<PAGE> 1
SCHEDULE 14A
(RULE 14A - 101)
INFORMATION REQUIRED
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ____________)
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ x ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec.
240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
Parallel Petroleum Corporation
-------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[ x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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PARALLEL PETROLEUM CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of
Parallel Petroleum Corporation (the "Company") will be held at the Midland
Petroleum Club, 501 West Wall Street, Midland, Texas 79701, on Wednesday, June
3, 1998 at 3:00 p.m., for the purpose of taking action on:
1. The election of the six current Directors to serve
until the next Annual Meeting of Stockholders and until their
successors shall be duly elected and qualified;
2. The approval of the Parallel Petroleum Corporation
1998 Stock Option Plan;
3. The approval of an amendment to the Company's
Certificate of Incorporation to decrease the number of authorized
shares of common stock and preferred stock;
4. The ratification of the reappointment of KPMG Peat
Marwick LLP as the Company's independent auditors for 1998; and
5. The transaction of such other business as may
properly come before the Annual Meeting or any adjournment
thereof.
The Company's Board of Directors has fixed the close of business on
April 29, 1998 as the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof.
By Order of the Board of Directors
THOMAS W. ORTLOFF
Secretary
May 4, 1998
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE AND PROMPTLY RETURN YOUR SIGNED PROXY
IN THE POSTAGE PAID ENVELOPE. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS
USE.
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PARALLEL PETROLEUM CORPORATION
One Marienfeld Place, Suite 465
110 N. Marienfeld
Midland, Texas 79701
(915) 684-3727
PROXY STATEMENT
----------------
SOLICITATION OF PROXIES
The accompanying Proxy is solicited on behalf of the Board of
Directors of Parallel Petroleum Corporation (the "Company") in connection with
the Annual Meeting of Stockholders to be held at the Midland Petroleum Club,
501 West Wall Street, Midland, Texas 79701, at 3:00 p.m. on Wednesday, June
3, 1998, for the purposes set forth in the accompanying Notice of Annual
Meeting, and at any adjournments thereof. The principal executive office of
the Company is located at One Marienfeld Place, Suite 465, 110 N. Marienfeld,
Midland, Texas 79701.
The cost of preparing, assembling and mailing the Notice of Annual
Meeting of Stockholders, Proxy Statement and Proxy, which are first being
mailed or delivered to the stockholders on or about May 4, 1998, will be borne
by the Company. It is contemplated that solicitation of Proxies will be
primarily by mail, but may be supplemented by personal solicitation by the
Company's officers, employees and Directors for which no additional
compensation will be paid.
Any stockholder giving a Proxy may revoke it at any time before it is
voted by delivering a later dated Proxy, or by notifying the Secretary of the
Company either in person or by written notice specifically revoking the power
to use and vote the Proxy. Stockholder attendance and voting in person at the
Annual Meeting will also revoke any Proxy given by such stockholder. If no
specification is made on the Proxy, the shares will be voted in accordance with
the recommendation of the Board of Directors, as stated herein, or at the
discretion of the named proxies with regard to any other matter that may
properly come before the Annual Meeting.
VOTING AT THE ANNUAL MEETING
The close of business on April 29, 1998 has been fixed by the
Company's Board of Directors as the record date for the determination of
stockholders entitled to vote at the annual Meeting of Stockholders. As of
that date, the Company had issued and outstanding 18,120,608 shares of Common
Stock and 600,000 shares of $.60 Cumulative Convertible Preferred Stock (the
"Preferred Stock").
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Holders of Common Stock will be entitled to vote on all matters
properly brought before the meeting, including the matters described in the
Notice of Annual Meeting accompanying this Proxy Statement. Holders of
Preferred Stock will be entitled to vote only upon the proposal to amend the
Company's Certificate of Incorporation to decrease the number of authorized
shares of common stock and preferred stock. The Company's Certificate of
Incorporation does not permit cumulative voting by the stockholders.
Accordingly, each share of Common Stock and each share of Preferred Stock
entitles the registered holder to one vote.
The presence of a majority of the combined outstanding shares of
Common Stock and Preferred Stock, whether present in person or represented by
Proxy, constitutes a quorum at the Annual Meeting. Abstentions and broker
"non- votes" are counted as present and entitled to vote for purposes of
determining a quorum. A broker "non-vote" occurs when a nominee holding shares
of the Company's Common Stock for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting
power with respect to that item and has not received instructions from the
beneficial owner.
Assuming the presence of a quorum, the affirmative vote of the holders
of a majority of the shares of Common Stock present in person or represented by
Proxy and entitled to vote at the Annual Meeting is required for (1) the
election of Directors, (2) approval of the Parallel Petroleum Corporation 1998
Stock Option Plan and (3) the ratification of the selection by the Board of
Directors of KPMG Peat Marwick LLP as the Company's auditors for the fiscal
year ending December 31, 1998. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock and the affirmative vote of
the holders of a majority of the outstanding shares of Preferred Stock, voting
as separate classes, is required for approval of the Directors' proposal to
amend the Company's Certificate of Incorporation to decrease the number of
authorized shares of common stock and preferred stock.
Abstentions will be treated as shares that are present and entitled to
vote for purposes of determining the number of shares present and entitled to
vote with respect to any particular matter, but will not be counted as a vote
in favor of such matter. Accordingly, an abstention from voting on a matter or
a Proxy instructing that a vote be withheld has the same effect as a vote
against the matter since it is one less vote for approval. Broker non-votes on
one or more matters will have no impact on such matters since they are not
considered "shares present" for voting purposes.
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STOCK OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of April 29,1998
with respect to the beneficial ownership of Common Stock by (i) each person
known to the Company to own beneficially more than five percent of the
outstanding Common Stock, (ii) each executive officer of the Company, (iii)
each Director and nominee for Director of the Company, and (iv) all executive
officers and Directors (and nominees) of the Company as a group:
<TABLE>
<CAPTION>
Percent
Name and Address Amount and Nature of of
of Beneficial Owner Beneficial Ownership (1) Class (2)
- ------------------- ------------------------ ---------
<S> <C> <C>
Thomas R. Cambridge 917,045(3) 4.98%
2201 Civic Circle, Suite 216
Amarillo, Texas 79109
Danny H. Conklin 143,124(4) *
First National Plaza, Suite 730
Amarillo, Texas 79101
Ernest R. Duke 252,473(5) 1.39%
408 West Wall Street
Midland, Texas 79701
Myrle Greathouse 997,988(6) 5.49%
400 Pine Street, Suite 700
Abilene, Texas 79601
Larry C. Oldham 677,090(7) 3.66%
One Marienfeld Place, Suite 465
Midland, Texas 79701
Charles R. Pannill 97,995(8) *
3416 Acorn Run
Fort Worth, Texas 76019
Wes-Tex Drilling Company 932,488(9) 5.15%
400 Pine Street, Suite 700
Abilene, Texas 79601
All Executive Officers and Directors
as a Group (6 persons) 3,085,715(10) 16.30%
</TABLE>
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* Less than one percent.
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(1) Unless otherwise indicated, all shares of Common Stock are held
directly with sole voting and investment powers.
(2) Securities not outstanding, but included in the beneficial ownership
of each such person are deemed to be outstanding for the purpose of
computing the percentage of outstanding securities of the class owned
by such person, but are not deemed to be outstanding for the purpose
of computing the percentage of the class owned by any other person.
(3) Includes 300,000 shares of Common Stock underlying presently
exercisable stock options.
(4) Includes 42,500 shares of Common Stock underlying presently
exercisable stock options.
