes of the Plan. The Committee shall have sole authority (within the
limitations described herein) to select the Non-employee Directors who are to be granted Options;
to establish the number of shares which may be issued to Non-employee Directors under each Option;
and to prescribe the form of the agreement embodying awards of Options. The Committee is authorized
to interpret the Plan, to determine all questions arising thereunder and to adopt such rules and
regulations, consistent with the provisions of the Plan, as it may deem advisable to carry out the
Plan. All decisions made by the Committee shall be final and conclusive. No member of the Board
shall be liable for anything done or omitted to be done by such member or by any other member of
the Board in connection with the Plan, except for such member’s own willful misconduct or as
expressly provided by statute.

     3. Eligibility of Optionee. Options may be granted only to directors who are not employees of
the Company or any parent or subsidiary corporation of the Company at the time the Option is
granted. The adoption of this Plan shall not be deemed to give any director any right to be granted
an Option. Options may be granted to the same Non-employee Director on more than one occasion.

     4. Shares Subject to the Plan. The aggregate number of shares which may be issued under
Options granted under the Plan shall not exceed 500,000 shares of Stock. Such shares may consist of
authorized but unissued shares of Stock or previously issued shares of Stock reacquired by the
Company. Any of such shares which remain unissued and which are not subject to outstanding Options
at the termination of the Plan shall cease to be subject to the Plan, but, until termination of the
Plan, the Company shall at all times make available sufficient number of shares to meet the
requirements of the Plan. If any Option hereunder expires or terminates prior to its exercise in
full, the shares theretofore subject to such Option may again be subject to an Option granted under
the Plan. The aggregate number of shares which may be issued under the Plan shall be subject to
adjustment in the same manner as provided in Paragraph 7 hereof with respect to shares of Stock
subject to Options then outstanding. Exercise of an Option in any manner shall result in a decrease
in the number of shares of Stock which may thereafter be available, both for purposes of the Plan
and for sale to any one individual, by the number of shares as to which the Option is exercised.

     5. Option Agreements; Terms and Conditions. Each Option granted under the Plan shall be
evidenced by an agreement and shall contain such terms and conditions, and may be exercisable for
such periods, as the Committee shall prescribe from time to time in accordance with this Plan, and
shall comply with the following terms and conditions:

     (a) The Option exercise price shall be the fair market value of the Stock subject to the
Option on the date the Option is granted. For all purposes under the Plan, the fair market of a
share of Stock on a particular date shall be equal to the average of the high and low sales prices
of the Stock on the date of grant as reported on the Nasdaq National Market tier of The Nasdaq
Stock Market (“NMS”), or on the stock exchange composite tape if the Stock is traded on a national
stock exchange on that date, or if no prices are reported on that date, on the last preceding date

 

 

on which such prices of the Stock are so reported. If the Stock is not traded on the NMS or
other stock exchange on that date, but is otherwise traded over the counter at the time a
determination of its fair market value is required to be made hereunder, its fair market value
shall be deemed to be equal to the average between the reported high and low or closing bid and
asked prices of the Stock on the most recent date on which the Stock was publicly traded. If the
Stock is not publicly traded at the time a determination of its value is required to be made
hereunder, the determination of its fair market value shall be made by the Committee in such manner
as it deems appropriate.

     (b) The Option shall not be transferable otherwise than by will or the laws of descent and
distribution, and may be exercised only by the Non-employee Director during the Non-employee
Director’s lifetime and while the Non-employee Director remains a director of the Company, except
that:

               (i) If the Non-employee Director ceases to be a director of the Company
because of disability, the Option may be exercised in full by the Non-employee
Director (or the Non-employee Director’s estate or the person who acquires the
Option by will or the laws of descent and distribution or otherwise by reason of the
death of the Non-employee Director) at any time during the period of one year
following such termination;

               (ii) If the Non-employee Director dies while he is a director of the Company,
the Non-employee Director’s estate, or the person who acquires the Option by will or
the laws of descent and distribution or otherwise by reason of the death of the
Non-employee Director, may exercise the Option in full at any time during the period
of one year-following the date of the Non-employee Director’s death; and

               (iii) If the Non-employee Director ceases to be director of the Company for
any reason other than as described in clause (i) or (ii) above, unless the
Non-employee Director is removed for cause, the Option may be exercised by the
Non-employee Director at any time during the period of three months following the
date the Non-employee Director ceases to be a director of the Company, or by the
Non-employee Director’s estate (or the person who acquires the Option by will or the
laws of descent and distribution or otherwise by reason of the death of the
Non-employee Director) during a period of one year following the Non-employee
Director’s death if the Non-employee Director dies during such three-month period,
but in each case only as to the number of shares the Non-employee Director was
entitled to purchase hereunder upon exercise of the Option as of the date the
Non-employee Director ceases to be a director.

