Document:

Exhibit 10.4

Exhibit 10.4

EXECUTION COPY

WESTERN LIBERTY BANCORP

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this “Agreement”), dated as of November 6, 2009 between Western
Liberty Bancorp, a Delaware corporation, its successors or assigns (the “Company”), and
Richard Deglman (the “Employee”).

W I T N E S S E T H

WHEREAS, the Company has entered into an agreement (the “Merger Agreement”) pursuant
to which it has agreed to acquire Service1st Bank of Nevada, a Nevada-chartered non-member bank, on
the terms and subject to the conditions set forth therein (the “Transaction”);

WHEREAS, the Company desires to employ the Employee as the Chief Credit Officer of the
Company’s Nevada commercial banking operations (the “Business”) following the occurrence of
the Transaction;

WHEREAS, the Company and the Employee desire to enter into this Agreement as to the terms of
the Employee’s employment as the Chief Credit Officer of the Business;

WHEREAS, the Employee’s agreement to be employed by the Company as of the Effective Date (as
defined in Section 2 hereof) is a material inducement to the Company to enter into this Agreement
as of the date hereof and the Merger Agreement;

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and
of other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

1. POSITION AND DUTIES.

(a) During the Employment Term (as defined in Section 2 hereof), the Employee shall serve as
the Chief Credit Officer of the Business. In this capacity, the Employee shall have all duties,
authorities and responsibilities commensurate with the duties, authorities and responsibilities of
persons in similar capacities in similarly sized companies, and such other duties, authorities and
responsibilities as the Chairman (the “Chairman”) of the Board of Directors of the Company
(the “Board”) shall designate from time to time that are not inconsistent with the
Employee’s position as Chief Credit Officer of the Business. The Employee shall report to the
Chief Executive Officer of the Business.

(b) During the Employment Term, the Employee shall devote all of the Employee’s business time,
energy and skill and the Employee’s best efforts to the performance of the Employee’s duties with
the Company; provided, that the foregoing shall not prevent the Employee from (i) serving
on the boards of directors of non-profit organizations and, with the prior written approval of the
Board in each instance, other for-profit companies, (ii) participating in charitable, civic,
educational, professional, community or industry affairs, and (iii) managing

 

 

 

the Employee’s passive personal investments; so long as such activities do not, individually
or in the aggregate, interfere or conflict with the Employee’s duties hereunder or create a
potential conflict of interest; provided further, that the foregoing shall not
prevent the Employee from participating in other non-passive activities if, as and when approved by
the Board, in each instance. If the Board determines, in its sole discretion, that any outside
activity or activities pose or will pose a conflict of interest, or that the time commitments
required interfere with the performance of the Employee’s duties hereunder, even if previously
approved, the Employee shall, at the request of the Board, cease such activities at the earliest
available opportunity.

(c) The Employee shall serve hereunder as an officer or director of any subsidiary or division
of the Company that includes any portion of the Business as requested by the Company from time to
time without any additional compensation therefor. The Company may, without limiting its liability
hereunder, cause any subsidiary to assume the Company’s obligations hereunder.

2. EMPLOYMENT TERM. The Company agrees to employ the Employee pursuant to the terms of this
Agreement, and the Employee agrees to be so employed, for a term of three years (the “Initial
Term”) commencing as of the Effective Date. Notwithstanding anything herein to the contrary,
the Employee agrees that he shall not terminate this Agreement prior to the Effective Date;
provided, that the Effective Date occurs no later than September 30, 2010; provided
further, that, prior to the Effective Date, the Employee shall agree to cooperate and
permit the Company to use his name in regulatory filings that he has approved, which approval shall
not unreasonably be withheld or delayed. On each anniversary of the Effective Date following the
Initial Term, the term of this Agreement shall be automatically extended for successive 1-year
periods (each a “Renewal Term”), provided, however, that either party
hereto may elect not to extend the term of this Agreement by giving written notice to the other
party at least 30 days prior to any such anniversary date. Notwithstanding the foregoing, the
Employee’s employment hereunder may be earlier terminated at any time during the Initial Term or
any Renewal Term in accordance with Section 7 hereof, subject to Section 8 hereof. The period of
time between the Effective Date and the termination of the Employee’s employment hereunder for any
reason shall be referred to herein as the “Employment Term.” For purposes of this
Agreement, “Effective Date” means the closing of the Transaction.

3. BASE SALARY. During the Employment Term, the Company agrees to pay the Employee an annual
base salary which initially shall be not less than $250,000. The Employee’s Base Salary shall be
payable in accordance with the regular payroll practices of the Company. The Employee’s Base
Salary shall be subject to annual review by the Board (or a committee thereof), and may be
increased, but not decreased below its then current level, from time to time by the Board. For
purposes of this Agreement, the base salary as determined herein from time to time shall constitute
“Base Salary”.