(5) Includes 17,500 shares of Common Stock underlying a presently
exercisable stock option. Also included are 74,395 shares held by
Duke and Cain Partnership, a general partnership in which Mr. Duke is
a partner, and 20,000 shares held in the name of Mr. Duke's wife. Mr.
Duke has shared voting and investment powers with respect to such
shares.
(6) Includes 932,488 shares of Common Stock held directly by Wes-Tex
Drilling Company ("Wes-Tex"), a corporation. Mr. Greathouse is the
chairman of the board of directors and sole shareholder of Wes-Tex
and, accordingly, has shared voting and investment powers with respect
to such shares. Also included are 42,500 shares of Common Stock
underlying presently exercisable stock options, and 1,000 shares held
by a twenty-two member investment club, of which Mr. Greathouse is a
member, and as to which Mr. Greathouse has shared voting and
investment powers. See note 9 below.
(7) Includes 367,000 shares of Common Stock underlying presently
exercisable stock options.
(8) Includes 25,000 shares of Common Stock underlying a presently
exercisable stock option. Also included are 1,300 shares held by Mr.
Pannill as custodian for the benefit of two minor grandchildren and as
to which Mr. Pannill disclaims beneficial ownership.
(9) Mr. Greathouse, a Director of the Company, is the chairman of the
board of directors and sole shareholder of Wes-Tex Drilling Company.
Wes-Tex has shared voting and investment powers with respect to such
shares. See note 6 above.
(10) Includes 812,000 shares of Common Stock underlying presently
exercisable stock options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires, among
other things, that the Company's Directors and officers file with the
Securities and Exchange Commission, at specified times, reports of beneficial
ownership and changes in beneficial ownership of the Company's
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Common Stock and other equity securities. To the Company's knowledge, all
Section 16(a) filing requirements have been complied with during the year ended
December 31, 1997, except that one transaction involving the purchase by Mr.
Duke's wife of a total of 4,000 shares of the Company's Common Stock was
reported thirteen days late.
ELECTION OF DIRECTORS
Directors of the Company are elected annually by the stockholders to
serve until the next annual meeting of stockholders and until their respective
successors are duly elected. The Bylaws of the Company provide that the number
of directors comprising the whole Board shall from time to time be fixed and
determined by resolution adopted by the Board of Directors. The Board of
Directors has fixed the size of the Board at six directors. Accordingly, the
Board of Directors is recommending that the six current Directors of the
Company be re-elected. If any nominee becomes unavailable for any reason, a
substitute nominee may be proposed by the Board of Directors and the shares
represented by Proxy will be voted for any substitute nominee, unless the Board
reduces the number of directors. The Board of Directors has no reason to
expect that any nominee will become unavailable. Unless otherwise directed in
the accompanying Proxy, it is the intention of the persons named in such Proxy
to vote the shares represented by such Proxy FOR the election of the following
six nominees for the offices of director of the Company to hold office until
the next annual meeting of stockholders and until their respective successors
have been duly elected and qualified:
<TABLE>
<CAPTION>
Director
Nominee Since Position with Company
------- --------- ---------------------
<S> <C> <C>
Thomas R. Cambridge 1985 Chairman of the Board of Directors
and Chief Executive Officer
Larry C. Oldham 1979 President, Treasurer and Director
Danny H. Conklin(1) 1985 Director
Ernest R. Duke(1) 1980 Director
Myrle Greathouse(2) 1993 Director
Charles R. Pannill(2) 1982 Director
</TABLE>
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(1) Member of Audit Committee.
(2) Member of Compensation Committee.
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Mr. Cambridge, age 62, is an independent petroleum geologist engaged
in the exploration for, development and production of oil and gas. From 1970
until 1990, such activities were carried out primarily through Cambridge & Nail
Partnership, a Texas general partnership. Since 1990, such oil and gas
activities have been carried out through Cambridge Production, Inc., a Texas
corporation. Mr. Cambridge has served as a Director of the Company since
February, 1985; as President during the period from October, 1985 to October,
1994; and as Chairman of the Board of Directors and Chief Executive Officer
since October, 1985. Mr. Cambridge serves the Company in the capacity of a
consultant and not as a full-time employee.
Mr. Oldham, age 44, a founder of the Company, has served as an
officer and Director of the Company since its formation in 1979. Mr. Oldham
became President of the Company in October, 1994, and served as Executive Vice
President of the Company prior to that time. Mr. Oldham is a member of the
American Institute of Certified Public Accountants and the Permian Basin
Landman's Association.
Mr. Conklin, age 63, is an independent petroleum geologist and a
principal partner in Philcon Development Co., a privately held oil and gas
exploration partnership. Mr. Conklin is a director of Boatmen's First National
Bank of Amarillo, Amarillo, Texas, a director of Southwestern Public Service
Company, Amarillo, Texas, and former Chairman of the Independent Petroleum
Association of America.
Mr. Duke, age 70, is a consultant to MI Drilling Fluids, LLC and the
president and majority shareholder of Mustang Mud, Inc., a privately held oil
field service company.
Mr. Greathouse, age 75, is the chairman of the board of directors and
sole shareholder of Wes-Tex Drilling Company, a corporation engaged in oil and
gas exploration and production.
Mr. Pannill, age 72, was employed by The Western Company of North
America for over thirty years until his retirement in February, 1982. During
his employment with The Western Company of North America, Mr. Pannill served in
various capacities, including those of an executive officer and director.
Officers of the Company are appointed annually by the Company's Board
of Directors to serve at the Board's discretion and until their respective
successors in office are duly appointed. There are no family relationships
between any of the Directors or officers of the Company.
OTHER INFORMATION; COMMITTEES OF THE BOARD
During the fiscal year ended December 31, 1997, four meetings of the
Company's Board of Directors were held. Each Director attended at least 75% of
the total number of meetings of the Board. The Directors also took action by
unanimous written consent on one occasion.
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During 1997, the members of the Audit Committee were Messrs. Conklin
and Duke. The function of the Audit Committee is to review the results of the
annual audit of the Company's financial statements and recommendations of the
independent auditors with respect to the Company's accounting practices,
policies and procedures and to recommend to the Board of Directors the
appointment of auditors for the Company. The Audit Committee held one meeting
in 1997 at which both members were present.
Messrs. Greathouse and Pannill served as members of the Compensation
Committee of the Board of Directors during 1997. The Compensation Committee
administers the Company's stock option plans and has the responsibility of
reviewing and recommending to the Board of Directors the compensation and terms
of benefit arrangements with the Company's officers and the making of awards
under such arrangements. The Compensation Committee took action by unanimous
written consent on three occasions during 1997, and at two meetings of the full
Board of Directors. Mr. Greathouse was absent from one Board meeting.
The Company does not have a standing nominating committee. The review
of recommendations for nominees for Board membership is made by the full Board
of Directors.
APPROVAL OF STOCK OPTION PLAN
In March, 1998, the Board of Directors adopted the Parallel Petroleum
Corporation 1998 Stock Option Plan (the "1998 Plan"). The 1998 Plan is
attached to this Proxy Statement as Appendix A. The purpose of the 1998 Plan
is to secure for the Company and its stockholders the benefits of the
incentives inherent in increased Common Stock ownership by employees of the
Company and to provide a means whereby employees 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. The 1998 Plan provides for the
granting of options to purchase up to 850,000 shares of Common Stock. Stock
options granted under the 1998 Plan may be either "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or stock options which do not constitute incentive stock
options ("nonqualified stock options"). At the date of this Proxy Statement,
no action had been taken with respect to grants of options under the 1998 Plan.
