Exhibit 10.29
FOURTH AMENDMENT TO FOURTH AMENDED
AND RESTATED CREDIT AGREEMENT
     This Fourth Amendment to Fourth Amended and Restated Credit Agreement (this
“Fourth Amendment”) dated as of November 9, 2009, but except as otherwise
specifically provided herein to be effective as of the Amendment Effective Date
(defined below), is by and among PARALLEL PETROLEUM CORPORATION, a Delaware
corporation (“Borrower”), and CITIBANK, N.A., BNP PARIBAS, WESTERN NATIONAL
BANK, COMPASS BANK, BANK OF SCOTLAND plc, TEXAS CAPITAL BANK, N.A., BANK OF
AMERICA, N.A. and WEST TEXAS NATIONAL BANK (collectively, “Lenders”), and
CITIBANK, N.A., as Joint Lead Arranger and as Administrative Agent (“Agent”) and
BNP PARIBAS, as Joint Lead Arranger and as Syndication Agent.
RECITALS:
     WHEREAS, Borrower and Lenders in the capacities stated above, entered into
that certain Fourth Amended and Restated Credit Agreement dated as of May 16,
2008, as amended by First Amendment to Fourth Amended and Restated Credit
Agreement dated as of October 31, 2008, by Second Amendment to Fourth Amended
and Restated Credit Agreement dated as of December 31, 2008, and by Third
Amendment to Fourth Amended and Restated Credit Agreement dated as of April 30,
2009 (the “Credit Agreement”).
     NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, the parties hereto
agree as follows:
Agreement
     Section 1. Definitions. Except as otherwise expressly provided herein, all
terms defined in the Credit Agreement shall have the same meanings herein.
     Section 2. New Definition of Total Consolidated Funded Debt. Section 1 of
the Credit Agreement is hereby amended to include the following additional
defined term in the appropriate alphabetical order:
     Total Consolidated Funded Debt means as of any date, the sum of (i) the
amount outstanding on the Revolving Loans, and (ii) the principal amount
outstanding on the Senior Unsecured Notes.
     Section 3. New Total Consolidated Funded Debt Covenant. The Credit
Agreement is hereby amended to include a new Section 13(t) reading as follows:
     (t) Total Consolidated Funded Debt. At all times during the term hereof
until all of the Senior Unsecured Notes have been paid in full and retired,
Borrower will not allow its Total Consolidated Funded Debt to exceed
$250,000,000, except that Total Consolidated Funded Debt may exceed

 

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$250,000,000 for a period of time not to exceed 3 days solely as a result of any
Advance to be used by Borrower to redeem Senior Unsecured Notes so long as such
Advance is delivered directly to the Paying Agent (as defined in the Indenture)
for payment to holders of the Senior Unsecured Notes and the Senior Unsecured
Notes are redeemed pursuant to the Indenture or as approved by Agent. This
covenant will be reviewed by Agent and Lenders in connection with each Borrowing
Base determination.
     Section 4. New Liquidity Maintenance Covenant. The Credit Agreement is
hereby amended to include a new Section 13(u) reading as follows:
     (u) Liquidity Maintenance. At all times during the term hereof, Borrower
will not allow the total of its Cash Equivalent Investments, plus the amount of
the Available Commitment which is available for Advance under Section 11(b)
hereof, to be less than $15,000,000.
     Section 5. Retirement of Senior Unsecured Notes. Borrower covenants and
agrees that all funds used to pay and retire Senior Unsecured Notes pursuant to
the Change of Control Offer (as defined in the Escrow Agreement (defined below))
shall be funds distributed from the Holdings Escrow Account and/or the Parallel
Deposit Account as defined in and in accordance with the Escrow Agreement, and
Borrower shall not use its other cash or Cash Equivalent Investments for such
purpose. This covenant shall be effective and binding upon Borrower as of the
date of this Fourth Amendment.
     Section 6. Representations and Warranties of Borrower. Borrower represents
and warrants to Lenders as follows:
          (a) The representations and warranties contained in Section 10 of the
Credit Agreement are true and correct on and as of the date hereof as though
made on and as of the date hereof, except for those representations and
warranties which address matters only as of a particular date (which remain true
and correct as of such date).
          (b) No Event of Default or Default has occurred and is continuing
under the Credit Agreement.
          (c) The execution, delivery and performance by Borrower of this Fourth
Amendment are within Borrower’s corporate powers, have been duly authorized by
all necessary action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not violate or constitute a default
under any provisions of applicable law or any material agreement binding upon
Borrower or its Subsidiaries or result in the creation or imposition of any Lien
upon any of the assets of Borrower or its Subsidiaries, except Permitted Liens.
          (d) This Fourth Amendment constitutes the valid and binding obligation
of Borrower enforceable in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditor’s rights generally, and

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(ii) the availability of equitable remedies may be limited by equitable
principles of general application.
     Section 7. Conditions Precedent. Except as otherwise specifically provided
herein, this Fourth Amendment shall be effective as of the date upon which all
of the following conditions have been satisfied (the “Amendment Effective
Date”):

  (a)   Agent shall have received counterparts of this Fourth Amendment duly
executed by Borrower and Majority Lenders on or before the date of this Fourth
Amendment;     (b)   Agent shall have received any other documents, certificates
and opinions in connection with this Fourth Amendment that may be requested by
Agent, in form and substance satisfactory to Agent;     (c)   Distribution to
Agent of the Parallel Revolving Payment Amount as defined in and pursuant to
that certain Amended and Restated Waiver Escrow Agreement dated as of
November 9, 2009, by and among PLLL Holdings, LLC, Borrower, and Citibank, N.A.,
as Administrative Agent and Escrow Agent, a copy of which is attached hereto as
Exhibit “A” (the “Escrow Agreement”);     (d)   Borrower shall have paid to
Agent for the ratable benefit of Lenders a facility fee in the amount of
$575,000 on the date of this Fourth Amendment; and     (e)   Borrower shall have
paid to Agent for its own account the fees described in that certain fee letter
dated of even date herewith between Borrower and Agent at the time provided
therein.

     Section 8. Ratification of Credit Agreement and Other Loan Documents.
Except as expressly amended hereby, the Credit Agreement and all of the other
Loan Documents are and shall be unchanged and all of the terms, provisions,
covenants, conditions, schedules and exhibits thereof shall remain and continue
in full force and effect and are hereby ratified and confirmed by Borrower and
Lenders as of the date of this Fourth Amendment as if the Credit Agreement and
the other Loan Documents were executed by Borrower and the other parties thereto
as of the date of this Fourth Amendment. The amendments contemplated hereby
shall not limit or impair any Liens securing the Loans, all of which are hereby
ratified, affirmed and extended to secure the Loans as they may be increased
pursuant hereto.
     Section 9. No Waiver. Neither the execution by Lenders of this Fourth
Amendment nor anything contained herein shall in anywise be construed or operate
as a waiver by Lenders of any Default or Event of Default (whether now existing
or that may occur hereafter) or of any of Lenders’ or Agent’s rights under the
Credit Agreement as amended hereby or under any of the other Loan Documents.

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     Section 10. Miscellaneous.
     10.1 Legal Expenses. Borrower hereby agrees to pay on demand all reasonable
fees and expenses of counsel to the Agent incurred by the Agent in connection
with the preparation, negotiation and execution of this Fourth Amendment and all
related documents.
     10.2 Multiple Counterparts. This Fourth Amendment may be executed in a
number of identical separate counterparts (including by facsimile transmission),
each of which for all purposes is to be deemed an original but all of which
shall constitute, collectively, one agreement. No party to this Fourth Amendment
shall be bound hereby until a counterpart of this Fourth Amendment has been
executed by Borrower, Agent and Majority Lenders.
     10.3 Reference to Agreement. Each of the Loan Documents is hereby amended
so that any reference in the Loan Documents to the Credit Agreement shall mean a
reference to the Credit Agreement as amended hereby.
     10.4 Governing Law. This Fourth Amendment is being executed and delivered,
and is intended to be performed, in Midland, Midland County, Texas, and the
substantive laws of Texas shall govern the validity, construction, enforcement
and interpretation of this Fourth Amendment and all other documents and
instruments referred to herein, unless otherwise specified therein.
     10.5 Plural and Singular Forms. The definitions given to terms defined
hereby shall be equally applicable to both the singular and plural forms of such
terms.
     10.6 Final Agreement. THIS FOURTH AMENDMENT, THE CREDIT AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS THEREOF, Borrower and Lenders have caused this Fourth Amendment
to be duly executed as of the day and year first above written.