4. EQUITY AWARDS. During the Employment Term, the Employee shall be eligible to receive other
equity and long-term incentive awards under the equity-based incentive compensation plans adopted
by the Company during the Employment Term for which the Company’s senior executives are generally
eligible. The level of the Employee’s participation in any such plan, if any, shall be determined
in the sole discretion of the Board from time to time.

 

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5. ANNUAL BONUS. During the Employment Term, the Employee shall be eligible to receive an
annual discretionary incentive payment under the Company’s annual bonus plan as in effect from time
to time (the “Annual Bonus”), upon the attainment of one or more pre-established
performance goals established by the Board of the Company’s Compensation Committee, which shall
include, but not be limited to, operating the Business and/or the Company in a safe and sound
manner and complying with all federal or state laws, rules and regulations.

6. EMPLOYEE BENEFITS; CHANGE IN CONTROL BENEFITS.

(a) BENEFIT PLANS. During the Employment Term, the Employee shall be entitled to participate
in any employee benefit plan that the Company has adopted or may adopt, maintain or contribute to
for the benefit of its employees generally from time to time in accordance with, and subject to,
the terms and conditions thereof, including satisfying the applicable eligibility requirements.
Notwithstanding the foregoing, the Company may in its sole discretion modify or terminate any
employee benefit plan at any time.

(b) VACATIONS. During the Employment Term, the Employee shall be entitled to four (4) weeks
of paid vacation per calendar year (as prorated for partial years) in accordance with the Company’s
policy on accrual and use applicable to employees as in effect from time to time. The Employee
agrees that any vacation taken by the Employee during the Employment Term shall be taken at times
which are mutually determined by the Chairman and the Employee not to interfere, in any material
respect, with the Employee’s performance of his duties hereunder.

(c) BUSINESS AND ENTERTAINMENT EXPENSES. Upon presentation of appropriate documentation, the
Employee shall be reimbursed in accordance with the Company’s expense reimbursement policy, for all
reasonable business and entertainment expenses incurred in connection with the performance of the
Employee’s duties hereunder and the Company’s policies with regard thereto.

(d) CHANGE IN CONTROL PAYMENT. If the Employee remains the Chief Credit Officer of the
Business through the closing of a Change in Control (as defined below), then, upon such closing,
the Employee shall receive a single cash payment in an amount equal to one (1) times the Employee’s
Base Salary for the year prior to the date of such closing (the “Change in Control
Payment”). For purposes of this Agreement, a “Change in Control” means the
acquisition, directly or indirectly, in one or more transactions, by any person or group of persons
acting in concert, of 50% of more of the then outstanding voting securities of the Business.

7. TERMINATION. The Employee’s employment and/or the Employment Term shall terminate on the
first of the following to occur:

(a) DISABILITY. Upon written notice by the Company to the Employee of termination due to
Disability. For purposes of this Agreement, “Disability” shall be defined as the inability
of the Employee to have performed the Employee’s material duties hereunder due to

 

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a physical or mental injury, infirmity or incapacity for 180 days (including weekends and
holidays) in any 365-day period.

(b) DEATH. Automatically on the date of death of the Employee.

(c) CAUSE. Immediately upon written notice by the Company to the Employee of a termination
for Cause. “Cause” shall mean:

(i) the Employee’s willful misconduct or gross negligence in the performance of the
Employee’s duties to the Company that has or could reasonably be expected to have an adverse
effect on the Company or the Business that, if curable, is not cured within 30 days of the
giving of written notice thereof to the Employee;

(ii) the Employee’s repeated refusal or failure to perform the Employee’s duties to the
Company or the Business or to follow the lawful directives of the Board (other than as a
result of death or a physical or mental incapacity), which refusal or failure continued for
at least 30 days following the giving of written notice of demand for substantial
performance to the Employee;

(iii) indictment for, conviction of, or pleading of guilty or nolo
contendere to, a felony or any crime involving moral turpitude;

(iv) the Employee’s embezzlement or misappropriation of corporate funds or other acts
of theft, fraud, malfeasance, self-dealing, dishonesty or breach of fiduciary duty in
connection with the performance of the Employee’s duties to the Company or the Business;

(v) the Employee either not receiving approval from the Bank Regulators to serve as the
Chief Credit Officer of the Business or later being determined by the Bank Regulators to be
unsuitable to serve in such capacity. “Bank Regulators” shall mean the Federal
Deposit Insurance Corporation or any successor thereto, the Federal Reserve Board, the State
of Nevada Financial Institutions Division, or any other federal or state regulatory agency
with authority over the Company, the Business or Service1st Bank of Nevada;

(vi) breach of Section 10 of this Agreement; or

(vii) material breach of any other Section of this Agreement or any other agreement
with the Company, the Business or a violation of the Company’s code of conduct or other
written policy that, if curable, is not cured within 30 days of the giving of written notice
thereof to the Employee.