Consequently, while it is expected that the current employees of the Company
will likely be granted options in the future, the employees that may receive
such options, the number of options and dollar values, are not currently
determinable.
At the Annual Meeting, stockholders will be asked to approve and
ratify the action taken by the Board of Directors in adopting the 1998 Plan.
The 1998 Plan was unanimously approved by the Board of Directors and the Board
of Directors recommends that the adoption of the 1998 Plan be ratified and
approved by the stockholders. Unless otherwise indicated, the proxies received
from stockholders will be voted in favor thereof. The affirmative vote of a
majority of the shares of
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Common Stock represented at the meeting will constitute approval and
ratification of the 1998 Plan. While stockholder approval of the 1998 Plan is
not required under Delaware law, the Code and certain rules of The Nasdaq Stock
Market require the 1998 Plan to be approved by the Company's stockholders. If
the required stockholder approval is not obtained, the 1998 Plan will be
terminated and no options under the 1998 Plan will be granted.
ADMINISTRATION. The 1998 Plan is administered by the Compensation
Committee of the Board of Directors. The members of the Compensation Committee
are not eligible to participate in the 1998 Plan. The Compensation Committee
has the sole authority to select the employees who are to be granted options
and to establish the number of shares issuable under each option. The
Compensation Committee is authorized to interpret the 1998 Plan, and to adopt
such rules and regulations, consistent with the provisions of the 1998 Plan, as
it may deem advisable.
ELIGIBILITY. Only employees of the Company whom the Compensation
Committee selects shall be eligible to receive one or more options under the
Plan.
STOCK TO BE OPTIONED. The aggregate number of shares of Common Stock
which may be issued pursuant to the exercise of stock options granted under the
1998 Plan may not exceed in the aggregate 850,000 shares, subject to
adjustments in the number of shares with respect to options and purchase prices
therefor in the event of stock splits or stock dividends, and for equitable
adjustments in the event of recapitalization, mergers, consolidations,
acquisitions of more than 50% of the outstanding shares of Common Stock by any
person or entity, dissolution and liquidation, and similar events. If any
outstanding option granted under the 1998 Plan expires or terminates prior to
its exercise in full, the shares allocable to the unexercised portion of such
option may be subsequently granted under the 1998 Plan. 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 1998 Plan and for sale to
any one individual, by the number of shares as to which the option is
exercised.
TERMS OF GRANTS. Options granted to employees shall contain such
terms and conditions and may be exercisable for such periods, as may be
approved by the Compensation Committee. The Compensation Committee is
empowered and authorized, but is not required, to provide for the exercise of
options by payment in cash or by delivering to the Company shares of Common
Stock having a fair market value equal to the purchase price, or any
combination of cash or Common Stock. The purchase price of Common Stock issued
under each option will not be less than the fair market value of the stock
subject to the option at the time of grant.
Options granted under the 1998 Plan are not transferable other than by
will or the laws of descent and distribution and are exercisable during the
optionee's lifetime only by the optionee and while the optionee is an employee
of the Company, except that if the optionee ceases to be an employee of the
Company as a result of death or disability, any options held by the optionee
may be exercised in full by the optionee's legal representative at any time
during the period of one year
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following such termination. If an optionee ceases to be an employee of the
Company other than for cause, death or disability, options may be exercised
within three months thereafter, but only as to the number of shares the
optionee was entitled to purchase as of the date the optionee ceased to be an
employee.
AMENDMENT OR TERMINATION. The Board of Directors of the Company may
amend or terminate the 1998 Plan at any time, but may not in any way impair the
rights of an optionee under an outstanding option without the consent of such
optionee.
TERM OF PLAN. The 1998 Plan will terminate upon and no further options
shall be granted after the expiration of ten years from the date of its adoption
by the Board of Directors.
FEDERAL TAX ASPECTS. Employees who receive incentive stock options
under the 1998 Plan will not recognize any income for federal income tax
purposes as a result of the receipt of such options. An optionee, upon exercise
of an incentive option under the 1998 Plan, will not recognize taxable income
nor will the Company then be entitled to a deduction. Any gain or loss realized
upon the subsequent disposition of the stock acquired upon exercise of incentive
options will be treated as long term capital gain or loss, provided that no such
disposition is made within two years after the option was granted and one year
after the option was exercised. If such holding period requirements are not
satisfied, the optionee will recognize ordinary income equal to the lesser of
(i) the fair market value of the stock on the date of exercise minus the
exercise price or (ii) the amount realized on disposition minus the exercise
price. Any gain in excess of the amount taxed as ordinary income will be
recognized as capital gain. If the stock is sold for less than the option price,
the loss is a capital loss.
The Company will not be entitled to a compensation deduction for
federal income tax purposes with respect to the grant of an incentive option to
an employee under the 1998 Plan or the exercise of the incentive option by the
employee. Upon an employee's disposition of shares acquired pursuant to an
incentive option, the Company will be entitled to a deduction for federal income
tax purposes equal to the amount, if any, of ordinary income recognized by such
employee.
Nonqualified options under the 1998 Plan will not have a "readily
ascertainable value" at the time of the grant of such options or at any time
until the options are exercised, and as a result, an optionee who receives a
nonqualified option will not be taxed upon the receipt of the option.
An optionee who receives a nonqualified option will generally
recognize ordinary income upon the exercise of the option in the amount by
which the fair market value of the underlying shares at the time of exercise
exceeds the exercise price. The Company will be entitled to a deduction from
income as an ordinary and necessary business expense when and to the extent
ordinary income is recognized by an optionee.
Upon the sale of the shares received upon the exercise of a
nonqualified option, the seller will generally recognize either short-term or
long-term capital gain or loss, depending upon the holding period of the
shares. The required holding period for long-term capital gain or loss
treatment is more
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than one year. The measure of the taxable gain or loss is determined by the
difference between the price paid for the shares upon the exercise of the
options (plus the amount of income recognized) and the selling price of the
shares.
The foregoing statements are based upon current federal income tax
laws and regulations and are subject to change if the tax laws and regulations,
or interpretations thereof, change.
PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
In March, 1998, the Board of Directors unanimously adopted an amendment
to the Company's Certificate of Incorporation, subject to stockholder approval,
decreasing the number of authorized shares of common stock of the Company from
100,000,000 to 60,000,000 and decreasing the number of authorized shares of
preferred stock from 40,000,000 to 10,000,000. The proposed decrease in
authorized shares is being submitted to permit the Company to reduce state
franchise taxes which it pays in the State of Delaware, the jurisdiction of the
Company's incorporation. In Delaware, the franchise taxes paid by the Company
are determined by formula, taking into account the Company's authorized shares
of common stock and preferred stock. Due to the significant number of shares
presently authorized by the Company's Certificate of Incorporation, the Company
believes that its present franchise tax obligations are inordinately high
relative to the Company's size and foreseeable needs.
Management does not anticipate that the shares by which the total
authorized capital stock would be decreased will be required in connection with
any future offerings of equity securities by the Company. If additional
authorized shares are so required, a proposed increase will be submitted for
approval to the Company's stockholders. Management believes that the proposed
amendment will provide a long-term advantage to the Company and its stockholders
by the reduction of annual franchise taxes to be paid by the Company in
Delaware.
If the proposal is adopted, the first paragraph of Article Fourth of
the Company's Certificate of Incorporation will be amended to read as follows:
FOURTH: The total number of shares of all classes that the
Corporation shall have authority to issue is 70,000,000 of
which 10,000,000 shall be Preferred Shares, par value $.10 per
share, and 60,000,000 shall be Common Shares, $.01 par value
per share.