               BORROWER: PARALLEL PETROLEUM CORPORATION,
a Delaware corporation
      By:   /s/ Steven D. Foster       Steven D. Foster        Chief Financial
Officer                LENDERS: CITIBANK, N.A. a national banking association,
as Joint Lead Arranger and Administrative Agent
and as a Lender
      By:   /s/ Frank K. Stowers       Frank K. Stowers        Vice President   
 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO FOURTH
AMENDED AND RESTATED CREDIT AGREEMENT]

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                  BNP PARIBAS, as Joint Lead Arranger and
Syndication Agent and as a Lender    
 
           
 
  By:   /s/ Edward Pak
 
   
 
  Name:   Edward Pak    
 
  Title:   Vice President    
 
           
 
  By:   /s/ Betsy Jocher
 
   
 
  Name:   Betsy Jocher    
 
  Title:   Director    
 
     
 
   

[SIGNATURE PAGE TO FOURTH AMENDMENT TO FOURTH
AMENDED AND RESTATED CREDIT AGREEMENT]

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            WESTERN NATIONAL BANK,
as a Lender
      By:   /s/ Wesley D. Bownds       Wesley D. Bownds        President     

[SIGNATURE PAGE TO FOURTH AMENDMENT TO FOURTH
AMENDED AND RESTATED CREDIT AGREEMENT]

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                  COMPASS BANK,
as a Lender    
 
           
 
  By:   /s/ Kathleen J. Bowen
 
   
 
  Name:   Kathleen J. Bowen    
 
  Title:   Senior Vice President    
 
         

[SIGNATURE PAGE TO FOURTH AMENDMENT TO FOURTH
AMENDED AND RESTATED CREDIT AGREEMENT]

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                  BANK OF SCOTLAND plc,
as a Lender    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

[SIGNATURE PAGE TO FOURTH AMENDMENT TO FOURTH
AMENDED AND RESTATED CREDIT AGREEMENT]

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                  TEXAS CAPITAL BANK, N.A.,
as a Lender    
 
           
 
  By:   /s/ Brian J. Petet
 
   
 
  Name:   Brian J. Petet    
 
  Title:   Senior Vice President    
 
     
 
   

[SIGNATURE PAGE TO FOURTH AMENDMENT TO FOURTH
AMENDED AND RESTATED CREDIT AGREEMENT]

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                  BANK OF AMERICA, N.A.,
as a Lender    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

[SIGNATURE PAGE TO FOURTH AMENDMENT TO FOURTH
AMENDED AND RESTATED CREDIT AGREEMENT]

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                  WEST TEXAS NATIONAL BANK,
as a Lender    
 
           
 
  By:   /s/ Chris L. Whigham
 
   
 
  Name:   Chris L. Whigham    
 
  Title:   Senior Vice President    
 
     
 
   

[SIGNATURE PAGE TO FOURTH AMENDMENT TO FOURTH
AMENDED AND RESTATED CREDIT AGREEMENT]

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EXHIBIT “A”
to
Fourth Amendment to Fourth Amended
And Restated Credit Agreement
dated November 9, 2009
AMENDED AND RESTATED WAIVER ESCROW AGREEMENT
     This Amended and Restated Waiver Escrow Agreement (this “Agreement”), dated
as of the 9th day of November, 2009, is made by and among PLLL Holdings, LLC, a
Delaware limited liability company (“Holdings”), Parallel Petroleum Corporation,
a Delaware corporation (“Parallel”), Citibank, N.A., a national banking
association, as administrative agent (“Administrative Agent”) for each of the
lenders (collectively, the “Lenders”) that is a signatory to that certain Fourth
Amended and Restated Credit Agreement, as amended or restated, between Parallel
and the Lenders (the “Credit Agreement”), and Citibank, N.A., a national banking
association acting through its Agency & Trust Department, as escrow agent
(“Escrow Agent”).
     WHEREAS, Holdings, Parallel, the Administrative Agent and the Escrow Agent
have previously entered into that certain Waiver Escrow Agreement, dated as of
October 23, 2009 (the “Original Agreement”) wherein the parties set forth the
terms and conditions pursuant to which the Escrow Agent shall hold the
Commitment Amount (as defined below) in escrow and act as Escrow Agent, and the
parties hereto now desire to amend and restate the Original Agreement in its
entirety through this Agreement on the terms and conditions hereinafter set
forth;
     NOW, THEREFORE, the parties hereto agree as follows:
BACKGROUND:
     WHEREAS, Holdings, PLLL Acquisition Co. (“Acquisition”) and Parallel
entered into an Agreement and Plan of Merger, dated September 15, 2009, as
amended (the “Merger Agreement”) pursuant to which Acquisition commenced on
September 24, 2009 a tender offer (the “Offer”) for all of the outstanding
shares of common stock of Parallel, together with the associated preferred stock
purchase rights (the “Shares”); and
     WHEREAS, the purchase by Acquisition pursuant to the Offer of more than 50%
of the Shares and a subsequent merger of Acquisition with and into Parallel
pursuant to the Merger Agreement (the “Merger”) will violate certain provisions
of the Credit Agreement; and
     WHEREAS, Parallel, the Lenders and the Administrative Agent entered into
that certain letter agreement, dated September 15, 2009 (the “Letter Agreement”)
pursuant to which the Lenders committed subject to certain terms and conditions
set forth therein to execute a waiver of compliance (the “Waiver”) by Parallel
of the provisions of the Credit Agreement that would otherwise be violated by
the consummation of the Offer and the Merger; and
     WHEREAS, one condition to the execution of the Waiver is that Holdings or
an affiliate of Holdings deposit into an escrow for the benefit of the Lenders
and Parallel (the “Escrow”) the amount of $158,803,125.00 (the “Commitment
Amount”), which is the total purchase price for all of the 10-1/4% Senior Notes
of Parallel (the “Senior Notes”) for which Parallel is required to
Exhibit “A”