     (c) The Option shall not be exercisable in any event after the expiration of ten years from
the date of grant.

     (d) The purchase price of shares as to which the Option is exercised shall be paid in full at
the time of exercise (a) in cash, (b) by delivering to the Company shares of Stock having a fair
market value equal to the purchase price, or (c) any combination of cash or Stock, as shall be
established by the Committee. Unless and until a certificate or certificates representing such
shares shall have been issued by the Company to the Non-employee Director, the Non-employee
Director (or the person permitted to exercise the Option in the event of Director’s death) shall
not be or have any of the rights or privileges of a stockholder of the Company with respect to
shares acquirable upon an exercise of the Option.

     (e) The terms and conditions of the respective Non-employee Director Stock Option agreements
need not be identical.

     6. Term of Plan. The Plan shall be effective upon the date of its approval and adoption by the
stockholders of the Company. Except with respect to Options then outstanding, if not sooner
terminated under the provisions of Paragraph 8, the Plan shall terminate upon and no further
Options shall be granted after the expiration of ten years from the date of its adoption by the
Board.

     7. Recapitalization or Reorganization.

     (a) The existence of the Plan and the Options granted hereunder 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
ahead of or affecting the Stock or the rights thereof, the dissolution

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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) The shares with respect to which Options may be granted are shares of Stock as presently
constituted, but if, and whenever, prior to the expiration of an Option theretofore granted, the
Company shall effect a subdivision or consolidation of shares of Stock or the payment of a stock
dividend on Stock without receipt of consideration by the Company, the number of shares of Stock
with respect to which such Option may thereafter be exercised (i) in the event of an increase in
the number of outstanding shares shall be proportionately increased, and the purchase price per
share shall be proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the purchase price per share shall be
proportionately increased.

     (c) If the Company recapitalizes or otherwise changes its capital structure, thereafter upon
any exercise of an Option theretofore granted the optionee shall be entitled to purchase under such
Option, in lieu of the number of shares of Stock as to which such Option shall then be exercisable,
the number and class of shares of stock and securities to which the optionee would have been
entitled pursuant to the terms of the recapitalization if, immediately prior to such
recapitalization, the optionee had been the holder of record of the number of shares of Stock as to
which such Option is then exercisable. If (i) the Company shall not be the surviving entity in any
merger or consolidation (or survives only as a subsidiary of an entity other than a previously
wholly-owned subsidiary of the Company), (ii) the Company sells, leases or exchanges or agrees to
sell, lease or exchange all or substantially all of its assets to any other person or entity (other
than a wholly-owned subsidiary of the Company), (iii) the Company is to be dissolved and
liquidated, (iv) any person or entity, including a “group” as contemplated by Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including,
without limitation, power to vote) of more than 50% of the outstanding shares of Stock, or (v) as a
result of or in connection with a contested election of directors, the persons who were directors
of the Company before such election shall cease to constitute a majority of the Board (each such
event is referred to herein as a “Corporate Change”), then upon the occurrence of any such
Corporate Change, any outstanding Options held by Non-employee Directors shall become fully
exercisable and upon any exercise of an Option theretofore granted the Non-employee Director shall
be entitled to purchase under such Option, in lieu of the number of shares of Stock as to which
such Option shall then be exercisable, the number and class of shares of stock or other securities
or property to which the Non-employee Director would have been entitled pursuant to the terms of
the Corporate Change if, immediately prior to such Corporate Change, the Non-employee Director had
been the holder of record of the number of shares of Stock as to which such Option is then
exercisable.

     (d) Any adjustment provided for in Subparagraphs (b) or (c) above shall be subject to any
required stockholder action.

     (e) 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 therefor, 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 adjustment by
reason thereof shall be made with respect to, the number of shares of Stock subject to Options
theretofore granted or the purchase price per share.

     8. Amendment or Termination of the Plan. The Board in its discretion may terminate the Plan at
any time with respect to any shares for which Options have not theretofore been granted. The Board
shall have the right to alter or amend the Plan or any part thereof from time to time, provided,
that no change in any Option theretofore granted may be made which would impair the rights of the
optionee without the consent of such optionee.