The proposed amendment would not affect the proportionate equity
interest in the Company of any holder of Common Stock or Preferred Stock.
If the proposal is approved, such amendment would become effective
upon the filing of the amendment with the Delaware Secretary of State.
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The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock and the affirmative vote of the holders of a majority of
the outstanding shares of Preferred Stock, voting as separate classes, is
required to approve the proposal. The Board of Directors recommends a vote FOR
the proposal.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") of the Board of Directors
is responsible for formulating and recommending to the full Board of Directors
the compensation paid to the Company's two executive officers, Mr. Cambridge and
Mr. Oldham. In reviewing the overall compensation of the Company's executive
officers, the Committee reviews and considers the following components of
executive compensation: base salaries, stock option grants, cash bonuses,
insurance plans, and Company contributions to the Company's 408(k) retirement
plan. The Committee consists of Myrle Greathouse and Charles R. Pannill,
non-employee Directors of the Company.
In establishing the compensation paid to the Company's executives, the
Committee emphasizes (i) providing compensation that will motivate and retain
the Company's executives and reward performance, (ii) encouraging the long- term
success of the Company, and (iii) encouraging the application of prudent
decision making processes in an industry marked by volatility and high risk.
Historically, the Committee has evaluated compensation paid to the
Company's executive officers based upon a variety of factors, including the
Company's growth in oil and gas reserves, the market value of the Company's
Common Stock, cash flow, the extent to which the Company's executive officers
are able to find and create opportunities for the Company to participate in
drilling or acquisition ventures having quality prospects, their ability to
formulate and maintain sound budgets for the Company's drilling ventures and
other business activities, the overall financial condition of the Company, and
the extent to which proposed business plans are met. The Committee does not
assign relative weights or rankings to these factors but instead makes a
subjective determination based upon a consideration of all such factors.
In establishing base salaries for the Company's executive officers, the
Committee does not rely on formal surveys or comparisons with other companies,
but instead relies on their general knowledge and experience, focusing on a
subjective analysis of each executive's contributions to the Company's overall
performance. Independent consultants have not been utilized by the Committee.
While specific performance levels or "benchmarks" are not used to establish
salaries, the Committee does take into account historic comparisons of Company
performance. With respect to awards of stock options, the Committee tries to
provide the Company's executives with an incentive compensation vehicle that
could result in future additional compensation to the executives, but only
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if the value of the Company increases for all stockholders. All stock options
are granted with exercise prices equal to the fair market value of the Company's
Common Stock on the date of grant. When awarding stock options, the Committee
considers the number of options granted on prior occasions.
The Committee did not award salary increases to either of the Company's
executive officers in 1997, the most recent salary adjustments being a 10%
increase for each of Messrs. Cambridge and Oldham in August, 1996. In February,
1997, the Committee granted to Mr. Oldham a stock option to purchase 100,000
shares of the Company's Common Stock and in May, 1997, a stock option to
purchase 100,000 shares of Common Stock was granted to Mr. Cambridge. Until
these grants, the Company's executive officers had not been awarded stock
options since October, 1993.
The Company does not provide significant perquisites to its employees
or Directors, and only one executive officer of the Company participates in the
Company's group insurance and retirement plans.
In the case of Mr. Cambridge, the Chief Executive Officer of the
Company, the factors considered by the Committee in establishing recommended
levels and components of compensation, in addition to those discussed above,
include the amount of time devoted by Mr. Cambridge to the business of the
Company and the fact that he does not participate in any of the Company's
insurance or retirement plans. These additional factors are included and
considered in the evaluation of Mr. Cambridge's compensation since he does not
serve the Company as a full-time employee. In reviewing the overall compensation
of Mr. Cambridge in 1997, the Committee also took into account the fact that Mr.
Cambridge had not received an increase in his salary since August, 1996 or an
award of stock options since October, 1993. The Committee further considered the
Company's overall operating results and the individual contributions made by Mr.
Cambridge towards the achievement of these results, including the sustained
growth in the Company's oil and gas reserves, financing arrangements, increased
oil and gas production, and the increased responsibilities of Mr. Cambridge
generally associated with the Company's growth. Specifically, in December, 1996
and January, 1997, the Company successfully consummated a public offering of its
Common Stock under Mr. Cambridge's guidance and the Company achieved record
results in the areas of oil and gas revenues, net income, oil and gas production
and oil and gas reserves for the year ended December 31, 1996. In May, 1997, the
Committee awarded Mr. Cambridge a stock option to purchase 100,000 shares of
Common Stock. In addition to the stock option, Mr. Cambridge also received a
Christmas bonus in the amount of $1,000, as did all employees of the Company.
The Committee feels that the stock option awards to the Company's executive
officers, including Mr. Cambridge, act as a catalyst to advancing the financial
interests of stockholders along with those of management. It is the Committee's
conclusion that the amount and types of compensation currently being paid to the
Company's executive officers are sufficient to motivate such officers and
encourage ongoing efforts directed towards increasing the value of the Company
for all stockholders.
-12-
<PAGE> 15
Recently enacted provisions of the Internal Revenue Code of 1986, as
amended, that restrict the deductibility of certain compensation over one
million dollars per year has not been a factor in the Committee's considerations
or recommendations.
Myrle Greathouse
Charles R. Pannill
-13-
<PAGE> 16
SUMMARY OF ANNUAL COMPENSATION
The Summary Compensation Table below sets forth for each of the three
fiscal years ended December 31, 1997, a summary of the types and amounts of
compensation paid to the executive officers of the Company.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
----------------------------------- ------------------------ --------
Other Restricted Securities All Other
Name and Annual Stock Underlying LTIP Compen-
Principal Salary Bonus Compen- Awards Options/ Payouts sation
Position Year ($) ($) sation ($) $ SARs(#) ($) ($)
- ------------------ ---- -------- -------- --------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
T.R. Cambridge 1997 $ 70,686 $ 1,000 $ 825 0 100,000 0 0
Chief Executive
Officer and 1996 $ 66,402 $ 2,945 $ 825 0 0 0 0
Chairman of the
Board of 1995 $ 62,475 $ 3,560 $ 900 0 0 0 0
Directors
L.C. Oldham 1997 $104,297 $ 1,000 $ 16,620(1) 0 100,000 0 $ 6,695(2)
President, 1996 $ 98,766 $ 4,346 $ 11,521(1) 0 0 0 $ 2,963(2)
Treasurer
and Director 1995 $ 92,181 $ 5,015 $ 11,521(1) 0 0 0 $ 2,765(2)
</TABLE>
- ----------------
(1) Such amount includes insurance premiums for nondiscriminatory group
life, medical, disability and dental insurance as follows: $11,532 for
1997; $10,417 for 1996; and $9,171 for 1995.
(2) For 1995 and 1996, such amounts represent contributions made by the
Company to Mr. Oldham's individual retirement account maintained under
the Company's 408(k) simplified employee pension plan/individual
retirement account ("SEP Account"). For 1997, such amount includes
$3,129 contributed by the Company to Mr. Oldham's SEP Account and the
reimbursement to Mr. Oldham of $3,566 for income tax preparation and
planning.
-14-
<PAGE> 17
STOCK OPTIONS
The Company has in the past utilized stock options as part of its
overall compensation of Directors, officers and employees. Narrative
descriptions of the Company's stock option plans and outstanding stock options
are set forth under the caption "Stock Option Plans" below.
The table below sets forth certain information with respect to stock
options granted to the named executive officers during the fiscal year ended
December 31, 1997.