A-1

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make an offer to purchase (the “Change of Control Offer”) upon the consummation
of the Offer pursuant to the terms of Section 4.12 of that certain Indenture,
dated as of July 31, 2007 (the “Indenture”), between Parallel and Wells Fargo
Bank, National Association, as trustee;
     WHEREAS, Holdings, Parallel and Administrative Agent desire to enter into
this Agreement to set forth the terms and conditions pursuant to which the
Escrow Agent shall hold the Commitment Amount in escrow and act as Escrow Agent;
and
     WHEREAS, Holdings, Parallel and Administrative Agent wish to appoint
Citibank, N.A. as Escrow Agent and Citibank, N.A. is willing to accept such
appointment to act as Escrow Agent, in each case upon the terms and conditions
of this Agreement.
     NOW THEREFORE, the parties hereto agree as follows:
     1. Creation of Accounts.
     (a) The Escrow Agent agrees to establish and maintain two (2) accounts at
Citibank, N.A.: (i) a segregated deposit account for the benefit of Holdings,
Administrative Agent and Parallel (collectively, the “Holdings Escrow Account”)
and (ii) a segregated deposit account for the benefit of Parallel and the
Administrative Agent (the “Parallel Deposit Account”). Upon the closing of the
Offer, Holdings caused the Commitment Amount to be delivered to the Escrow Agent
in accordance with instructions provided by the Escrow Agent, and the Escrow
Agent is hereby instructed to deposit the Commitment Amount in the Holdings
Escrow Account and to hold in escrow in the Holdings Escrow Account in
accordance with this Agreement the Commitment Amount, together with all earnings
thereon, if any, after the date hereof (the Commitment Amount, inclusive of all
earnings thereon, being referred to as the “Escrow Funds”). The Escrow Agent
acknowledged receipt of the Commitment Amount. Whenever and to the extent Escrow
Funds are distributed pursuant to the Equity Issuance Instructions provided for
in Section 3(a) of this Agreement (the “Distributed Funds”), the Escrow Agent is
hereby instructed to deposit such Distributed Funds in the Parallel Deposit
Account and to hold in escrow in the Parallel Deposit Account in accordance with
this Agreement the Distributed Funds together with all earnings thereon, if any,
after the date hereof (the Distributed Funds, inclusive of all earnings thereon,
if any, being referred to as the “Deposit Funds”).
     (b) In the event any Senior Notes are to be placed into escrow under
Section 3(d) of this Agreement, Holdings and Parallel agree to use commercially
reasonable efforts to establish an investment account (the “Bond Account”) with
an escrow agent other than the Escrow Agent named herein which will perform the
functions set forth in Section 3(d) (the “Bond Agent”), and Holdings and
Parallel further agree that Section 3(d) will govern with respect to the Senior
Notes and the Bond Account. The Administrative Agent will assist Holdings and
Parallel in connection with finding a Bond Agent. The Escrow Agent, in such
capacity, shall not have any duties or obligations with respect to Section 3(d),
any Senior Notes or the Bond Account. If and when a Bond Account is established,
the Bond Agent will execute and deliver an amendment to this Agreement or an
ancillary agreement agreed upon by Parallel, Holdings, Administrative Agent and
the Bond Agent. Unless otherwise provided in such amendment or ancillary
agreement, the Bond Agent shall have all rights of the Escrow Agent in this
Agreement except
Exhibit “A”

A-2

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those directly relating to the Escrow Funds, the Holdings Escrow Account, the
Deposit Funds and the Parallel Deposit Account and those set forth in Section 5.
     (c) Upon execution of this Agreement, Holdings, Parallel and Administrative
Agent shall each execute and deliver to the Escrow Agent a certificate of
incumbency substantially in the form set forth for such party in Exhibit A
hereto, for the purpose of establishing the identity of the representative of
Holdings, Parallel and Administrative Agent entitled to issue instructions or
directions to the Escrow Agent on behalf of each such party (the person(s) so
designated from time to time, the “Authorized Persons”). In the event of any
change in the identity of such representatives, a new certificate of incumbency
shall be executed and delivered to the Escrow Agent by the appropriate party
with a copy simultaneously sent to the other parties hereto. Until such time as
the Escrow Agent shall receive a new incumbency certificate, the Escrow Agent
shall be fully protected in relying without inquiry on any then current
incumbency certificate on file with the Escrow Agent. In the event funds
transfer instructions are given (other than in writing at the time of execution
of this Agreement) such funds transfer instructions should contain a selected
test word also evidenced on each certificate of incumbency. Test words must
contain at least 8 alphanumeric characters, established at document execution
and changed each time a new certificate of incumbency is executed and delivered
in accordance with the above. The parties to this Agreement acknowledge that
these security procedures for funds transfers are commercially reasonable.
     (d) Holdings, Parallel and Administrative Agent acknowledge and agree that
all funds held in the Holdings Escrow Account, the Parallel Deposit Account and
all rights with respect thereto granted under this Agreement are Collateral (as
defined in the Credit Agreement) and the Administrative Agent and the Lenders
under the Credit Agreement shall possess all rights thereto granted to them
under the Credit Agreement and the Security Instruments (as defined in the
Credit Agreement) that are a part thereof. Holdings and Parallel agree that they
will promptly execute and deliver to Administrative Agent at its reasonable
request all documents, agreements and instruments necessary or appropriate to
carry out the acknowledgement and agreement in the foregoing sentence. The
Escrow Agent, in such capacity, shall have no responsibility, duty, liability or
obligation with respect to the Collateral, the Credit Agreement, other Security
Instruments or any security interest created thereby, and the Escrow Agent is
entitled to rely solely upon the terms of this Agreement.
     (e) To help the U.S. government fight the funding of terrorism and money
laundering activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each person who opens an
account. When an account is opened, the Escrow Agent will ask for information
that will allow the Escrow Agent to identify relevant parties. The parties
hereby acknowledge such information disclosure requirements and agree to comply
with all such information disclosure requests from time to time from the Escrow
Agent.
     2. Investment of Escrow Funds and Deposit Funds. (a) The Escrow Agent shall
hold Escrow Funds in the Holdings Escrow Account and any Deposit Funds in the
Parallel Deposit Account in non-interest bearing accounts at Citibank, N.A. with
no earnings thereon, unless and until Holdings gives written instructions to the
Escrow Agent that either or both be held in approved money market funds as
directed by Holdings.
Exhibit “A”

A-3

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     (b) The Escrow Agent shall invest the Escrow Funds or Deposit Funds, as the
case may be, on the date of receipt of written instructions from Holdings,
provided that such instructions are received on or before 11:00 a.m. New York
City time. Any instructions received by the Escrow Agent after 11:00 a.m. New
York City time shall be treated as if received on the following Business Day.
For purposes of this Agreement “Business Day” shall mean any day that the Escrow
Agent is open for business.
     (c) Any investment direction contained herein may be executed through an
affiliated broker dealer of the Escrow Agent and will be entitled to such usual
and customary fee. Neither Citigroup nor any of its affiliates assume any duty
or liability for monitoring the investment rating.
     3. Disbursement from Holdings Escrow Account and Parallel Deposit Account.
The Escrow Agent shall continue to hold the Escrow Funds and the Deposit Funds
in its possession until authorized hereunder to distribute them as follows:
     (a) pursuant to the joint written instructions in the form of Annex A
hereto (the “Equity Issuance Instructions”) of Holdings and Parallel that
Parallel has issued its common stock to Holdings in exchange for all or a
portion of the Escrow Funds, Escrow Agent shall distribute the amount of the
Escrow Funds set forth in the Equity Issuance Instructions from the Holdings
Escrow Account to the Parallel Deposit Account;
     (b) pursuant to the joint written instructions in the form of Annex B
hereto (the “Note Purchase Instructions”) of Parallel and Administrative Agent
that Parallel is obligated to purchase Senior Notes pursuant to the Change of
Control Offer, Escrow Agent shall distribute the amount of Deposit Funds set
forth in the Note Purchase Instructions from the Parallel Deposit Account to the
Paying Agent under the Indenture as provided in the Note Purchase Instructions;
     (c) pursuant to the joint written instructions in the form of Annex C
hereto (the “Note Contribution Instructions”) of Holdings and Administrative
Agent that Holdings is obligated to purchase Senior Notes pursuant to an offer
made by Holdings or an affiliate of Holdings (other than Parallel) to purchase
Senior Notes (a “Notes Offer”), Escrow Agent shall distribute the amount of
Escrow Funds set forth in the Note Contribution Instructions from the Holdings
Escrow Account to the party set forth in the Note Contribution Instructions;
     (d) in the event that Escrow Funds are distributed pursuant to
Section 3(c), (i) immediately upon the closing of such a Notes Offer, Holdings
shall deposit all of the Senior Notes purchased with the Bond Agent in the Bond
Account, (ii) Holdings shall contribute all Senior Notes in the Bond Account to
Parallel and Parallel shall issue its common stock to Holdings in exchange
therefor within 5 days after each acquisition of Senior Notes by Holdings or its
affiliates, and (iii) pursuant to joint written instructions in the form of
Annex D hereto (the “Note Retirement Instructions”) of Holdings and Parallel
that Parallel has issued common stock to Holdings in exchange for the Senior
Notes purchased by Holdings or its affiliates, the Bond Agent shall distribute
to Parallel the Senior Notes held in the Bond Account;
Exhibit “A”