(d) WITHOUT CAUSE. Immediately upon written notice by the Company to the Employee of an
involuntary termination without Cause (other than for death or Disability).

(e) GOOD REASON. Upon written notice by the Employee to the Company of a termination for Good
Reason. “Good Reason” shall mean the occurrence of any of the following events without the
written consent of the Employee, unless such events are fully corrected in all

 

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material respects by the Company within 30 days following its receipt of the written
notification by the Employee to the Company described below:

(i) diminution in the Employee’s Base Salary;

(ii) relocation of the Employee’s primary work location beyond 50 miles outside of Las
Vegas, Nevada;

(iii) a material diminution of the Employee’s authority, duties and responsibilities;
or

(iv) any other action or inaction that constitutes a material breach by the Company of
this Agreement.

Any claim of any such event as “Good Reason” shall be deemed irrevocably waived by the Employee
unless: (x) the Employee delivers written notice to the Board of his intent to resign from his
employment hereunder for Good Reason within 60 days following the date on which the event the
Employee claims constitutes Good Reason occurs, which notice shall specifically identify the facts
and circumstances the Employee claims constitutes Good Reason, and (y) the Employee resigns from
his employment hereunder for Good Reason within 150 days following the date on which the event the
Employee claims constitutes Good Reason occurs.

Notwithstanding anything herein to the contrary, the Employee agrees that this Agreement may be
terminated by the Company prior to the Effective Date upon the occurrence of any of the events set
forth in Section 7(a), Section 7(b), Section 7(c)(iii), Section 7(c)(v), Section 7(c)(vi) (with
respect to a breach of Section 10(a), Section (c) and Section 10(d)) or Section 7(c)(vii).

(f) WITHOUT GOOD REASON. Upon 30 days’ prior written notice by the Employee to the Company of
the Employee’s voluntary termination of employment without Good Reason; provided, that upon
receipt of such notice the Company may, in its sole discretion, make such termination effective at
an earlier date and the termination shall still be treated as a voluntary termination by the
Employee without Good Reason.

(g) EXPIRATION OF EMPLOYMENT TERM; NON-EXTENSION OF AGREEMENT. Upon the expiration of the
Employment Term due to a non-extension of the Agreement by the Company or the Employee pursuant to
the provisions of Section 2 hereof.

8. CONSEQUENCES OF TERMINATION.

(a) DEATH. In the event that the Employee’s employment and the Employment Term ends on
account of the Employee’s death, the Employee’s estate shall be entitled to the following:

(i) any unpaid Base Salary through the date of termination, paid in accordance with the
regular payroll practices of the Company;

 

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(ii) reimbursement for any unreimbursed business expenses incurred through the date of
termination pursuant to, and paid in accordance with, Sections 6(c) and 23(b)(iii) of this
Agreement;

(iii) any accrued but unused vacation time paid in accordance with Company policy; and

(iv) such vested accrued benefits, if any, as to which the Employee may be entitled
under the Company’s employee benefit plans and programs applicable to the Employee as of the
date of termination (other than any severance pay plan), which shall be paid or provided in
accordance with the terms of the applicable plan or program (collectively, Sections 8(a)(i)
through 8(a)(iv) hereof shall be hereafter referred to as the “Accrued Benefits”).

(b) DISABILITY. In the event that the Employee’s employment and/or Employment Term ends on
account of the Employee’s Disability, the Company shall pay or provide the Employee with the
Accrued Benefits.

(c) TERMINATION FOR CAUSE OR WITHOUT GOOD
REASON OR AS A RESULT OF EMPLOYEE NON-EXTENSION OF
THIS AGREEMENT. If the Employee’s employment is terminated (i) by the Company for Cause, (ii) by
the Employee without Good Reason, or (iii) as a result of the Employee’s non-extension of the
Employment Term as provided in Section 2 hereof, the Company shall pay to the Employee the Accrued
Benefits.

(d) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON OR AS A RESULT OF COMPANY NON-EXTENSION OF
THIS AGREEMENT. If the Employee’s employment by the Company is terminated (x) by the Company other
than for Cause, (y) by the Employee for Good Reason, or (z) as a result of the Company’s
non-extension of the Employment Term as provided in Section 2 hereof, the Company shall pay or
provide the Employee with the Accrued Benefits and, subject to the Employee’s compliance with the
obligations in Sections 9, 10 and 11 hereof, the following, subject to the provisions of Section 23
hereof: subject to (A) the Employee’s timely election of continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), and (B) the
Employee’s continued co-payment of premiums at the same level and cost to the Employee as if the
Employee were an employee of the Company (excluding, for purposes of calculating cost, an
employee’s ability to pay premiums with pre-tax dollars) (the “active employee rate”), continued
participation in the Company’s group health plan (to the extent permitted under applicable law and
the terms of such plan) which covers the Employee for a period of up to 18 months at the Company’s
expense (other than as set forth in sub-section (B)), provided, that the Employee is
eligible and remains eligible for COBRA coverage; and provided, further, that in
the event that the Employee obtains other employment that offers group health benefits, such
continuation of coverage by the Company under this Section 8(d)(ii) shall immediately cease.
Notwithstanding the foregoing, if he benefits under the Company’s group health plan will be taxable
to the Employee, then in lieu of the Company’s payments for such continued participation, the
Company shall reimburse the Employee for his premiums for continued coverage under such

 

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plan in the amount that the cost of such coverage exceeds the active employee rate (as
determined based on the Executive’s premium rate in effect on the date of termination).

