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PROMISSORY NOTE
$30,000,000.00 Midland, Texas July 1, 1996
FOR VALUE RECEIVED, the undersigned PARALLEL PETROLEUM CORPORATION, a
Delaware corporation (referred to herein as "Borrower"), hereby unconditionally
promises to pay to the order of BANK ONE, TEXAS, N.A., a national banking
association ("Lender"), at 2301 West Wall Street, Midland County, Midland,
Texas 79701, or such other address as Lender shall designate in writing to
Borrower, the principal sum of THIRTY MILLION AND NO/100 DOLLARS
($30,000,000.00), or if less, so much thereof as may be advanced pursuant to
the Loan Agreement (as hereinafter defined), in lawful money of the United
States of America, together with interest from the date hereof until paid at
the rates specified in the Loan Agreement.
The principal and all accrued interest on this Note shall be due and
payable in accordance with the terms and provisions of the Loan Agreement.
This Note is executed pursuant to that certain Loan Agreement dated of
even date herewith between Borrower and Lender (herein, as from time to time
amended, modified or restated, called the "Loan Agreement"), and is the Note
referred to therein. All capitalized terms used but not specifically defined
herein shall have the meanings ascribed thereto in the Loan Agreement.
Reference is made to the Loan Agreement and the other Loan Papers for a
statement of the prepayment rights and obligations of Borrower, a description
of the properties mortgaged and assigned as security, the nature and extent of
such security and the rights of the parties under the Loan Papers in respect
to such security, for a statement of the terms and conditions under which the
due date of this Note may be accelerated and for statements regarding other
matters affecting this Note (including without limitation the obligations of
the holder hereof to advance funds hereunder, principal and interest payment
due dates, voluntary and mandatory prepayments, exercise of rights and
remedies, payment of attorneys' fees, court costs and other costs of collection
and certain waivers by Borrower and others now or hereafter obligated for
payment of any sums due hereunder). Upon the occurrence of an Event of
Default, as that term is defined in the Loan Agreement or the other Loan
Papers, the holder hereof shall have all rights and remedies of the Lender
under the Loan Agreement and the other Loan Papers.
Nothing contained in this Note, the Loan Agreement, any other Loan Paper
or in any other agreement or undertaking relating hereto or to the Obligation
shall be construed to obligate Borrower, under any circumstances whatsoever,
to pay interest at a rate in excess of the Highest Lawful Rate. All sums paid
under the Loan Agreement or under this Note that are deemed to be interest
shall be spread and prorated over the entire period for which this Note is
outstanding. In the event that any sums received hereunder or under the Loan
Agreement from Borrower are at any time under applicable law deemed or held
to provide a rate of interest in excess of the Highest Lawful Rate, the
effective rate of interest on the Obligation shall be deemed reduced to and
shall be the Highest Lawful Rate, and Borrower and any other parties hereby
agree to accept as their sole remedy under such circumstances either the
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return of any sums of interest that may have been collected in excess of
the Highest Lawful Rate or the application of these sums as a credit against
the unpaid principal amount of this Note, whichever remedy may be elected by
Lender. In addition, in the event that the maturity of this Note is accelerated
by reason of the election by Lender hereunder or under the Loan Agreement,
then earned interest may never include more than the amount calculated pursuant
to the Highest Lawful Rate, and if unearned interest is provided for in this
Note or the other Loan Papers, Borrower and any other parties liable on said
documents hereby agree to accept as their sole remedy under such circumstances
either (a) the cancellation of said unearned interest, or (b) if theretofore
paid, either the return to Borrower or the crediting of said unearned interest
on the principal amount due under this Note or other documents, whichever
action may be elected by Lender. To the extent the Highest Lawful Rate is
determined by reference to the laws of the State of Texas, same shall be the
indicated (weekly) rate ceiling as defined in Article 5069-1.04, Texas Revised
Civil Statutes, provided that Lender may, by notice to Borrower, elect such
other reference as is allowed by said statute.
If any payment of principal or interest on this Note shall become due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall in such case be
included in computing interest in connection with such payment.
If this Note is placed in the hands of an attorney for collection, or if
it is collected through any legal proceeding at law or in equity or in
bankruptcy, receivership or other court proceedings, Borrower agrees to pay
all costs of collection, including, but not limited to, court costs and
reasonable attorneys' fees.
Borrower and each surety, endorser, guarantor and other party ever liable
for payment of any sums of money payable on this Note, jointly and severally
waive presentment and demand for payment, notice of acceleration or the
intention to accelerate the maturity, protest, notice of protest and
nonpayment, as to this Note and as to each and all installments hereof, and
agree that their liability under this Note shall not be affected by any
renewal or extension in the time of payment hereof, or in any indulgences, or
by any release or change in any security for the payment of this Note, and
hereby consent to any and all renewals, extensions, indulgences, releases or
changes.
This Note shall be governed by and construed in accordance with the
applicable laws of the United States of America and the laws of the State of
Texas, except that Tex. Rev. Civ. Stat. Ann. art. 5069, Chapter 15 (which
regulates certain revolving credit loan accounts and revolving tri-party
accounts) shall not apply to this Note.
This Note is given, to the extent of $15,068,621.09, in renewal and
rearrangement, but not in extinguishment or novation, of the unpaid principal
balance of the certain promissory note dated June 12, 1996, in
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the original principal amount of $25,000,000, executed by Borrower and
payable to the order of NationsBank of Texas, N.A., which note has been
assigned to Lender.
THIS WRITTEN NOTE, THE LOAN AGREEMENT AND THE OTHER LOAN PAPERS
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.
EXECUTED this 1st day of July, 1996.
BORROWER:
PARALLEL PETROLEUM CORPORATION,
a Delaware corporation
By:/s/ Thomas R. Cambridge
---------------------------
Thomas R. Cambridge
Chairman of the Board
By:/s/ Larry C. Oldham
---------------------------
Larry C. Oldham
President