A-4

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     (e) pursuant to the joint written instructions in the form of Annex E
hereto (the “Release Date Instructions”) of Holdings and Parallel that either
the Change of Control Payment Date (as defined in the Indenture) with respect to
the Change of Control Offer or the date on which the Change of Control Offer is
terminated in accordance with its terms, whichever occurs first, has occurred
(the earlier thereof to occur, the “Release Date”), the Escrow Agent shall
distribute (i) to Administrative Agent, from the Holdings Escrow Account and the
Parallel Deposit Account, the Parallel Revolving Payment Amount (as hereafter
defined) and (ii) to Holdings, from the Holdings Escrow Account, the Holdings
Release Amount (as hereafter defined). The “Parallel Revolving Payment Amount”
shall be an amount (not less than zero) equal to the difference between (1) the
sum of (A) the amount outstanding at the date of determination thereof on the
Revolving Loans under the Credit Agreement and (B) the principal amount
outstanding of the Senior Notes, after taking into account the purchase and
retirement of any Senior Notes pursuant to any written instructions pursuant to
the provisions of this Section 3, and (2) $250 million. The Escrow Agent shall
satisfy the distribution required by subsection (i) hereof first from the
Parallel Deposit Account with any balance required satisfied from the Holdings
Escrow Account. The “Holdings Release Amount” shall be the lesser of (Y) the
balance remaining in the Holdings Escrow Account after the distribution of the
Parallel Revolving Payment Amount and (Z) $33.8 million. The Parallel Revolving
Payment Amount, when received by the Administrative Agent pursuant to this
Section 3(e), shall be immediately applied by the Administrative Agent to the
repayment of the Revolving Loans in accordance with Section 2(a) of the Credit
Agreement. The Escrow Agent shall conclusively rely on the calculations of the
Parallel Revolving Payment Amount and the Holdings Release Amount specified in
the Release Date Instructions, and the Escrow Agent shall have no duty,
obligation, liability or responsibility with respect thereto.
     (f) pursuant to the written instructions of the Administrative Agent that
the Lenders are entitled pursuant to Section 14 of the Credit Agreement to
set-off and apply the Escrow Funds and the Deposit Funds to the repayment of
indebtedness owed to the Lenders under the Credit Agreement as though the Escrow
Funds and the Deposit Funds are deposits and investment property held by a
Lender or an affiliate of a Lender for the credit or account of Parallel under
said Section 14, the Escrow Agent shall distribute to Administrative Agent all
of the Escrow Funds and the Deposit Funds from their respective accounts in
accordance with the instructions provided by the Administrative Agent. The
Administrative Agent shall send a copy of such instructions to Holdings and
Parallel;
     (g) in the event that the Escrow Agent shall be uncertain as to its duties
or rights hereunder or shall receive instructions with respect to the Escrow
Funds or Deposit Funds which, in its sole determination, are in conflict either
with other instructions received by it or with any provision of this Agreement,
it shall be entitled to hold the Escrow Funds or Deposit Funds, or any portion
thereof, in the Holdings Escrow Account or the Parallel Deposit Account, as the
case may be, pending the resolution of such uncertainty to the Escrow Agent’s
sole satisfaction, by final judgment of a court or courts of competent
jurisdiction or otherwise, or the Escrow Agent, at its sole option, may dispose
of the Escrow Funds or the Deposit Funds (and any other amounts that thereafter
become part of the Holdings Escrow Account or the Parallel Deposit Account, as
the case may be) with a court of competent jurisdiction pursuant to Section 7
hereof; and
Exhibit “A”

A-5

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     (h) prior to the disbursement of funds from the Holdings Escrow Account or
the Parallel Deposit Account, as the case may be, Escrow Agent may, in its
discretion and without any obligation to do so, seek confirmation of any
instructions by telephone callback to the party or parties providing the
instruction through their designated representative(s) as set forth in
Exhibit A. To ensure the accuracy of the instructions it receives, the Escrow
Agent may record such call backs.
     4. Termination. This Agreement shall terminate and be of no further force
and effect on December 31, 2009 or such earlier date on which the final
disbursement of the Escrow Funds and the Deposit Funds has been made hereunder,
whether by written direction or otherwise (either such date, the “End Date”),
subject, however, to the survival of obligations specifically contemplated in
this Agreement to survive. Any Escrow Funds and Deposit Funds remaining in the
Holdings Escrow Account or the Parallel Deposit Account on the End Date shall be
distributed by the Escrow Agent to a segregated deposit account to be
established by Parallel at Citibank, N.A. After distribution of any Escrow Funds
or Deposit Funds pursuant to this Section 4, the Escrow Agent, in such capacity,
shall not have any further duties or obligations under this Agreement. Parallel,
Holdings and Administrative Agent agree that such account shall be pledged by
Parallel to Administrative Agent, for the benefit of Lenders, to secure
Parallel’s obligations under the Credit Agreement and related loan documents,
pursuant to a security agreement in form and substance acceptable to Citibank,
N.A. Said security agreement will provide, among other things, that withdrawals
from such account will be permitted only for the purpose of redeeming and
retiring outstanding Senior Notes until all of the Senior Notes are fully
redeemed and retired, at which time any remaining funds in said account may be
used at Parallel’s discretion.
     5. Fees. Parallel agrees to pay the Escrow Agent’s fees and expenses as
outlined in Exhibit B attached hereto when due. In the event fees and expenses,
or any other obligations owed to the Escrow Agent (or its counsel), are not paid
to the Escrow Agent when due, Escrow Agent is hereby authorized to pay said
fees, expenses and other amounts from the Holdings Escrow Account or the
Parallel Deposit Account.
     6. Indemnification. Holdings and Parallel covenant and agree, jointly and
severally, to indemnify the Escrow Agent and its employees, officers and
directors (each, an “Indemnified Party”) for, hold each Indemnified Party
harmless from, and defend each Indemnified Party against, any and all claims,
losses, actions, liabilities, costs, damages and expenses of any nature incurred
by any Indemnified Party arising out of or in connection with this Agreement or
with the administration of its duties hereunder, including but not limited to
attorney’s fees and expenses, tax liabilities (including any taxes, interest and
penalties but excluding any income tax liabilities associated with the Escrow
Agent’s fees), any liabilities or damages that may result from any inaccuracy or
misrepresentation made in any tax certification provided to the Escrow Agent,
and other costs and expenses of defending or preparing to defend against any
claim of liability, except to the extent such loss, liability, damage, cost and
expense shall be caused by the Indemnified Party’s own gross negligence or
willful misconduct. The foregoing indemnification and agreement to hold harmless
shall survive the termination of this Agreement and the resignation or removal
of the Escrow Agent.
Exhibit “A”