; provided, however, that Company shall have no contractual or other obligation to
make any payment to which the Employee shall be entitled pursuant to this Section 7(d) to the
Employee unless (i) such payment receives the prior approval of the appropriate federal banking
agency, if required at that time by 12 U.S.C. Section 1828(k),12 C.F.R. Part 359, or other federal
or state laws, rules or regulations, and (ii) such obligation and such payment comply in all other
respects with 12 U.S.C. Section 1828(k),12 C.F.R. Part 359, and other federal and state laws, rules
or regulations, to the extent that such provisions are applicable at that time; provided
further, however, that this Agreement shall comply with 12 U.S.C. Section 1828(k),
12 C.F.R. Part 359, and other applicable federal and state laws, rules or regulations.

Payments and benefits provided in this Section 8(d) shall be in lieu of any termination or
severance payments or benefits for which the Employee may be eligible under any of the plans,
policies or programs of the Company.

(e) OTHER OBLIGATIONS. Upon any termination of the Employee’s employment with the Company,
the Employee shall promptly resign from any other position as an officer, director or fiduciary of
any Company-related entity.

9. RELEASE; NO MITIGATION. Any and all amounts payable and benefits or additional rights
provided to the Employee upon a termination of his employment pursuant to Section 8 (other than the
Accrued Benefits) shall only be payable or provided if the Employee delivers to the Company and
does not revoke a general release of claims in favor of the Company and certain related parties in
a form reasonably satisfactory to the Company, which the Company shall provide to the Employee
within seven days following the date of termination. Such release shall be executed and delivered
(and no longer subject to revocation, if applicable) within 60 days following termination. In no
event shall the Employee be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Employee under any of the provisions of this Agreement,
nor shall the amount of any payment hereunder be reduced by any compensation earned by the Employee
as a result of employment by a subsequent employer, except as provided in Section 8(d)(ii) hereof.
The Employee shall not be entitled to any release of claims from the Company in favor of the
Employee.

10. RESTRICTIVE COVENANTS.

(a) CONFIDENTIALITY. The Employee agrees that the Employee shall not, directly or indirectly,
use, make available, sell, disclose or otherwise communicate to any person, other than in the
course of the Employee’s assigned duties and for the benefit of the Company, following the date of
this Agreement, any business and technical information or trade secrets, nonpublic, proprietary or
confidential information, knowledge or data relating to the Company, any of its subsidiaries,
affiliated companies or businesses, which shall have been obtained by the Employee following the
date of this Agreement. The foregoing shall not apply to information that (A) was known to the
public prior to its disclosure to the Employee; (B) becomes generally known to the public
subsequent to disclosure to the Employee through no wrongful act of the Employee or any
representative of the Employee; or (C) the Employee is required to disclose by

 

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applicable law, regulation or legal process (provided, that the Employee provides the
Company with prior notice of the contemplated disclosure and cooperates with the Company at its
expense in seeking a protective order or other appropriate protection of such information).

(b) NONCOMPETITION. The Employee acknowledges that the Employee performs services of a unique
nature for the Company that are irreplaceable, and that the Employee’s performance of such services
to a competing business within the State of Nevada will result in irreparable harm to the Company.
Accordingly, during the Employee’s employment hereunder and for a period of 1 year thereafter, the
Employee agrees that the Employee will not, directly or indirectly, own, manage, operate, control,
be employed by (whether as an employee, consultant, independent contractor or otherwise, and
whether or not for compensation) or render services to any person, firm, corporation or other
entity, in whatever form, engaged in competition with the Company or any of its subsidiaries or
affiliates or in any other material business in which the Company or any of its subsidiaries or
affiliates is engaged on the date of termination or in which they have planned, on or prior to such
date, to be engaged in on or after such date, within the State of Nevada. Notwithstanding the
foregoing, nothing herein shall prohibit the Employee from being a passive owner of not more than
one percent of the equity securities of a publicly traded corporation engaged in a business that is
in competition with the Company or any of its subsidiaries or affiliates, so long as the Employee
has no active participation in the business of such corporation.