Option/Sar Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------------- Potential Realizable
Value at Assumed Annual
Number of Percent of Rates of Stock Price
Securities Total Options Appreciation for
Underlying Granted to Exercise or Option Term (1)
Options Employees in Base Price Expiration ---------------------
Name Granted (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
- ---- ----------- ----------- --------------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
T. R. Cambridge 100,000 (2) 66.67% $4.09 5-17-07 $257,670 $650,310
L.C. Oldham 100,000 (3) 66.67% $4.82 2-10-07 $303,660 $766,380
</TABLE>
- ----------------
(1) These amounts are calculated based on the indicated annual rates of
appreciation and annual compounding from the date of grant to the end
of the option term. Actual gains, if any, on stock option exercises
are dependent on the future performance of the Common Stock and
overall stock market conditions. There is no assurance that the
amounts reflected in this table will be achieved.
(2) A nonqualified stock option to purchase 100,000 shares of Common Stock
was granted to Mr. Cambridge on May 17, 1997 pursuant to the Company's
Non-employee Directors' Stock Option Plan. The option is exercisable
in two equal annual installments, commencing May 17, 1998.
(3) On February 10, 1997 an incentive stock option to purchase 100,000
shares of the Company's Common Stock was granted to Mr. Oldham
pursuant to the Company's 1992 Stock Option Plan. The option is
exercisable in five equal annual installments, commencing February 10,
1998.
-15-
<PAGE> 18
The following table sets forth certain information with respect to
stock option exercises during the fiscal year ended December 31, 1997 by the
executive officers of the Company and the value of each such executive
officer's unexercised stock options at December 31, 1997.
Aggregated Option/SAR Exercises in
Last Fiscal Year and Fiscal Year - End Option/SAR Values
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Securities Underlying Unexercised In-the-Money
Shares Options at Options
Acquired on Value Fiscal Year-End (#) at Fiscal Year-End (#)(1)
Exercise Realized --------------------------------- -----------------------------
Name (#) ($)(2) Exercisable Unexercisable Exercisable Unexercisable
- --------------- ----------- -------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T.R. Cambridge 0 0 250,000 100,000 $1,197,750 $266,000
L.C. Oldham 290,000 $1,858,900 347,000 100,000 $1,752,590 $266,000
</TABLE>
- ---------------
(1) Value of in-the-money options is equal to the fair market value of a
share of Common Stock at fiscal year-end ($6.75 per share), based on
the last sale price of the Company's Common Stock, less the exercise
price.
(2) The value realized is equal to the fair market value of a share of
Common Stock on the date of exercise ($6.75 per share), based on the
last sale price of the Company's Common Stock, less the exercise price.
-16-
<PAGE> 19
STOCK PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
Company Market Peer
Date Index Index Index
- --------- ------- ------- -------
<S> <C> <C> <C>
12/31/92 100.000 100.000 100.000
01/29/93 104.000 102.846 106.586
02/26/93 180.000 99.010 114.696
03/31/93 182.000 101.875 127.733
04/30/93 232.000 97.528 133.226
05/28/93 232.000 103.350 139.712
06/30/93 256.000 103.826 141.127
07/30/93 244.000 103.949 133.276
08/31/93 304.000 109.321 139.499
09/30/93 488.000 112.577 138.294
10/29/93 480.000 115.107 138.330
11/30/93 384.000 111.676 124.338
12/31/93 376.000 114.790 119.418
01/31/94 384.000 118.274 122.490
02/28/94 568.000 117.170 123.544
03/31/94 512.000 109.964 114.822
04/29/94 544.000 108.537 116.683
05/31/94 524.000 108.801 120.953
06/30/94 480.000 104.822 119.230
07/29/94 456.000 106.972 120.415
08/31/94 464.000 113.792 114.145
09/30/94 448.000 113.501 115.842
10/31/94 456.000 115.732 118.579
11/30/94 368.000 111.892 112.137
12/30/94 368.000 112.206 110.441
01/31/95 376.000 112.835 103.138
02/28/95 376.000 118.802 102.835
03/31/95 264.000 122.325 108.490
04/28/95 192.000 126.177 109.361
05/31/95 224.000 129.432 111.125
06/30/95 256.000 139.921 110.966
07/31/95 248.000 150.207 111.083
08/31/95 256.000 153.252 109.471
09/29/95 264.000 156.776 112.370
10/31/95 240.000 155.878 106.512
11/30/95 224.000 159.538 108.405
12/29/95 228.000 158.688 116.039
01/31/96 328.000 159.470 120.107
02/29/96 288.000 165.539 123.014
03/29/96 344.000 166.088 120.281
04/30/96 472.000 179.868 130.712
05/31/96 496.000 188.126 139.325
</TABLE>
-17-
<PAGE> 20
<TABLE>
<S> <C> <C> <C>
06/28/96 496.000 179.646 145.897
07/31/96 616.000 163.650 136.907
08/30/96 640.000 172.818 137.279
09/30/96 648.000 186.037 150.000
10/31/96 656.000 183.982 156.942
11/29/96 648.000 195.356 163.426
12/31/96 600.000 195.180 167.613
01/31/97 672.000 209.051 170.438
02/28/97 568.000 197.495 143.326
03/31/97 624.000 184.602 146.235
04/30/97 528.000 190.373 138.327
05/30/97 584.000 211.956 151.881
06/30/97 640.000 218.441 162.020
07/31/97 568.000 241.500 162.003
08/29/97 768.000 241.132 174.625
09/30/97 848.000 255.398 199.531
10/31/97 808.000 242.178 196.799
11/28/97 720.000 243.390 177.541
12/31/97 864.000 239.567 159.759
</TABLE>
LEGEND
<TABLE>
<CAPTION>
Symbol Total Returns Index for: 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
- ------ ----------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
______ [ ] Parallel Petroleum Corporation 100.00 376.0 368.0 228.0 600.0 864.0
... __ . * Nasdaq Stock Market (US Companies) 100.00 114.8 112.2 158.7 195.2 239.6
- - - - - # NASDAQ Stocks (SIC 1310-1319 US 100.00 119.4 110.4 116.0 167.6 159.8
Companies) Crude Petroleum and
Natural Gas
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
-18-
<PAGE> 21
The indexes in the performance graph, prepared by the Center for
Research in Security Prices of the University of Chicago Graduate School of
Business, compare the annual cumulative total stockholder return on the
Company's Common Stock with the cumulative total return of The Nasdaq Stock
Market (U.S.) Index and a peer group index comprised of 126 U.S. companies
engaged in crude oil and natural gas operations, based on a three-digit
standard industrial classification ("SIC") code, whose stocks were traded on
Nasdaq during the five year period ended December 31, 1997. The table assumes
that the value of an investment in the Company's Common Stock and each index
was $100 at the end of 1992 and that all dividends were reinvested.