A-6

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     7. Interpleader. Escrow Agent shall be entitled to refrain from taking any
action contemplated by this Agreement in the event that it becomes aware of any
disagreement between the parties hereto as to any facts or as to the happening
of any contemplated event precedent to such action, and in any such event, the
Escrow Agent shall not be liable in any way or to any person for its failure or
refusal to act, and the Escrow Agent shall be entitled to continue to so refuse
to act and refrain from acting until (i) the rights of all parties having or
claiming an interest in the escrow property shall have been fully and finally
adjudicated by a court of competent jurisdiction, or all differences and doubts
shall have been resolved by agreement among all of the parties, and (ii) the
Escrow Agent shall, in the case of adjudication by a court of competent
jurisdiction, have received a final order, judgment or decree by such court of
competent jurisdiction, which order, judgment or decree is not subject to
appeal, and in the case of resolution of differences and doubts by agreement,
have received a notice in writing signed by each of the parties setting forth in
detail the agreement.. In the event that (i) any dispute shall arise between the
parties with respect to the disposition or disbursement of any of the assets
held hereunder, or (ii) Escrow Agent shall be uncertain as to how to proceed in
a situation not explicitly addressed by the terms of this Agreement whether
because of conflicting demands by the other parties hereto or otherwise, Escrow
Agent shall be permitted to interplead all of the assets held hereunder into a
court of competent jurisdiction, and thereafter be fully relieved from any and
all liability or obligation with respect to such interpleaded assets. The
parties hereto other than Escrow Agent further agree to pursue any redress or
recourse in connection with such a dispute, without making Escrow Agent a party
to the same. The costs and expenses (including reasonable attorneys’ fees and
expenses) incurred by the Escrow Agent in connection with such proceeding shall
be paid by, and be the joint and several obligation of, Holdings and Parallel.
     8. Tax on Earnings. (a) As between Holdings and Parallel, for purposes of
federal and other taxes based on income, Parallel shall be treated as the owner
of the Escrow Funds and the Deposit Funds and Parallel shall report all income,
if any, that is earned on or derived from the Escrow Funds or the Deposit Funds,
as the case may be, as its income in the taxable year or years in which such
income is properly includable and pay any taxes attributable thereto.
     (b) Holdings and Parallel agree that, for tax reporting purposes, the
Escrow Funds and the Deposit Funds shall be reported in the year of disbursement
on a Form 1099-B, if applicable, in relation to principal and on a Form 1099-INT
for interest earned or on a Form 1099-DIV for dividends earned in the case of
money market investments. Holdings and Parallel agree that this Agreement does
not relieve them of their obligation for tax information reporting under Section
6041 of the Internal Revenue Code of 1986, as amended from time to time (the
“Code”), and the Treasury regulations thereunder, as well as the obligation to
report amounts of imputed interest income to the extent required pursuant to
Code Section 483 or Section 1272. The Escrow Agent shall not be responsible for
determining or reporting such imputed interest.
     (c) Holdings and Parallel shall upon the execution of this Agreement
provide the Escrow Agent with a duly completed and properly executed original
IRS Form W-9 (or applicable Form W-8, in the case of a non-U.S. person)
certifying such party’s U.S. tax identification number if Form W-9 is provided,
or status as a beneficial owner of the escrow property if a Form W-8 is
provided. Holdings and Parallel understand that, in the event valid U.S. tax
forms, or other relevant forms, are not provided to the Escrow Agent, the tax
law may
Exhibit “A”

A-7

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require withholding of tax on disbursements and on a portion of any interest or
other income earned on the investment of the escrow property.
     (d) Should the Escrow Agent become liable for the payment of taxes,
including withholding taxes relating to any funds, including interest and
penalties thereon, held by it pursuant to this Agreement or any payment made
hereunder, Holdings and Parallel agree, jointly and severally, to reimburse the
Escrow Agent for such taxes, interest and penalties upon demand. Without
limiting the foregoing, the Escrow Agent shall be entitled to deduct such taxes,
interest and penalties from the Escrow Funds and the Deposit Funds in accordance
with Section 5 hereof.
     (e) Holdings and Parallel acknowledge and agree that none of the payments
under this Agreement are for compensation for services performed by an employee
or independent contractor of any of them.
     (f) Citigroup, Inc., its affiliates, and its employees are not in the
business of providing tax or legal advice to any taxpayer outside of Citigroup,
Inc. and its affiliates. This Agreement and any amendments or attachments are
not intended or written to be used, and cannot be used or relied upon, by any
such taxpayer or for the purpose of avoiding tax penalties. Any such taxpayer
should seek advice based on the taxpayer’s particular circumstances from an
independent tax advisor.
     (g) This Section 8 may be amended by the Escrow Agent as necessary and upon
notice to Holdings, Parallel and the Administrative Agent to conform to tax and
regulatory requirements and any other changes to the current applicable
governmental tax laws. The Escrow Agent’s rights under this Section shall
survive the termination of this Agreement or the resignation or removal of the
Escrow Agent.
     9. Ministerial Duties and Liability of Escrow Agent. Escrow Agent shall
have only those duties as are specifically provided herein, which shall be
deemed purely ministerial in nature, and shall under no circumstances be deemed
a fiduciary or trustee for any of the parties to this Agreement, and no duties,
responsibilities or obligations of the Escrow Agent shall be inferred or
implied. Escrow Agent will not have any responsibility or liability for any
actions or omissions of the Bond Agent. Escrow Agent shall neither be
responsible for, nor chargeable with, knowledge of the terms and conditions of
any other agreement, instrument or document between the other parties hereto, in
connection herewith, including without limitation, the Merger Agreement, the
Credit Agreement, the Letter Agreement, the Waiver, or the Indenture, and the
Escrow Agent shall not be responsible for determining or compelling compliance
therewith or be otherwise bound thereby. This Agreement sets forth all matters
pertinent to the escrow contemplated hereunder, and no additional obligations of
Escrow Agent shall be inferred from the terms of this Agreement or any other
agreement. Escrow Agent shall not be liable for any action taken or omitted
hereunder if taken or omitted by it in good faith. Escrow Agent shall also be
fully protected in relying upon any written notice, demand, instruction,
certificate, or other document which it in good faith believes to be genuine and
shall have no obligation to verify the truth, authenticity, validity or accuracy
thereof. The Escrow Agent may act in reliance upon any signature believed by it
to be genuine and may assume that any person purporting to make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so. IN NO EVENT SHALL ESCROW AGENT BE LIABLE,
Exhibit “A”

A-8

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DIRECTLY OR INDIRECTLY, FOR ANY DAMAGES OR EXPENSES ARISING OUT OF THE SERVICES
PROVIDED HEREUNDER, EXCEPT TO THE EXTENT THAT A COURT OF COMPETENT JURISDICTION
DETERMINES THAT SUCH DAMAGES OR EXPENSES DIRECTLY RESULTED FROM ESCROW AGENT’S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. UNDER NO CIRCUMSTANCES SHALL ESCROW
AGENT BE RESPONSIBLE FOR INDIRECT, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES,
EVEN IF ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
          The Escrow Agent shall not be required to expend or risk any of its
own funds or otherwise incur any financial or other liability in the performance
of any of its duties hereunder and the Escrow Agent shall not be obligated to
take any legal or other action hereunder which might in its judgment involve or
cause it to incur any expense or liability unless it shall have been furnished
with indemnification satisfactory to the Escrow Agent.
          The Escrow Agent shall be under no duty to afford the escrow property
any greater degree of care than it gives its own similar property. The Escrow
Agent shall not be liable for any damage, loss or injury resulting from any
action taken or omitted in the absence of gross negligence or willful
misconduct.
          Notwithstanding any other provision of the Agreement, the Escrow Agent
shall not be liable for the acts or omissions of any nominees, correspondents,
designees, agents, subagents or subcustodians, or for the investment or
reinvestment of any escrow property, or any liquidation of such investment or
reinvestment, executed in accordance with the terms of this Agreement,
including, without limitation, any liability for any delays (not resulting from
its gross negligence or willful misconduct as adjudicated by a court of
competent jurisdiction) in the investment or reinvestment of the escrow
property, any loss of interest incident to any such delays, or any loss or
penalty as a result of the liquidation of any investment before its stated
maturity date.
          The recitals contained in this Agreement shall be taken as the
statements of Holdings, Parallel and the Administrative Agent, and the Escrow
Agent shall have no liability therefor.
     10. Choice of Counsel, Agents and Mergers. Escrow Agent shall have the
right, but not the obligation, to consult with counsel of its choice and shall
not be liable for any action taken or omitted to be taken by Escrow Agent in
good faith in accordance with the opinion or advice of such counsel. Escrow
Agent shall have the right to perform any of its duties hereunder through
agents, attorneys, custodians or nominees. Any banking association or
corporation into which Escrow Agent may be merged, converted or with which
Escrow Agent may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which Escrow Agent shall be a party, or any
banking association or corporation to which all or substantially all of the
corporate trust business of Escrow Agent shall be transferred, shall succeed to
all Escrow Agent’s rights, obligations and immunities hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
     11. Resignation or Removal of Escrow Agent. Escrow Agent may resign as such
following the giving of thirty (30) days prior written notice to the other
parties hereto. Similarly,
Exhibit “A”