     9. Miscellaneous Provisions.

     (a) Neither the Plan nor any action taken hereunder shall be construed as giving any
Non-Employee Director any right to be retained in the service of the Company.

     (b) An optionee’s rights and interest under the Plan may not be assigned or transferred in
whole or in part either directly or by operation of law or otherwise (except in the event of an
optionee’s death or disability, by will or the laws of descent and distribution), including, but
not by way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy, or in any
other manner, and no such right or interest of any participant in the Plan shall be subject to any
obligation or liability of such participant.

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     (c) No shares of Stock shall be issued hereunder unless counsel for the Company shall be
satisfied that such issuance will be in compliance with applicable Federal, state, and other
securities laws and regulations.

     (d) It shall be a condition to the obligation of the Company to issue shares of Stock upon
exercise of an Option, that the optionee (or any beneficiary or person entitled to act under or
through Optionee as provided herein) pay to the Company, upon its demand, such amount as may be
requested by the Company for the purpose of satisfying any liability to withhold Federal, state,
local, or foreign income or other taxes. If the amount requested is not paid, the Company may
refuse to issue shares of Stock.

     (e) By accepting any option under the Plan, each optionee and each person claiming under or
through such person shall be conclusively deemed to have indicated his or her acceptance and
ratification of, and consent to, any action taken under the Plan by the Company, the Board or the
Committee.

4exv10w2

 

FORM 10-Q

Exhibit 10.2

ENCORE WIRE CORPORATION

1999 Stock Option Plan

     Section 1. Purpose. It is the purpose of the Plan to promote the interests of the
Company and its stockholders by attracting, retaining and stimulating the performance of selected
Employees of the Company and its Affiliates and giving such Employees the opportunity to acquire a
proprietary interest in the Company and an increased personal interest in its continued success and
progress.

     Section 2. Definitions. As used herein the following terms have the following
meanings:

     (a) “Affiliate” means any parent or subsidiary corporation of the Company within the meaning
of Section 424(e) and (f) of the Code. (A corporation includes any business entity that elects to
be classified as an association for federal tax purposes or that otherwise is a corporation for
federal tax purposes.)

     (b) “Board” means the Board of Directors of the Company.

     (c) “Code” means the Internal Revenue Code of 1986, as amended.

     (d) “Committee” means the Compensation Committee of the Board, each member of which shall be a
‘non-employee director’ within the meaning of Rule 16B-3 under the Securities Exchange Act of 1934,
as amended, and an ‘outside director’ within the meaning of Treasury Regulation Section
1.162-27(e)(3) interpreting Section 162(m) of the Code.

     (e) “Common Stock” means the $.01 par value Common Stock of the Company.

     (f) “Company” means Encore Wire Corporation, a Delaware corporation.

     (g) “Employee” means any regular salaried officer or employee of the Company or an Affiliate,
including such officers or employees who are also members of the Board.

     (h) “Fair Market Value” means the closing sales price of the Common Stock on the date in
question (or if there is no reported sale on such date, then on the last preceding date on which a
report of sale occurred) as reported on the National Association of Securities Dealers Automated
Quotation System (“NASDAQ”), or on any national securities exchange on which the Common Stock is
then traded; or if the Common Stock is not listed or admitted to trading on any such exchange and
is not listed as a national market security on NASDAQ, but is quoted on NASDAQ (or any similar
system), “Fair Market Value” shall mean the average of the closing high bid and low ask prices of
the Common Stock on such system on the date in question.

 

 

FORM 10-Q

     (i) “Options” means any option to purchase shares of Common Stock granted pursuant to the
provisions of the Plan.

     (j) “Optionee” means an Employee who has been granted an Option under the Plan.

     (k) “Plan” means this Encore Wire Corporation 1999 Stock Option Plan, as amended February 20,
2006.

     Section 3. Number of Shares. Options may be granted by the Company from time to time
under the Plan to purchase an aggregate of 1,200,000 shares of the authorized Common Stock. If any
Option expires or terminates for any reason without having been exercised in full, the unpurchased
shares subject to such expired or terminated Option shall be available for purposes of the Plan.
The maximum number of shares of Common Stock for which options may be granted under the Plan to any
one Employee during a calendar year is 100,000.

     Section 4. Administration of the Plan.

     (a) The Plan shall be administered by the Committee. Each member of the Committee shall be
appointed by the Board. The Board shall have the sole continuing authority to appoint members of
the Committee, both in substitution for members previously appointed and to fill vacancies.