CHANGE OF CONTROL ARRANGEMENTS
The Company's outstanding stock options and stock option plans contain
certain "change of control" provisions which are applicable to the Company's
outstanding stock options, including the options held by Messrs. Cambridge and
Oldham, and other Directors of the Company. Such provisions include the
following: if (i) the Company is not the surviving entity in any merger or
consolidation, (ii) the Company sells, leases or exchanges all or substantially
all of its assets, (iii) the Company is to be dissolved and liquidated, (iv)
any person or group acquires beneficial ownership of more than 50% of the
Company's outstanding Common Stock, or (v) in connection with a contested
election of directors, the persons who were directors of the Company before
such election cease to constitute a majority of the Board of Directors (each
such event, a "Corporate Change"), then within (a) ten days after approval by
the stockholders of the Company of such merger, consolidation, sale, lease or
exchange of assets or dissolution or election of directors or (b) thirty days
of such change of control, the Compensation Committee (the "Committee") of the
Board of Directors shall effect one or more of the following alternatives: (1)
accelerate the time at which options may be exercised, (2) require the
mandatory surrender to the Company by optionees of some or all of such options,
in which event the Committee shall cancel such options and pay to each the
"Change of Control Value", (3) make such adjustments to such options as the
Committee deems appropriate to reflect such Corporate Change or (4) provide
that 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 Common Stock as to which such option is then exercisable, the number
and class of shares of stock or other securities or property to which the
optionee would have been entitled pursuant to the terms of the agreement of
merger, consolidation or sale of assets and dissolution if, immediately prior
to such merger, consolidation or sale of assets and dissolution the optionee
had been the holder of record of the number of shares of Common Stock as to
which such option is then exercisable. The "Change of Control Value" is an
amount equal to, whichever is applicable, (i) the per share price offered to
stockholders of the Company in any merger, consolidation, sale of assets or
dissolution transaction, (ii) the price per share offered to stockholders of
the Company in any tender offer or exchange offer whereby a Corporate Change
takes place, or (iii) if such Corporate Change occurs other than pursuant to a
tender or exchange offer, the fair market value per share of the shares into
which such options being surrendered are exercisable, as determined by the
Committee as of the date determined by the Committee to be the date of
cancellation and surrender of such options.
-19-
<PAGE> 22
COMPENSATION OF DIRECTORS
Messrs. Conklin, Duke, Greathouse and Pannill, non-employee Directors
of the Company, each receive $1,000 for attendance at meetings of the Board of
Directors and $500 for attendance at meetings of Board committees of which they
are members. All Directors are reimbursed for expenses incurred in connection
with attending meetings.
The Company's 1992 Stock Option Plan provides for the granting of a
one-time option to purchase 25,000 shares of the Company's Common Stock to each
individual who was a non-employee Director of the Company on March 1, 1992 and
to each individual who becomes a non-employee Director after March 1, 1992.
See "Stock Option Plans" below. Each non-employee Director of the Company has
been granted an option pursuant to these provisions of the 1992 Plan, all of
which were granted prior to 1995.
Directors who are not employees of the Company are eligible to
participate in the Non-Employee Directors Stock Option Plan. See "Stock
Options Plans" below. On May 17, 1997, each of Messrs. Conklin, Duke,
Greathouse and Pannill were granted an option to purchase 35,000 shares of
Common Stock and Mr. Cambridge was granted an option to purchase 100,000 shares
of Common Stock. All of the options were granted with an exercise price of
$4.09 per share, the fair market value of the Company's Common Stock on the
date of grant. The options are exercisable with respect to one-half of the
shares on May 17, 1998, and one-half on May 17, 1999. The options expire ten
years from the date of grant.
STOCK OPTION PLANS
1983 Incentive Stock Option Plan. In May, 1984, the Company's
stockholders approved and adopted the Company's 1983 Incentive Stock Option
Plan (the "1983 Plan"). Options granted under the 1983 Plan are intended to be
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), which, generally, provides the
holder of an incentive stock option with certain favorable tax benefits. Under
the terms of the 1983 Plan, all employees of the Company were eligible to
participate. The 1983 Plan authorized the granting of options to purchase a
total of 750,000 shares of the Company's Common Stock. The exercise price of
options granted under the 1983 Plan must be at least equal to the fair market
value of the Company's Common Stock on the date of grant. Subject to the right
of accumulation, each option is exercisable as to one-third of the shares
optioned one year after the date of grant, with an additional one-third of the
shares becoming exercisable at the end of each year thereafter. Options are
cumulative and, to the extent not exercised in each annual period, may be
exercised in whole or in part three years after the date of grant. All options
expire, in any event, ten years after the date of grant. Although the 1983
Plan expired by its own terms on May 19, 1993, incentive stock options to
purchase 247,000 shares of Common Stock, which were granted prior to May 19,
1993, remain outstanding and subject to all terms and conditions of the 1983
Plan. The 1983 Plan is administered by the Compensation Committee of the
Company's Board of Directors.
-20-
<PAGE> 23
1992 Stock Option Plan. In May, 1992, the Company's stockholders
approved and adopted the Company's 1992 Stock Option Plan (the "1992 Plan"). The
1992 Plan provides for the granting to key employees (including officers and
Directors who are also key employees) of the Company and Directors who are not
employees of the Company of options to purchase up to an aggregate of 750,000
shares of Common Stock. Options granted under the 1992 Plan to employees may be
either incentive stock options within the meaning of Section 422 of the Code, or
options which do not constitute incentive stock options. Options granted to
non-employee Directors will not be incentive stock options.
The 1992 Plan is administered by the Board's Compensation Committee,
none of whom are eligible to participate in the 1992 Plan except to receive a
one-time option to purchase 25,000 shares at the time he becomes a Director. The
Compensation Committee has the sole authority to select the employees who are to
be granted options, to establish the number of shares issuable under each option
and to establish such terms and conditions as may be approved by the
Compensation Committee, except that the purchase price of Common Stock issued
under each option shall not be less than the fair market value of the stock
subject to the option at the time of grant.
The 1992 Plan provides for the granting of an option to purchase 25,000
shares of Common Stock to each individual who was a non-employee Director of the
Company on March 1, 1992 and to each individual who becomes a non-employee
Director following March 1, 1992. Members of the Compensation Committee are not
eligible to participate in the 1992 Plan other than to receive a non-qualified
stock option to purchase 25,000 shares of Common Stock as described above.
An option may be granted in exchange for an individual's right and
option to purchase shares of Common Stock pursuant to the terms of an agreement
that existed prior to the date such option is granted ("Prior Option"). An
option agreement that grants an option in exchange for a Prior Option must
provide for the surrender and cancellation of the Prior Option. The purchase
price of Common Stock issued under an option granted in exchange for a Prior
Option shall be determined by the Compensation Committee and, such purchase
price may, without limitation, be equal to the price for which the optionee
could have purchased Common Stock under the Prior Option.
The Board of Directors of the Company may amend or terminate the 1992
Plan at any time, but may not in any way terminate or restrict the rights of a
participant under an outstanding option without the consent of such participant.
The Board of Directors may not make any alteration or amendment which would
materially increase the benefits accruing to participants under the 1992 Plan,
increase the aggregate number of shares which may be issued pursuant to the
provisions of the 1992 Plan, change the class of individuals eligible to receive
options under the 1992 Plan, or extend the term of the 1992 Plan, without the
approval of the stockholders of the Company.
The 1992 Plan will terminate upon and no further options may be
granted thereunder after the expiration of ten years from the date of its
adoption by the Board of Directors.
-21-
<PAGE> 24
Non-Employee Directors Stock Option Plan. The Company's Non-Employee
Directors Stock Option Plan (the "Directors Plan") was approved by the
stockholders of the Company at the annual meeting of stockholders held on May
14, 1997. The Plan provides for granting to Directors who are not employees of
the Company options to purchase up to an aggregate of 500,000 shares of Common
Stock of the Company. Options granted under the Directors Plan will not be
incentive stock options within the meaning of the Code.
The Directors Plan is administered by the Compensation Committee of the
Board of Directors. The Compensation Committee has sole authority 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 such terms and conditions as the Committee shall prescribe from time
to time in accordance with the Plan. Under provisions of the Directors Plan, the
option exercise price must be the fair market value of the stock subject to the
option on the date the option is granted. Options are not transferable other
than by will or the laws of descent and distribution and are not exercisable
after ten years from the date of grant.