A-9

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Escrow Agent may be removed and replaced following the giving of thirty
(30) days prior written notice to Escrow Agent by Parallel with the written
consent of Administrative Agent, provided that Parallel proposes a new Escrow
Agent reasonably acceptable to Holdings and Administrative Agent. In either
event, the duties of Escrow Agent shall terminate (30) days after the date of
such notice (or as of such earlier date as may be mutually agreeable); and
Escrow Agent shall then deliver the balance of the moneys or assets then in its
possession to a successor escrow agent appointed by Parallel and reasonably
acceptable to Holdings as evidenced by a written notice filed with Escrow Agent.
If a successor escrow agent has not accepted such appointment by the end of such
30-day period, the Escrow Agent may deliver the escrow property to the
Administrative Agent. The Escrow Agent shall deduct any outstanding fees,
expenses and other amounts from the Escrow Funds or the Deposit Funds prior to
transferring any moneys or assets to a successor escrow agent or to the
Administrative Agent, and upon delivery of the escrow property to the successor
escrow agent or the Administrative Agent, the Escrow Agent shall have no further
duties, responsibilities or obligations hereunder.
     12. Attachment of Escrow Funds or Deposit Funds; Compliance with Legal
Orders. In the event that any escrow property under this Agreement shall be
attached, garnished or levied upon by any court order, or the delivery thereof
shall be stayed or enjoined by an order of a court, or any order, judgment or
decree shall be made or entered by any court order affecting the property
deposited under this Agreement, Escrow Agent is hereby expressly authorized, in
its sole discretion, to obey and comply with all writs, orders or decrees so
entered or issued, which it is advised by legal counsel of its own choosing is
binding upon it, whether with or without jurisdiction, and in the event that
Escrow Agent obeys or complies with any such writ, order or decree it shall not
be liable to any of the parties hereto or to any other person, by reason of such
compliance notwithstanding such writ, order or decree being substantially
reversed, modified, annulled, set aside or vacated.
     13. Notices and Instructions. All claims, notices, instructions, requests,
demands, or other communications hereunder shall be in writing and be given in
person, by facsimile transmission or Federal Express or comparable overnight
courier service, and shall become effective (a) on delivery if given in person,
(b) when receipt is acknowledged if sent by facsimile transmission, or (c) on
the date of delivery if sent by reputable courier service; provided, that
notices to the Escrow Agent shall only be deemed given upon actual receipt by
the Escrow Agent. All claims, notices, instructions, requests, demands and other
communications to the Escrow Agent must be received on or before 11:00 a.m. New
York City time. Any such communications received by the Escrow Agent after
11:00 a.m. New York City time shall be treated as if received on the following
Business Day.
     Notices shall be addressed as follows:

  (a)   If to Holdings:         PLLL Holdings, LLC
Address: 9 West 57th Street
                New York, New York 10019
Attention: Sam Oh
Facsimile: 646 607-0539
Telephone: 212 515-3200

Exhibit “A”

A-10

--------------------------------------------------------------------------------

 

      With a copy to:         Akin Gump Strauss Hauer & Feld LLP
Address: One Bryant Park
                New York, NY 10036
Attention: Mark Zvonkovic
Facsimile: 212-872-1002
Telephone: 212-872-8008     (b)   If to Parallel:
Parallel Petroleum Corporation
Address: 1004 N. Big Spring, Suite 400
                Midland, TX 79701
Attention: Steven D. Foster
Facsimile: 432-684-3905
Telephone: 432-684-3727         With a copy to:         Lynch, Chappell & Alsup,
PC
Address: 300 N. Marienfeld, Suite 700
                Midland, TX 79701
Attention: Tommy Ortloff
Facsimile: 432-683-2587
Telephone: 432-683-3351     (c)   If to Administrative Agent:         Citibank,
N.A.
Address: 1004 N. Big Spring, Suite 121
                Midland, TX 79701
Attention: Frank K. Stowers
Facsimile: 432-687-1231
Telephone: 432-682-2079     (d)   If to Escrow Agent:         Citibank, N.A.
Address: 388 Greenwich Street, 14 Fl
                New York, NY 10005
Attention: Camille Tomao, Director
Facsimile: 212-657-2762
Telephone: 212-816-5859

or to such other address as any party may from time to time specify by notice to
the other parties given in accordance with this Section 13.
Exhibit “A”

A-11

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     14. Amendment. This Agreement may not be amended or modified except by a
written agreement executed by Holdings, Parallel, Administrative Agent and
Escrow Agent.
     15. Governing Law. (a) The parties agree (pursuant to section 5-1401 of the
General Obligations Law of the State of New York) that, to the extent such laws
would otherwise not apply, this Agreement (including this choice-of-law
provision) and the rights and obligations of the parties to this Agreement shall
be governed by, construed in accordance with, and all controversies and disputes
arising under, in connection with or in relation to this Agreement shall be
resolved pursuant to, the laws of the State of New York applicable to contracts
made and to be wholly performed in the State of New York.
     (b) The parties irrevocably and unconditionally submit to the exclusive
jurisdiction of the federal and state courts located in the Borough of
Manhattan, City, County and State of New York, for any proceedings commenced
regarding this Agreement, including, but not limited to, any interpleader
proceeding. The parties irrevocably submit to the jurisdiction of such courts
for the determination of all issues in such proceedings and irrevocably waive
any objection to venue or inconvenient forum for any proceeding brought in any
such court.
     16. Force Majeur. Notwithstanding anything contained in this Agreement to
the contrary, the Escrow Agent shall not incur any liability for not performing
any act or fulfilling any obligation hereunder by reason of any occurrence
beyond its control (including, without limitation, any provision of any present
or future law or regulation or any act of any governmental authority, any act of
God or war or terrorism, or the unavailability of the Federal Reserve Bank wire
services or any electronic communication facility).
     17. Use of Name. No printed or other material in any language, including
prospectuses, notices, reports, and promotional material which mentions
“Citibank”, or “Citigroup” or “Citi” by name or the rights, powers, or duties of
the Escrow Agent under this Agreement shall be issued by any of the other
parties hereto, or on such party’s behalf, without the prior written consent of
the Escrow Agent; provided that this Agreement may be filed as an exhibit to
Parallel’s periodic reports filed with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, and such reports may
contain summary descriptions of this Agreement.
     18. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns and heirs and legal beneficiaries.
     19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. A faxed signature hereto
shall be as legally binding as a signed original hereto.
     20. Waiver of Conflicts of Interests. Holdings and Parallel hereby
acknowledge and agree that Citibank, N.A. is acting in multiple capacities under
this Agreement and that Citibank, N.A. may act in its discretion and best
interests regardless of such multiple capacities, and Holdings and Parallel each
hereby waive and release any and all claims or causes of action relating to any
potential conflicts of interest arising from Citibank, N.A. acting in multiple
capacities hereunder.
[Signature Page Follows]
Exhibit “A”

A-12

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be executed by its duly authorized officer effective as of the day and year
first above written.