(c) NONSOLICITATION; NONINTERFERENCE. (i) Following the date of this Agreement and for a
period of 1 year following the Employee’s employment with the Company, the Employee agrees that the
Employee shall not, except in the furtherance of the Employee’s duties hereunder, directly or
indirectly, individually or on behalf of any other person, firm, corporation or other entity,
solicit, aid or induce any customer of the Company or any of its subsidiaries or affiliates to
purchase goods or services then sold by the Company or any of its subsidiaries or affiliates from
another person, firm, corporation or other entity or assist or aid any other persons or entity in
identifying or soliciting any such customer.

(ii) Following the date of this Agreement and for a period of 1 year following the
Employee’s employment with the Company, the Employee agrees that the Employee shall not,
except in the furtherance of the Employee’s duties hereunder, directly or indirectly,
individually or on behalf of any other person, firm, corporation or other entity, (A)
solicit, aid or induce any employee, representative or agent of the Company or any of its
subsidiaries or affiliates to leave such employment or retention or to accept employment
with or render services to or with any other person, firm, corporation or other entity
unaffiliated with the Company or hire or retain any such employee, representative or agent,
or take any action to materially assist or aid any other person, firm, corporation or other
entity in identifying, hiring or soliciting any such employee, representative or agent, or
(B) interfere, or aid or induce any other person or entity in interfering, with the
relationship between the Company or any of its subsidiaries or affiliates and any of their
respective vendors, joint venturers or licensors. An employee, representative or agent
shall be deemed covered by this Section 10(c)(ii) while so employed or retained and for a
period of six (6) months thereafter.

 

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(d) NONDISPARAGMENT. The Employee agrees not to make negative comments or otherwise disparage
the Company or its officers, directors, employees, shareholders, agents or products, in any manner
likely to be harmful to them or their business, business reputation or personal reputation other
than while employed by the Company, in the good faith performance of the Employee’s duties to the
Company. The foregoing shall not be violated by truthful statements in response to legal process,
required governmental testimony or filings, or administrative or arbitral proceedings (including,
without limitation, depositions in connection with such proceedings); provided, that prior
to making any such statement the Employee shall provide the Company with prior notice and shall
reasonably cooperate with the Company in seeking a protective order or other appropriate protection
against making such statement.

(e) INVENTIONS. (i) The Employee acknowledges and agrees that all ideas, methods,
inventions, discoveries, improvements, work products or developments (“Inventions”),
whether patentable or unpatentable, (A) that relate to the Employee’s work with the Company, made
or conceived by the Employee, solely or jointly with others, during the Employment Term, or (B)
suggested by any work that the Employee performs in connection with the Company, either while
performing the Employee’s duties to the Company or on the Employee’s own time, but only insofar as
the Inventions are related to the Employee’s work as an employee or other service provider to the
Company, shall belong exclusively to the Company (or its designee), whether or not patent
applications are filed thereon. The Employee will keep full and complete written records (the
“Records”), in the manner prescribed by the Company, of all Inventions, and will promptly
disclose all Inventions completely and in writing to the Company. The Records shall be the sole
and exclusive property of the Company, and the Employee will surrender them upon the termination of
the Employment Term, or upon the Company’s request. The Employee will assign to the Company the
Inventions and all patents that may issue thereon in any and all countries, whether during or
subsequent to the Employment Term, together with the right to file, in the Employee’s name or in
the name of the Company (or its designee), applications for patents and equivalent rights (the
“Applications”). The Employee will, at any time during and subsequent to the Employment
Term, make such applications, sign such papers, take all rightful oaths, and perform all acts as
may be requested from time to time by the Company with respect to the Inventions. The Employee
will also execute assignments to the Company (or its designee) of the Applications, and give the
Company and its attorneys all reasonable assistance (including the giving of testimony) to obtain
the Inventions for its benefit, all without additional compensation to the Employee from the
Company, but entirely at the Company’s expense.

(ii) In addition, the Inventions will be deemed Work for Hire, as such term is defined
under the copyright laws of the United States, on behalf of the Company and the Employee
agrees that the Company will be the sole owner of the Inventions, and all underlying rights
therein, in all media now known or hereinafter devised, throughout the universe and in
perpetuity without any further obligations to the Employee. If the Inventions, or any
portion thereof, are deemed not to be Work for Hire, the Employee hereby irrevocably
conveys, transfers and assigns to the Company, all rights, in all media now known or
hereinafter devised, throughout the universe and in perpetuity, in and to the Inventions,
including, without limitation, all of the Employee’s right, title and interest in the
copyrights (and all renewals, revivals and extensions thereof) to the Inventions, including,
without limitation, all rights of any kind or any nature now or hereafter recognized,
including without limitation, the unrestricted right to make modifications,

 

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adaptations and revisions to the Inventions, to exploit and allow others to exploit the
Inventions and all rights to sue at law or in equity for any infringement, or other
unauthorized use or conduct in derogation of the Inventions, known or unknown, prior to the
date hereof, including, without limitation, the right to receive all proceeds and damages
therefrom. In addition, the Employee hereby waives any so-called “moral rights” with
respect to the Inventions. The Employee hereby waives any and all currently existing and
future monetary rights in and to the Inventions and all patents that may issue thereon,
including, without limitation, any rights that would otherwise accrue to the Employee’s
benefit by virtue of the Employee being an employee of or other service provider to the
Company.