     (b) The Committee shall have full authority subject to the express provisions of the Plan to
interpret the Plan, to provide, modify and rescind rules and regulations relating to it, to
determine the terms and provisions of each Option and the form of each option agreement evidencing
an Option granted under the Plan, including the authority to place restrictions on the shares of
Common Stock to be purchased pursuant to an Option, and to make all other determinations and
perform such actions as the Committee deems necessary or advisable to administer the Plan. In
addition, the Committee shall have full authority, subject to the express provisions of the Plan,
to determine the Employees to whom Options shall be granted, the time or date of grant of each such
Option, the number of shares subject thereto, and the price at which such shares may be purchased.
In making such determinations, the Committee may take into account the nature of the services
rendered by the Employee, his present and potential contributions to the success of the Company’s
business and such other facts as the Committee in its discretion shall deem appropriate to carry
out the purposes of the Plan.

     (c) Notwithstanding the authority hereby delegated to the Committee to grant Options to
Employees under the Plan, the Board also shall have full authority, subject to the express
provisions of the Plan, to grant options to Employees under the Plan, to interpret the Plan, to
provide, modify and rescind rules and regulations relating to it, to determine the terms and
provisions of Options granted to Employees under the Plan and the form of option agreements
evidencing Options granted under the Plan and to make all other determinations and perform such
actions as the Board deems necessary or advisable to administer the Plan; provided, however, that
the Board shall not grant any Option to any officer (as defined in Rule 16B-3) of the Company or to
any Employee who is also a member of the Board or to any “covered employee” within the meaning of
Section 162(m) of the Code, except upon, and strictly in accordance with, a

 

 

FORM 10-Q

recommendation of the Committee regarding the number of shares covered by, and the recipient,
timing, exercise price and other terms of, such Option.

     (d) No member of the Committee shall be eligible to receive an Option.

     Section 5. Grant of Options. At any time and from time to time during the duration of
the Plan and subject to the express provisions thereof, Options may be granted by the Committee to
any Employee for such number of shares of Common Stock as the Committee in its discretion shall
deem to be in the best interest of the Company and which will serve to further the purposes of the
Plan. The Committee, in its discretion, may designate any Option so granted as an incentive stock
option intended to qualify under Section 422 of the Code. To the extent that the aggregate Fair
Market Value (determined at the time the respective Incentive Stock Option is granted) of Common
Stock with respect to which Incentive Stock Options are exercisable for the first time by an
individual during any calendar year under all incentive stock option plans of the Company and its
Affiliates exceeds $100,000, such excess Incentive Stock Options shall be treated as options which
do not constitute Incentive Stock Options. The Committee shall determine, in accordance with
applicable provisions of the Code, which of an optionee’s Incentive Stock Options will not
constitute Incentive Stock Options because of such limitation and shall notify the optionee of such
determination as soon as practicable after such determination.

     Section 6. Option Price. The purchase price per share of Common Stock under each
Option shall be determined by the Committee but in no event shall be less than 100% of the Fair
Market Value per share of Common Stock at the time the Option is granted; provided, however, that
the purchase price per share of Common Stock under any incentive stock option granted to an
Optionee who, at the time such incentive stock option is granted, owns stock possessing more than
10% of the total combined voting power of all classes of stock of the Company or any Affiliate
shall be at least 110% of the Fair Market Value per share of Common Stock at the date of grant.
Upon exercise of an Option, the purchase price shall be paid in full in cash, or if to the extent
provided for under the option agreement for such Option, in cash and or by delivery of shares of
Common Stock already owned by the Optionee, held for at least six months free of any restriction,
and having an aggregate Fair Market Value equal to the purchase price. The proceeds of such sale
shall constitute general funds of the Company. Upon exercise of an Option, the Optionee will be
required to pay to the Company the amount of any federal, state or local taxes required by law to
be withheld in connection with such exercise.

     Section 7. Option Period and Terms of Exercise of Options. Except as otherwise
provided for herein, each Option granted under the Plan shall be exercisable during such period
commencing on or after the expiration of one year from the date of the grant of such Option as the
Committee shall determine; provided that the otherwise unexpired portion of any Option shall expire
and become null and void no later than upon the first to occur of (i) the expiration of ten years
from the date such Option was granted, (ii) the expiration of three months from the date of the
termination of the Optionee’s employment with the Company or an Affiliate for any reason other than
death or disability, or (ii) the expiration of one year from the date of the termination of the
Optionee’s employment with the Company or an Affiliate by reason of death or disability. Anything
herein to the contrary notwithstanding the otherwise unexpired portion of any Option granted
hereunder shall expire and become null and void immediately upon