                  PLLL HOLDINGS, LLC      
 
  By:        
 
     
 
   
 
  Printed Name:        
 
     
 
   
 
  Title:        
 
     
 
          PARALLEL PETROLEUM CORPORATION    
 
           
 
  By:        
 
     
 
   
 
  Printed Name:        
 
     
 
   
 
  Title:        
 
     
 
          CITIBANK, N.A., as Administrative Agent    
 
           
 
  By:        
 
     
 
Frank K. Stowers, its Vice President    

     The undersigned hereby accepts the terms and provisions of the foregoing
Agreement and agrees to accept, hold, deal with and dispose of any property
comprising the Escrow Funds and the Deposit Funds in accordance with the
foregoing Agreement.

            ESCROW AGENT

CITIBANK, N.A.
      By:           Camille Tomao, its Director             

Exhibit “A”

A-13

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EXHIBIT A
CERTIFICATE OF INCUMBENCY — PARALLEL
     Pursuant to the Amended and Restated Waiver Escrow Agreement, dated as of
November 9, 2009 (the “Agreement”), by and among PLLL Holdings, LLC, a Delaware
limited liability company (“Holdings”), Parallel Petroleum Corporation, a
Delaware corporation (“Parallel”), Citibank, N.A., a national banking
association, as administrative agent (“Administrative Agent”) for each of the
lenders (collectively, the “Lenders”) that is a signatory to that certain Fourth
Amended and Restated Credit Agreement, as amended, between Parallel and the
Lenders (the “Credit Agreement”) and Citibank, N.A., a national banking
association acting through its Agency & Trust Department, as escrow agent
(“Escrow Agent”), the undersigned hereby certifies that the following named
person is duly appointed, qualified and authorized by Parallel to furnish the
Escrow Agent with directions and instructions on behalf of Parallel relating to
any matter concerning the Agreement and the funds and/or property held pursuant
thereto, including, but not limited to, verifying the content of any wire
disbursement instruction.

                             
 
        Specimen Signature
Name
           
 
                         
Title
                           
 
                         
Phone
                           
 
                         
E-mail Address
                           
 
         

TEST WORD

         
 
 
 
   

     IN WITNESS WHEREOF, this Certificate of Incumbency has been executed as of
the ___ day of                      , 200_.

              PARALLEL PETROLEUM CORPORATION:
 
       
 
  By:    
 
       
 
  Name:    
 
       
 
  Title:    
 
       
 
  Telephone Number:    
 
       

Exhibit A

A-1

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EXHIBIT A (continued)
CERTIFICATE OF INCUMBENCY — HOLDINGS
     Pursuant to the Amended and Restated Waiver Escrow Agreement, dated as of
November 9, 2009 (the “Agreement”), by and among PLLL Holdings, LLC, a Delaware
limited liability company (“Holdings”), Parallel Petroleum Corporation, a
Delaware corporation (“Parallel”), Citibank, N.A., a national banking
association, as administrative agent (“Administrative Agent”) for each of the
lenders (collectively, the “Lenders”) that is a signatory to that certain Fourth
Amended and Restated Credit Agreement, as amended, between Parallel and the
Lenders (the “Credit Agreement”) and Citibank, N.A., a national banking
association acting through its Agency & Trust Department, as escrow agent
(“Escrow Agent”), the undersigned hereby certifies that the following named
persons, acting singly and requiring only one signature, are duly appointed,
qualified and authorized by Holdings to furnish the Escrow Agent with directions
and instructions on behalf of Holdings relating to any matter concerning the
Agreement and the funds and/or property held pursuant thereto, including, but
not limited to, verifying the content of any wire disbursement instruction.

                             
 
        Specimen Signature
Name
           
 
                         
Title
                           
 
                         
Phone
                           
 
                         
E-mail Address
                           
 
         

TEST WORD

         
 
 
 
   

     IN WITNESS WHEREOF, this Certificate of Incumbency has been executed as of
the ___ day of                     , 200_.

              PLLL HOLDINGS, LLC:
 
       
 
  By:    
 
       
 
  Name:    
 
       
 
  Title:    
 
       
 
  Telephone Number:    
 
       

Exhibit A

A-2

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EXHIBIT A (continued)
CERTIFICATE OF INCUMBENCY — ADMINISTRATIVE AGENT
     Pursuant to the Amended and Restated Waiver Escrow Agreement, dated as of
November 9, 2009 (the “Agreement”), by and among PLLL Holdings, LLC, a Delaware
limited liability company (“Holdings”), Parallel Petroleum Corporation, a
Delaware corporation (“Parallel”), Citibank, N.A., a national banking
association, as administrative agent (“Administrative Agent”) for each of the
lenders (collectively, the “Lenders”) that is a signatory to that certain Fourth
Amended and Restated Credit Agreement, as amended, between Parallel and the
Lenders (the “Credit Agreement”) and Citibank, N.A., a national banking
association acting through its Agency & Trust Department, as escrow agent
(“Escrow Agent”), the undersigned hereby certifies that the following named
persons, acting singly and requiring only one signature, are duly appointed,
qualified and authorized by the Administrative Agent to furnish the Escrow Agent
with directions and instructions on behalf of the Administrative Agent relating
to any matter concerning the Agreement and the funds and/or property held
pursuant thereto, including, but not limited to, verifying the content of any
wire disbursement instruction.

                             
 
        Specimen Signature
Name
           
 
                         
Title
                           
 
                         
Phone
                           
 
                         
E-mail Address
                           
 
         

TEST WORD

         
 
 
 
   

     IN WITNESS WHEREOF, this Certificate of Incumbency has been executed as of
the ___ day of                      , 200_.

              CITIBANK, N.A.:
 
       
 
  By:    
 
       
 
  Name:    
 
       
 
  Title:    
 
       
 
  Telephone Number:    
 
       

Exhibit A

A-3

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EXHIBIT B
ESCROW AGENT FEE SCHEDULE

         
Initial Escrow Set-up Fee

To be paid by Parallel Petroleum Corporation
  $ 15,000.00    
Quarterly Escrow fee due beginning on December 31, 2009 and at the end of each
fiscal quarter thereafter

To be paid by Parallel Petroleum Corporation
  $ 15,000.00    
Per Transaction Fee after initial set-up

To be paid by Parallel Petroleum Corporation
  $ 1,000.00    
Out of pocket expenses, including attorneys’ fees and expenses

To be paid by Parallel Petroleum Corporation
  At cost  

Exhibit B

 

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ANNEX A — EQUITY ISSUANCE INSTRUCTIONS
[___], 2009
VIA FACSIMILE: 212-657-2762
Citibank, N.A., as Escrow Agent
388 Greenwich Street, 14 FL
New York, NY 10005
Attn: Camille Tomao, Director
Re: Joint Written Instructions on Release of Escrow Funds Pursuant to Common
Stock Issuance
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Waiver Escrow Agreement,
dated as of November 9, 2009 (the “Agreement”), by and among PLLL Holdings, LLC,
a Delaware limited liability company (“Holdings”), Parallel Petroleum
Corporation, a Delaware corporation (“Parallel”), Citibank, N.A., a national
banking association, as administrative agent (“Administrative Agent”) for each
of the lenders (collectively, the “Lenders”) that is a signatory to that certain
Fourth Amended and Restated Credit Agreement, as amended, between Parallel and
the Lenders (the “Credit Agreement”) and Citibank, N.A., a national banking
association acting through its Agency & Trust Department, as escrow agent
(“Escrow Agent”). Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
Pursuant to Section 3(a) of the Agreement, Parallel has issued common stock to
Holdings in exchange for the sum of $[___] of the Escrow Funds, and Holdings and
Parallel hereby instruct the Escrow Agent to immediately distribute such sum
from the Holdings Escrow Account to the Parallel Deposit Account.
Test Word:                      

                  Very truly yours,    
 
                PLLL HOLDINGS, LLC    
 
           
 
  By:        
 
     
 
   
 
  Name:     , in [his]
 
                capacity as Holdings’ Representative    
 
                PARALLEL PETROLEUM CORPORATION    
 
           
 