(f) RETURN OF COMPANY PROPERTY. On the date of the Employee’s termination of employment with
the Company for any reason (or at any time prior thereto at the Company’s request), the Employee
shall return all property belonging to the Company or its affiliates (including, but not limited
to, any Company-provided laptops, computers, cell phones, wireless electronic mail devices or other
equipment, or documents and property belonging to the Company).

(g) REFORMATION. If it is determined by a court of competent jurisdiction in any state that
any restriction in this Section 10 is excessive in duration or scope or is unreasonable or
unenforceable under the laws of that state, it is the intention of the parties that such
restriction may be modified or amended by the court to render it enforceable to the maximum extent
permitted by the laws of that state.

(h) TOLLING. In the event of any violation of the provisions of this Section 10, the Employee
acknowledges and agrees that the post-termination restrictions contained in this Section 10 shall
be extended by a period of time equal to the period of such violation, it being the intention of
the parties hereto that the running of the applicable post-termination restriction period shall be
tolled during any period of such violation.

(i) SURVIVAL OF PROVISIONS. The obligations contained in Sections 10 and 11 hereof shall
survive the termination or expiration of this Agreement, the Employment Term and/or the Employee’s
employment with the Company and shall be fully enforceable thereafter.

11. COOPERATION. Upon the receipt of reasonable notice from the Company (including its
outside counsel), the Employee agrees that while employed by the Company and thereafter, the
Employee will respond and provide information with regard to matters in which the Employee has
knowledge as a result of the Employee’s employment with the Company, and will provide reasonable
assistance to the Company, its affiliates and their respective representatives in defense of any
claims that may be made against the Company or its affiliates, and will assist the Company and its
affiliates in the prosecution of any claims that may be made by the Company or its affiliates, to
the extent that such claims may relate to the period of the Employee’s employment with the Company.
The Employee agrees to promptly inform the Company if the Employee becomes aware of any lawsuits
involving such claims that may be filed or threatened against the Company or its affiliates. The
Employee also agrees to promptly inform the Company (to the extent that the Employee is legally
permitted to do so) if the Employee is asked to assist in any investigation of the Company or its
affiliates (or their actions),

 

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regardless of whether a lawsuit or other proceeding has then been filed against the Company or
its affiliates with respect to such investigation, and shall not do so unless legally required. If
the Employee is required to provide services pursuant to this Section 11 following the Employment
Term for more than five hours per month for more than three months, then (a) the Employee shall
receive a fee for his time at a rate of $1,000 per day and (b) in accordance with its reimbursement
policies and procedures as in effect, including the timely submission of proper documentation
supporting such expenses, the Company will pay (or reimburse the Employee for) reasonable
out-of-pocket travel, lodging, communication and duplication expenses incurred in connection with
the performance of such services 

12. EQUITABLE RELIEF AND OTHER REMEDIES. The Employee acknowledges and agrees that the
Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 10
or Section 11 hereof would be inadequate and, in recognition of this fact, the Employee agrees
that, in the event of such a breach or threatened breach, in addition to any remedies at law, the
Company, without posting any bond, shall be entitled to obtain equitable relief in the form of
specific performance, a temporary restraining order, a temporary or permanent injunction or any
other equitable remedy which may then be available. In the event of a violation by the Employee of
Section 10 or Section 11 hereof, any severance being paid or provided to the Employee pursuant to
this Agreement or otherwise shall immediately cease, and any severance previously paid to the
Employee shall be immediately repaid to the Company.

13. NO ASSIGNMENTS. This Agreement is personal to each of the parties hereto. Except as
provided in this Section 13 hereof, no party may assign or delegate any rights or obligations
hereunder without first obtaining the written consent of the other party hereto. The Employee
hereby acknowledges and agree that the Company may assign this Agreement (including the provisions
of Section 10 and Section 11) to any successor to all or substantially all of the business and/or
assets of the Company. As used in this Agreement, “Company” shall mean the Company and any
successor to its business and/or assets.