The purchase price of shares as to which an option is exercised must be
paid in full at the time of exercise (i) in cash, (ii) by delivering to the
Company shares of stock having a fair market value equal to the purchase price,
or (iii) a combination of cash or stock, as established by the Compensation
Committee.
The Board may terminate the Directors Plan at any time in its
discretion with respect to any shares for which options have not theretofore
been granted. The Board also has the right to alter or amend the Directors
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.
Other Option Grants. In addition to the stock options granted pursuant
to the Company's stock option plans, the Company has, on two occasions, granted
stock options to Mr. Cambridge pursuant to the general corporate powers of the
Company, rather than pursuant to such plans. Upon recommendation of the
Company's Compensation Committee, the Board of Directors of the Company granted
a non-qualified stock option to Mr. Cambridge to purchase 150,000 shares of
Common Stock at an exercise price of $.64 per share, the fair market value of
the Common Stock on December 11, 1991, the date of grant. On October 18, 1993,
and upon further recommendation of the Company's Compensation Committee, the
Board of Directors granted a non-qualified stock option to Mr. Cambridge to
purchase 100,000 shares of Common Stock at an exercise price of $3.9375 per
share, the fair market value of the Common Stock on the date of grant. Neither
option is transferable other than by will or the laws of descent and
distribution and both options terminate ten years from the date of grant.
-22-
<PAGE> 25
RETIREMENT PLAN
The Company maintains under Section 408(k) of the Code a combination
simplified employee pension ("SEP") and individual retirement account ("IRA")
plan (the "SEP/IRA") for eligible employees. Generally, eligible employees
include all employees who are at least twenty-one years of age.
Company contributions to employee SEP accounts may be made from time to
time at the discretion of the Company, as authorized from time to time by the
Compensation Committee of the Board of Directors, and the percentage of such
contributions may also vary from time to time. However, the same percentage
contribution must be made for all participating employees. The Company is not
required to make annual contributions to the employees SEP accounts. The Company
may make tax-deductible contributions for each employee participant of up to 15%
of such participant's compensation or $30,000, whichever is less. Under the
prototype simplified employee pension plan adopted by the Company, all of the
Company's SEP contributions must be made to SEP/IRAs maintained with the sponsor
of the plan, a national investment banking firm. All contributions to employees'
accounts are immediately 100% vested and become the property of each employee at
the time of contribution, including employer contributions, income-deferral
contributions and IRA contributions. Generally, earnings on contributions to an
employee's SEP/IRA account are not subject to federal income tax until
withdrawn.
In addition to receiving SEP contributions by the Company, employees
may make individual annual IRA contributions of up to the lesser of $2,000 or
100% of compensation. Each employee is responsible for the investment of funds
in his or her own SEP/IRA and can select investments offered through the sponsor
of the plan.
Distributions may be taken by employees at any time and must commence
by April 1st following the year in which the employee attains age 70 1/2.
The Company presently makes matching contributions to employee accounts
in an amount equal to the contribution made by each employee, not to exceed,
however, 3% of each such employee's salary during any calendar year. During the
fiscal year ended December 31, 1997, the Company contributed an aggregate of
$14,265 to the accounts of seven employee participants, of which $3,129 was
allocated to the account of Mr. Oldham, the President and a Director of the
Company.
CERTAIN TRANSACTIONS
From time to time, Wes-Tex Drilling Company ("Wes-Tex"), a corporation,
acquires undivided interests in oil and gas leasehold acreage from the Company
and participates with the Company and other interest owners in the drilling and
development of such acreage. Myrle Greathouse, a director and the sole
shareholder of Wes-Tex, has served as a Director of the Company since December
1993. Wes-Tex participates in such operations under standard form operating
-23-
<PAGE> 26
agreements on the same or similar terms afforded by the Company to nonaffiliated
third parties. The Company invoices all working interest owners, including
Wes-Tex, on a monthly basis, without interest, for their pro rata share of lease
acquisition, drilling and operating expenses. During the year ended December 31,
1997, the Company billed Wes-Tex the aggregate amount of approximately $27,000
for Wes-Tex's proportionate share of lease operating expenses incurred on
properties operated by the Company. The largest amount owed to the Company by
Wes-Tex at any one time during the year ended December 31, 1997 for its share of
lease operating expenses was approximately $9,000, and at December 31, 1997,
Wes-Tex owed the Company approximately $9,000 for such expenses. During the
fiscal year ended December 31, 1997, the Company disbursed approximately $75,000
to Wes-Tex in payment of revenues attributable to Wes-Tex's pro rata share of
the proceeds from sales of oil and gas produced from properties in which Wes-Tex
and the Company owned interests.
During the year ended December 31, 1997, Cambridge Production, Inc.
("CPI"), a corporation owned by Mr. Cambridge, served as operator of 18 wells on
oil and gas leases in which the Company owned an interest. Generally, the
operator of a well is responsible for the day to day operations on the lease,
overseeing of production, employment of field personnel, maintenance of
production and other records, determining the location and timing of drilling of
wells, gas contract administration, joint interest billings, revenue
distribution, making various regulatory filings, reporting to working interest
owners and other matters. During 1997, CPI billed the Company approximately
$498,000, which included $73,000 for the Company's pro rata share of lease
operating expenses and $425,000 for the Company's pro rata share of drilling
expenses and workover expenses. Of the total amount billed to the Company,
approximately $476,000 was paid by the Company to CPI during 1997. The largest
amount owed by the Company to CPI at any one time during 1997 was approximately
$45,000. At December 31, 1997, CPI owed the Company approximately $15,000. CPI's
billings to the Company are made monthly on the same basis as made to all other
working interest owners in the wells. The Company's pro rata share of oil and
gas sales during 1997 from the wells operated by CPI was approximately $211,000.
Management of the Company believes that each of the above referenced
transactions was made on terms no less favorable than if such transactions had
been entered into with an unrelated party.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, subject to ratification by the stockholders at
the Annual Meeting, has reappointed the firm of KPMG Peat Marwick LLP as
independent auditors for the fiscal year ending December 31, 1998. If the
stockholders do not ratify this appointment, the Board may consider other
independent public accountants or continue the appointment of KPMG Peat Marwick
LLP. KPMG Peat Marwick LLP has been the Company's independent auditors since
1979.
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Representatives of KPMG Peat Marwick LLP are expected to be present at
the Annual Meeting of Stockholders and will be afforded an opportunity to make
a statement at the Annual Meeting if they desire to do so. It is expected that
such representatives will be available to respond to appropriate questions.
Stockholders are requested to vote FOR the ratification of the
reappointment of KPMG Peat Marwick LLP as the Company's independent auditors
for the fiscal year ending December 31, 1998.
OTHER MATTERS
The Company's Board of Directors does not know of any other business
to be presented at the Annual Meeting of Stockholders. If any other matter
properly comes before the Annual Meeting, however, it is intended that the
persons named in the enclosed Proxy will vote said Proxy in accordance with
their best judgment on such matters.
Stockholders may obtain, without charge, a copy of the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 as filed with
the Securities and Exchange Commission upon written request addressed to the
Manager of Public Relations of the Company, One Marienfeld Place, Suite 465, 110
N. Marienfeld, Midland, Texas 79701.
STOCKHOLDER PROPOSALS
Stockholders desiring to submit proposals for action at the Company's
1999 annual meeting of stockholders must submit such proposals to the Company
at its principal executive office on or before December 15, 1998. Proposals
should be sent to the Secretary of the Company, One Marienfeld Place, Suite
465, 110 N. Marienfeld, Midland, Texas 79701. The use of certified mail,
return receipt requested, is suggested.