  By:        
 
     
 
   
 
  Name:     , in [his]
 
     
 
   
 
  capacity as Parallel’s Representative    
 
     
 
   

Annex A

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ANNEX B — NOTE PURCHASE INSTRUCTIONS
[___], 2009
VIA FACSIMILE: 212-657-2762
Citibank, N.A., as Escrow Agent
388 Greenwich Street, 14 FL
New York, NY 10005
Attn: Camille Tomao, Director

Re:   Joint Written Instructions on Release of Deposit Funds Pursuant to Change
of Control Offer

Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Waiver Escrow Agreement,
dated as of November 9, 2009 (the “Agreement”), by and among PLLL Holdings, LLC,
a Delaware limited liability company (“Holdings”), Parallel Petroleum
Corporation, a Delaware corporation (“Parallel”), Citibank, N.A., a national
banking association, as administrative agent (“Administrative Agent”) for each
of the lenders (collectively, the “Lenders”) that is a signatory to that certain
Fourth Amended and Restated Credit Agreement, as amended, between Parallel and
the Lenders (the “Credit Agreement”) and Citibank, N.A., a national banking
association acting through its Agency & Trust Department, as escrow agent
(“Escrow Agent”). Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
Pursuant to Section 3(b) of the Agreement, Parallel is obligated to purchase
Senior Notes pursuant to the Change of Control Offer, and Parallel and the
Administrative Agent hereby instruct the Escrow Agent to distribute $[___] of
the Deposit Funds from the Parallel Deposit Account to [insert name of the
Paying Agent under the Indenture] on or before [                    ].
[Insert wiring or other distribution instructions]
Test Word:                      

                  Very truly yours,    
 
                PARALLEL PETROLEUM CORPORATION    
 
           
 
  By:        
 
     
 
   
 
  Name:     , in [his]
 
                Capacity as Parallel’s Representative    
 
                CITIBANK, N.A., as Administrative Agent    
 
           
 
  By:        
 
     
 
   
 
  Name:        
 
     
 
   
 
  Title:        
 
     
 
   

Annex B

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ANNEX C — NOTE CONTRIBUTION INSTRUCTIONS
[___], 2009
VIA FACSIMILE: 212-657-2762
Citibank, N.A., as Escrow Agent
388 Greenwich Street, 14 FL
New York, NY 10005
Attn: Camille Tomao, Director
Re: Joint Written Instructions on Release of Escrow Funds Pursuant to Notes
Offer
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Waiver Escrow Agreement,
dated as of November 9, 2009 (the “Agreement”), by and among PLLL Holdings, LLC,
a Delaware limited liability company (“Holdings”), Parallel Petroleum
Corporation, a Delaware corporation (“Parallel”), Citibank, N.A., a national
banking association, as administrative agent (“Administrative Agent”) for each
of the lenders (collectively, the “Lenders”) that is a signatory to that certain
Fourth Amended and Restated Credit Agreement, as amended, between Parallel and
the Lenders (the “Credit Agreement”) and Citibank, N.A., a national banking
association acting through its Agency & Trust Department, as escrow agent
(“Escrow Agent”). Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
Pursuant to Section 3(c) of the Agreement, Holdings is obligated to purchase
Senior Notes pursuant to an Offer made by Holdings or an affiliate of Holdings,
and Holdings and the Administrative Agent hereby instruct the Escrow Agent to
distribute $[___] of the Escrow Funds from the Holdings Escrow Account to [___]
on or before [                    ] in accordance with the following
instructions.
[Insert wiring or other distribution instructions]
Test Word:                      

                  Very truly yours,    
 
                PLLL HOLDINGS, LLC    
 
           
 
  By:        
 
     
 
   
 
  Name:     , in [his]
 
                capacity as Holdings’ Representative    
 
                CITIBANK, N.A., as Administrative Agent    
 
           
 
  By:        
 
     
 
   
 
  Name:        
 
     
 
   
 
  Title:        
 
     
 
   

Annex C

--------------------------------------------------------------------------------

 

ANNEX D — NOTE RETIREMENT INSTRUCTIONS
[___], 2009
[Bond Agent]
[Address]
Re: Joint Written Instructions on Release of Senior Notes Pursuant to Common
Stock Issuance
Dear [___]:
Reference is made to that certain Amended and Restated Waiver Escrow Agreement,
dated as of November 9, 2009 (the “Agreement”), by and among PLLL Holdings, LLC,
a Delaware limited liability company (“Holdings”), Parallel Petroleum
Corporation, a Delaware corporation (“Parallel”), Citibank, N.A., a national
banking association, as administrative agent (“Administrative Agent”) for each
of the lenders (collectively, the “Lenders”) that is a signatory to that certain
Fourth Amended and Restated Credit Agreement, as amended, between Parallel and
the Lenders (the “Credit Agreement”) and Citibank, N.A., a national banking
association acting through its Agency & Trust Department, as escrow agent
(“Escrow Agent”). Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
Pursuant to Section 3(c) of the Agreement, Holdings has purchased Senior Notes
pursuant to a Notes Offer made by Holdings or an affiliate of Holdings. Pursuant
to Section 3(d) of the Agreement, Holdings has deposited the Senior Notes with
Bond Agent in the Bond Account and Parallel has issued common stock to Holdings
in exchange for the Senior Notes purchase by Holdings. Holdings and Parallel
hereby instruct the Bond Agent to immediately distribute the Senior Notes from
the Bond Account to Parallel.

                  Very truly yours,    
 
                PLLL HOLDINGS, LLC    
 
           
 
  By:        
 
     
 
   
 
  Name:     ,  in [his]
 
                capacity as Holdings’ Representative    
 
                PARALLEL PETROLEUM CORPORATION    
 
           
 
  By:        
 
     
 
   
 
  Name:     ,   in [his]
 
                capacity as Parallel’s Representative    

Annex D

--------------------------------------------------------------------------------

 

ANNEX E — RELEASE DATE INSTRUCTIONS
[___], 2009
VIA FACSIMILE: 212-657-2762
Citibank, N.A., as Escrow Agent
388 Greenwich Street, 14 FL
New York, NY 10005
Attn: Camille Tomao, Director
Re: Certification and Joint Written Instructions on Distribution of Proceeds on
Release Date
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Waiver Escrow Agreement,
dated as of November 9, 2009 (the “Agreement”), by and among PLLL Holdings, LLC,
a Delaware limited liability company (“Holdings” ), Parallel Petroleum
Corporation, a Delaware corporation (“Parallel”), Citibank, N.A., a national
banking association, as administrative agent (“Administrative Agent”) for each
of the lenders (collectively, the “Lenders”) that is a signatory to that certain
Fourth Amended and Restated Credit Agreement, as amended, between Parallel and
the Lenders (the “Credit Agreement”) and Citibank, N.A., a national banking
association acting through its Agency & Trust Department, as escrow agent (
“Escrow Agent”). Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
Holdings and Parallel hereby certify that (i) the Parallel Revolving Payment
Amount is $[___], (ii) the Holdings Release Amount is $[___] and (iii) the
Release Date has occurred. Pursuant to Section 3(e) of the Agreement, Holdings
and Parallel hereby instruct the Escrow Agent to distribute, on
                    , 2009, the Parallel Revolving Payment Amount to the
Administrative Agent in accordance with the following wire instructions and the
Holdings Release Amount to Holdings in accordance with the following wire
instructions.
     [insert wire instructions]
Test Word:                      

                  Very truly yours,    
 
                PLLL HOLDINGS, LLC    
 
           
 
  By:        
 
     
 
   
 
  Name:     ,  in [his]
 
                capacity as Holdings’ Representative    
 
                PARALLEL PETROLEUM CORPORATION    
 
           
 
  By:        
 
     
 
   
 
  Name:     ,   in [his]
 
                capacity as Parallel’s Representative    

Annex E