14. NOTICE. For purposes of this Agreement, notices and all other communications provided for
in this Agreement shall be in writing. Each notice and all other communications shall be delivered
either by hand, by confirmed facsimile or electronic mail (but only if followed by transmittal by
national overnight courier or hand delivered in person on the next business day), by guaranteed
overnight delivery service, or by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

If to the Employee:

At the address (or to the facsimile number) shown

on the records of the Company

If to the Company:

Western Liberty Bancorp

1370 Avenue of the Americas

28th Floor

11

 

New York, New York 10019

Attention: Jason N. Ader, Chairman

Facsimile: 212.445.7800

with a copy to:

Proskauer Rose LLP

1585 Broadway

New York, New York 10036-8299

Attention: Jeffrey A. Horwitz

Facsimile: 212.969.2900

or to such other address as either party may have furnished to the other in writing in accordance
herewith. Each notice and all other communications shall be deemed duly given and effective upon
actual receipt (or refusal of receipt).

15. SECTION HEADINGS; INCONSISTENCY. The section headings used in this Agreement are included
solely for convenience and shall not affect, or be used in connection with, the interpretation of
this Agreement. In the event of any inconsistency between the terms of this Agreement and any
form, award, plan or policy of the Company, the terms of this Agreement shall govern and control.

16. SEVERABILITY. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof.

17. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and the same instrument.

18. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of New York, without
regard to its principles of conflicts of laws. Each of the Parties irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York located in New York City or the
United States District Court for the Southern District of New York for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such suit, action or proceeding may
be served on each party hereto anywhere in the world by the same methods as are specified for the
giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in
such court. Each party hereto irrevocably waives any objection to the laying of venue of any such
suit, action or proceeding brought in such courts and irrevocably waives any claim that any such
suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH
RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.

 

12

 

19. INDEMNIFICATION. The Company hereby agrees to indemnify the Employee and hold the
Employee harmless to the extent provided under the By-Laws of the Company and the Indemnification
Agreement, dated as of November 3, 2009, between Service1st Bank of Nevada and the Employee against
and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs,
expenses (including reasonable attorney’s fees), losses, and damages resulting from the Employee’s
good faith performance of the Employee’s duties and obligations with the Company. This obligation
shall survive the termination of the Employee’s employment with the Company. Notwithstanding the
foregoing, the Employee’s right to indemnification pursuant to this Section 19 shall be made
ineffective as necessary to ensure with compliance with 12 C.F.R. Part 359.

20. LIABILITY INSURANCE. From and after the Effective Date, the Company shall cover the
Employee under directors’ and officers’ liability insurance both during and, while potential
liability exists, after the term of this Agreement in the same amount and to the same extent as the
Company covers its other officers and directors.

21. MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed by the Employee
and such officer or director as may be designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent time. This
Agreement together with all exhibits hereto sets forth the entire agreement of the parties hereto
in respect of the subject matter contained herein and supersedes any and all prior agreements or
understandings, written or oral, between the Employee and either the Company or Service1st Bank of
Nevada with respect to the subject matter hereof, including, without limitation, any draft
employment agreement previously provided by or on behalf of Service1st Bank of Nevada to the
Employee (it being agreed and acknowledged that, for the avoidance of doubt, no such agreement was
ever executed and delivered by either Service1st Bank of Nevada or the Employee and, accordingly,
does not constitute a binding obligation of either Services1st Bank of Nevada or the Employee). No
agreements or representations, oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not expressly set forth in this Agreement.

22. REPRESENTATIONS. The Employee represents and warrants to the Company that (a) the
Employee has the legal right to enter into this Agreement and to perform all of the obligations on
the Employee’s part to be performed hereunder in accordance with its terms, and (b) the Employee is
not a party to any agreement or understanding, written or oral, and is not subject to any
restriction, which, in either case, could prevent the Employee from entering into this Agreement or
performing all of the Employee’s duties and obligations hereunder. In addition, the Employee
acknowledges that the Employee is aware of Section 304 (Forfeiture of Certain Bonuses and Profits)
of the Sarbanes-Oxley Act of 2002 and the right of the Company to be reimbursed for certain
payments to the Employee in compliance therewith. In addition, the Employee hereby represents,
warrants and agrees with the Company that: (i) a portion of the compensation payable to the
Employee pursuant to this Agreement constitutes good and valuable consideration, the receipt and
sufficiency of which are hereby expressly acknowledged, for the covenants and agreements contained
in Section 10 and Section 11; (ii) the covenants and

 

13

 

agreements contained in Section 10 and Section 11 are reasonable, appropriate and suitable in
their geographic scope, duration and content; the Employee shall not, directly or indirectly, raise
any issue of the reasonableness, appropriateness and suitability of the geographic scope, duration
or content of such covenants and agreements in any proceeding to enforce such covenants and
agreements; and such covenants and agreements shall survive the termination of the Employees
employment for the durations set forth therein; (iii) the enforcement of any remedy under this
Agreement will not prevent the Employee from earning a livelihood because the Employee’s past work
history and abilities are such that the Employee reasonably can expect to find work, if he so
chooses, in other areas and lines of business; (iv) the covenants and agreements stated in Section
10 and Section 11 are essential for the Employer’s reasonable protection; and (v) the Company has
reasonably relied on these covenants and agreements by the Employee.