By Order of the Board of Directors
THOMAS W. ORTLOFF
Secretary
Midland, Texas
May 4, 1998
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<PAGE> 28
APPENDIX A
PARALLEL PETROLEUM CORPORATION
1998 STOCK OPTION PLAN
I. PURPOSE OF THE PLAN
The Parallel Petroleum Corporation 1998 Stock Option Plan (the "Plan")
is intended to provide a means whereby certain employees of Parallel Petroleum
Corporation, a Delaware corporation (the "Company"), and its subsidiaries 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 certain employees the option ("Option") to purchase shares of the
common stock of the Company ("Stock"), as hereinafter set forth. Options granted
under the Plan to employees may be either incentive stock options, within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), ("Incentive Stock Options") or options which do not constitute
Incentive Stock Options.
II. 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 employees who are to be granted Options
hereunder and to establish the number of shares which may be issued to employees
under each Option and to prescribe the form of the agreement embodying awards of
Options. The Committee is authorized to interpret the Plan and may from time to
time 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 in selecting the employees to whom Options shall be granted, in
establishing the number of shares which may be issued to employees under each
Option and in construing the provisions of the Plan shall be final. 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.
<PAGE> 29
III. 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 employee
during the employee's lifetime and while the employee remains employed by the
Company, except that: (i) if the employee ceases to be an employee of the
Company because of disability, the Option may be exercised in full by the
employee (or the employee'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 employee) at any time during the period of one year following such
termination; (ii) if the employee dies while he is an employee of the Company,
the employee'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 employee,
may exercise the Option in full at any time during the period of one year
following the date of the employee's death; and (iii) if the employee ceases to
be an employee of the Company for any reason other than as described in clause
(i) or (ii) above, unless the employee is removed for cause, the Option may be
exercised by the employee at any time during the period of three months
following the date the employee ceases to be an employee of the Company, or by
the employee'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 employee)
during a period of one year following the employee's death if the employee dies
during such three-month period, but in each case only as to the number of shares
the employee was entitled to purchase hereunder upon exercise of the Option as
of the date the employee ceases to be an employee.
(c) The Option shall not be exercisable in any event after the
expiration of ten years from the date of grant.
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<PAGE> 30
(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 employee, the employee (or
the person permitted to exercise the Option in the event of the employee'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 employee stock option
agreements need not be identical.
IV. ELIGIBILITY OF OPTIONEE
(a) Subject to the provisions of paragraph (b) below, Options may be
granted only to individuals who are employees (including officers and directors
who are also employees) of the Company or any parent or subsidiary corporation
(as defined in Section 424 of the Code) of the Company at the time the Option is
granted. Options may be granted to the same employee on more than one occasion.
(b) No Incentive Stock Option shall be granted to an individual if, at
the time the Option is granted, such individual owns stock possessing more than
10% of the total combined voting power of all classes of stock of the Company or
of its parent or subsidiary corporation, within the meaning of Section 422(b)(6)
of the Code, unless (i) at the time such Option is granted the option price is
at least 110% of the fair market value of the Stock subject to the Option and
(ii) such Option by its terms is not exercisable after the expiration of five
years from the date of grant. To the extent that the aggregate fair market value
(determined at the time the respective Incentive Stock Option is granted) of
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 parent and subsidiary corporations exceeds
$100,000, such 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, Treasury Regulations and other
administrative pronouncements, which of an employee optionee's Incentive Stock
Options will not constitute Incentive Stock Options because of such limitation
and shall notify the employee optionee of such determination as soon as
practicable after such determination.
V. SHARES SUBJECT TO THE PLAN
The aggregate number of shares which may be issued under Options
granted under the Plan shall not exceed 850,000 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
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<PAGE> 31
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 a
sufficient number of shares to meet the requirements of the Plan. Should any
Option hereunder expire or terminate 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 Article
VII 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. Separate stock certificates shall be issued by the Company
for those shares acquired pursuant to the exercise of an Incentive Stock Option
and for those shares acquired pursuant to the exercise of any Option which does
not constitute an Incentive Stock Option.
VI. 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 Article VIII, 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.
VII. 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 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.
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<PAGE> 32
(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
employees shall become fully exercisable and upon any exercise of an Option
theretofore granted the employee 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 employee would have been entitled pursuant to the terms
of the Corporate Change if, immediately prior to such Corporate Change, the
employee 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.
VIII. 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.
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<PAGE> 33
IX. MISCELLANEOUS PROVISIONS
(a) Neither the Plan nor any action taken hereunder shall be construed
as giving any employee 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, all as provided in Article III),
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.
(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 of Directors or the
Committee.
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<PAGE> 34
PARALLEL PETROLEUM CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - JUNE 3, 1998
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas R. Cambridge and Larry C. Oldham,
severally, as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all of the shares
of Common Stock of PARALLEL PETROLEUM CORPORATION of record in the name of the
undersigned at the close of business on April 29, 1998, which the undersigned is
entitled to vote at the 1998 Annual Meeting of Stockholders of the Company and
at any and all adjournments thereof, with respect to the matters set forth below
and described in the Notice of Annual Meeting and Proxy Statement dated May 4,
1998, receipt of which is acknowledged.
1. ELECTION OF DIRECTORS:
___ FOR ALL NOMINEES LISTED BELOW ___ WITHHOLD AUTHORITY
(except as marked to the contrary) (to vote for all
nominees below)
(INSTRUCTIONS: To withhold authority to vote for any nominee below,
strike a line through the nominee's name)
Thomas R. Cambridge, Danny H. Conklin, Ernest R. Duke, Myrle
Greathouse, Larry C. Oldham, Charles R. Pannill.
2. APPROVAL OF 1998 STOCK OPTION PLAN.
___ FOR ___ AGAINST ___ ABSTAIN
3. PROPOSAL TO DECREASE AUTHORIZED SHARES OF COMMON STOCK AND PREFERRED
STOCK.
___ FOR ___ AGAINST ___ ABSTAIN
4. APPROVAL OF SELECTION OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS
FOR THE COMPANY.
___ FOR ___ AGAINST ___ ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any and all
adjournments thereof.
<PAGE> 35
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder(s). IF NO INDICATION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
-------------------------------------------
Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or guardian
, please give full title as such. If a
corporation, please sign in corporate name
by President or other authorized officer. If
a partnership, please sign in partnership
name by an authorized person.
-------------------------------------------
Signature
-------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED POSTAGE
PRE-PAID ENVELOPE.
DATED ___________________________, 1998
<PAGE> 36
PARALLEL PETROLEUM CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - JUNE 3, 1998
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas R. Cambridge and Larry C. Oldham,
severally, as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all of the shares
of Preferred Stock of PARALLEL PETROLEUM CORPORATION of record in the name of
the undersigned at the close of business on April 29, 1998, which the
undersigned is entitled to vote at the 1998 Annual Meeting of Stockholders of
the Company and at any and all adjournments thereof, with respect to the matters
set forth below and described in the Notice of Annual Meeting and Proxy
Statement dated May 4, 1998, receipt of which is acknowledged.
1. PROPOSAL TO DECREASE AUTHORIZED SHARES OF COMMON STOCK AND PREFERRED
STOCK.
___ FOR ___ AGAINST ___ ABSTAIN
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any and all
adjournments thereof.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder(s). IF NO INDICATION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1.
-------------------------------------------
Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as such. If
a corporation, please sign in corporate name
by President or other authorized officer. If
a partnership, please sign in partnership
name by an authorized person.
-------------------------------------------
Signature
-------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED POSTAGE
PRE-PAID ENVELOPE.
DATED , 1998
----------------------