 

 

FORM 10-Q

Optionee’s termination of employment with the Company or an Affiliate by reason of such
Optionee’s fraud, dishonesty or performance of other acts detrimental to the Company or an
Affiliate. Any incentive stock option granted to an Optionee who, at the time such incentive stock
option is granted, owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any Affiliate shall not be exercisable after the expiration of
five years from the date of its grant. Under the provisions of any option agreement evidencing an
Option, the Committee may limit the number of shares purchasable thereunder in any period or
periods of time during which the Option is exercisable and may impose such other terms and
conditions upon the exercise of an Option as are not inconsistent with the terms of this Plan;
provided, however, that the Committee, in its discretion, may accelerate the exercise date of any
Option to any date following the date of grant.

     Section 8. Nontransferability of Options. An Option granted under the Plan shall be
transferable by the Optionee only by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionee only by the Optionee.

     Section 9. Termination of Employment. Transfers of employment between the Company and
any of its Affiliates shall not be considered to be a termination of employment for the purposes of
this Plan. Nothing in the Plan or in any option agreement evidencing an Option granted under the
Plan shall confer upon any Optionee any right to continue in the employ of the Company or any
Affiliate or in any way interfere with the right of the Company or any Affiliate to terminate the
employment of the Optionee at any time, with or without cause.

     Section 10. Adjustments Upon Changes in Common Stock. In the event the Company shall
effect a split of the Common Stock or dividend payable in Common Stock, or in the event the
outstanding Common Stock shall be combined into a smaller number of shares, the maximum number of
shares as to which Options may be granted under the Plan and the maximum number of shares as to
which an Option or Options may be granted to any one Optionee during a calendar year shall be
decreased or increased proportionately. In the event that before delivery by the Company of all of
the shares of Common Stock in respect of which any Option has been granted under the Plan, the
Company shall have effected such a split, dividend or combination, the shares still subject to such
Option shall be increased or decreased proportionately and the purchase price per share shall be
decreased or increased proportionately so that the aggregate purchase price for all of the then
optioned shares shall remain the same as immediately prior to such split, dividend or combination.

     In the event of a reclassification of Common Stock not covered by the foregoing, or in the
event of a liquidation or reorganization (including a merger, consolidation, spinoff or sale of
assets) of the Company or an Affiliate, the Committee shall make such adjustments, if any, as it
may deem appropriate in the number, purchase price and kind of shares covered by the unexercised
portions of Options theretofore granted under the Plan. The provisions of this Section shall only
be applicable if, and only to the extent that, the application thereof does not conflict with any
valid governmental statute, regulation or rule.

 

 

FORM 10-Q

     Section 11. Amendment and Termination of the Plan. Subject to the right of the Board
to terminate the plan prior thereto, the Plan shall terminate at the expiration of ten years from
June 28, 1999, the date of adoption of the Plan by the Board. No Options may be granted after
termination of the Plan. The Board may alter or amend the plan but may not without the approval of
the stockholders of the Company make any alteration or amendment thereof which operates (i) to
abolish the Committee, change the qualifications of its members or withdraw the administration of
the Plan from its supervision, (ii) to increase the total number of shares of Common Stock for
which options may be granted under the Plan (other than as provided in Section 10 hereof), (iii) to
increase the maximum number of shares of Common Stock for which options may be granted under the
Plan (other than as provided in Section 10 hereof) to any one Employee during a calendar year, (iv)
to extend the term of the Plan or the maximum exercise period provided in Section 7 hereof, (v) to
decrease the minimum purchase price provided in Section 6 hereof (other than as provided in Section
10 hereof), or (vi) to materially modify the requirements as to eligibility for participation in
the Plan.

     No termination or amendment of the Plan shall adversely affect the rights of an Optionee under
an Option, except with the consent of such Optionee.

     Section 12. Requirements of Law. The granting of Options and the issuance of Common
Stock upon the exercise of an Option shall be subject to all applicable laws, rules and regulations
and to such approval by governmental agencies as may be required.

     Section 13. Effective Date of the Plan. The Plan shall become effective, as of the
date of its adoption by the Board, when it has been duly approved by the unanimous written consent
of the holders of the shares of Common Stock in accordance with applicable law within twelve months
after the date of adoption of the Plan by the Board. If the Plan is not so approved, the Plan
shall terminate and any Option granted hereunder shall be null and void.

     Section 14. Gender. Words of any gender used in the Plan shall be construed to
include any other gender, unless the context requires otherwise.

February 20, 2006

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