23. TAX MATTERS.

(a) WITHHOLDING. The Employee shall pay, or make arrangements satisfactory to the Company to
pay, in a manner satisfactory to the Company, an amount equal to the amount of all applicable
federal, state and local taxes (but not the Company’ share of Social Security taxes) that the
Company is required to withhold at any time. In the absence of such arrangements, the Company may
withhold from any and all amounts payable under this Agreement such federal, state and local taxes
as may be required to be withheld pursuant to any applicable law or regulation.

(b) SECTION 409A COMPLIANCE.

(i) The parties agree that this Agreement shall be interpreted to comply with Code
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the
regulations and guidance promulgated thereunder to the extent applicable (collectively
“Code Section 409A”) and all provisions of this Agreement shall be construed in a
manner consistent with the requirements for avoiding taxes or penalties under Code Section
409A. In no event will the Company be liable for any additional tax, interest or penalties
that may be imposed on the Employee by Code Section 409A or any damages for failing to
comply with Code Section 409A or the provisions of this Section 23.

(ii) Notwithstanding any provision to the contrary in this Agreement, a termination of
the Employee’s employment shall not be deemed to have occurred for purposes of any provision
of this Agreement providing for the payment of any amounts or benefits upon or following a
termination of employment unless such termination is also a “separation from service”
(within the meaning of Code Section 409A) and, for purposes of any such provision of this
Agreement, references to a “termination” or “termination of employment” will mean separation
from service. If the Employee is deemed on the date of termination of his employment to be
a “specified employee”, within the meaning of that term under Section 409A(a)(2)(B) of the
Code and using the identification methodology selected by the Company from time to time, or
if none, the default methodology set forth in Code Section 409A, then with regard to any
payment or the providing of any benefit that constitutes “non-qualified deferred
compensation” pursuant to Code Section 409A, such payment or benefit will not be made or
provided

 

14

 

prior to the earlier of (i) the expiration of the six-month period measured from the
date of the Employees separation from service or (ii) the date of the Employee’s death. On
the first day of the seventh month following the date of the Employee’s separation from
service or, if earlier, on the date of the Employee’s death, all payments delayed pursuant
to this Section (whether they would have otherwise been payable in a single sum or in
installments in the absence of such delay) will be paid or reimbursed to the Employee in a
lump sum, and any remaining payments and benefits due under this Agreement will be paid or
provided in accordance with the normal payment dates specified for them herein.

(iii) Any reimbursement of costs and expenses provided for under this Agreement shall
be made no later than December 31 of the calendar year next following the calendar year in
which the expenses to be reimbursed are incurred.

(iv) With regard to any provision herein that provides for reimbursement of expenses or
in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement
or in-kind benefits is not subject to liquidation or exchange for another benefit, and (ii)
the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any
taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits
to be provided, in any other taxable year, provided, that the foregoing clause (ii)
shall not be violated with regard to expenses reimbursed under any arrangement covered by
Code Section 105(b) solely because such expenses are subject to a limit related to the
period the arrangement is in effect.

(v) With regard to any installment payments provided for herein, each installment
thereof shall be deemed a separate payment for purposes of Code Section 409A.

(vi) Whenever a payment under this Agreement specifies a payment period with reference
to a number of days, the actual date of payment within the specified period shall be within
the sole discretion of the Company.

(vii) To the extent that this Agreement provides for the Employee’s indemnification by
the Company and/or the payment or advancement of costs and expenses associated with
indemnification, any such amounts shall be paid or advanced to the Employee only in a manner
and to the extent that such amounts are exempt from the application of Code Section 409A in
accordance with the provisions of Treasury Regulation 1.409A-1(b)(10).

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

15

 

EXECUTION COPY

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.

	 	 	 	 	 
	 	WESTERN LIBERTY BANCORP

 	 
	 	By:  	/s/ Jason N. Ader	 
	 	 	Name:  	Jason N. Ader	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	/s/ Richard Deglman	 
	 	 	 
	 	RICHARD DEGLMANexv10w29

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

 

 

$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

2

 

(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.

3

 

     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]

4

 

     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]

5

 

	 	 	 	 	 	 	 
	 	 	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]

6

 

	 	 	 	 	 
	 	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]

7

 

	 	 	 	 	 	 	 
	 	 	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]

8

 

	 	 	 	 	 	 	 
	 	 	BANK OF SCOTLAND plc,

as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO FOURTH

AMENDED AND RESTATED CREDIT AGREEMENT]

9

 

	 	 	 	 	 	 	 
	 	 	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]

10

 

	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,

as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO FOURTH

AMENDED AND RESTATED CREDIT AGREEMENT]

11

 

	 	 	 	 	 	 	 
	 	 	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]

12

 

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

 

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

 

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

 

     (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

 

     (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

 

     (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

 

     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

 

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

 

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

 

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

 

     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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

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