Exhibit 10.23 GUARANTY
THIS GUARANTY (this
"Guaranty") is made as of the 23rd day of December, 2005, by
PARALLEL, L.L.C. , a Delaware limited liability company (the
"Guarantor") in favor of the Agent, for the benefit of the Lenders,
under the Credit Agreement referred to below; WITNESSETH :
WHEREAS , PARALLEL PETROLEUM
CORPORATION, a Delaware corporation ("PPC") and PARALLEL, L.P., a
Texas limited partnership ("PLP") (PPC and PLP collectively are
hereinafter referred to as the "Principal"), Guarantor, CITIBANK
TEXAS, N.A., a national banking association, having its principal
office in Midland, Texas, as Joint Lead Arranger and Administrative
Agent (the "Agent"), BNP PARIBAS, as Joint Lead Arranger and
Syndication Agent, and certain other financial institutions from
time to time parties thereto (the "Lenders") have entered into a
certain Third Amended and Restated Credit Agreement dated of even
date herewith (as same may be amended, modified or restated from
time to time, the "Credit Agreement"), providing, subject to the
terms and conditions thereof, for extensions of credit to be made
by the Lenders to the Principal;
WHEREAS , it is a condition precedent to the Agent and the
Lenders executing the Credit Agreement that Guarantor execute and
deliver this Guaranty whereby the Guarantor shall guarantee the
payment when due, subject to Section 9 hereof, of all
Guaranteed Obligations and Rate Management Obligations, as defined
below; and WHEREAS , in
consideration of the financial and other support that the Principal
has provided, and such financial and other support as the Principal
may in the future provide, to the Guarantor, and in order to induce
the Lenders and the Agent to enter into the Credit Agreement, and
the Lenders and their Affiliates to enter into one or more Rate
Management Transactions with the Principal, and because the
Guarantor has determined that executing this Guaranty is in its
interest and to its financial benefit, the Guarantor is willing to
guarantee the obligations of the Principal under the Credit
Agreement, any Note, any Rate Management Transaction, and the other
Loan Documents; NOW,
THEREFORE , in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION l.1. Selected Terms Used
Herein . "Guaranteed Obligations"
is defined to mean (i) all indebtedness, obligations and
liabilities of either Principal to Agent or any Lender arising out
of or pursuant to the provisions of the Credit Agreement, the Notes
and other Loan Documents, (ii) all Rate Management
Obligations, (iii) all indebtedness, obligations and liabilities of
either Principal to any Lender of any kind or character now
existing or hereafter arising, whether direct, indirect, related,
unrelated, fixed, contingent, liquidated, unliquidated, joint,
several or joint and several, and regardless of whether such
indebtedness, obligations and liabilities may, prior to their
acquisition by any Lender, be or have been payable to or in favor
of a
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third party and subsequently acquired by any Lender (it being
contemplated that any Lender may make such acquisitions from third
parties), including without limitation all indebtedness,
obligations and liabilities of either Principal to any Lender now
existing or hereafter arising by note, draft, acceptance, guaranty,
endorsement, letter of credit, assignment, purchase, overdraft,
discount, indemnity agreement or otherwise, (iv) all accrued
but unpaid interest on any of the indebtedness described in (i),
(ii) and (iii) above, (v) all obligations of either
Principal to any Lender under any documents evidencing, securing,
governing and/or pertaining to all or any part of the indebtedness
described in (i), (ii), (iii) or (iv) above,
(vi) all costs and expenses incurred by any Lender in
connection with the collection and administration of all or any
part of the indebtedness and obligations described in (i), (ii),
(iii), (iv) or (v) above or the protection or
preservation of, or realization upon, the collateral securing all
or any part of such indebtedness and obligations, including without
limitation all reasonable attorneys’ fees, and (vii) all
renewals, extensions, modifications and rearrangements of the
indebtedness and obligations described in (i), (ii), (iii), (iv),
(v) and (vi) above. "Rate
Management Obligations" means any and all obligations of either
Principal, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all Rate Management Transactions
with Agent or a Lender or an Affiliate of Agent or a Lender, and
(ii) any and all cancellations, buy backs, reversals,
terminations or assignments of any Rate Management Transactions.
SECTION 1.2. Terms in Credit
Agreement. Other capitalized terms used herein but not defined
herein shall have the meaning set forth in the Credit Agreement.
SECTION 2.1. Representations and
Warranties . The Guarantor represents and warrants (which
representations and warranties shall be deemed to have been renewed
upon each Borrowing Date under the Credit Agreement) that:
(a) It is a limited liability company
duly and properly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite
authority to conduct its business in each jurisdiction in which its
business is conducted. (b) It has the
power and authority and legal right to execute and deliver this
Guaranty and to perform its obligations hereunder. The execution
and delivery by it of this Guaranty and the performance of its
obligations hereunder have been duly authorized by proper
corporate, partnership or limited liability company proceedings,
and this Guaranty constitutes a legal, valid and binding obligation
of Guarantor enforceable against it in accordance with its terms,
except as enforceability may be limited by general principles of
equity and bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally.
(c) Neither the execution and
delivery by it of this Guaranty, nor the consummation of the
transactions herein contemplated, nor compliance with the
provisions hereof will violate (i) any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on it or
any of its subsidiaries or (ii) its articles or certificate of
incorporation, partnership agreement, limited liability company
agreement, certificate of partnership, articles or certificate of
organization, by-laws, or operating or other management agreement,
as the case may be, or
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(iii) the provisions of any indenture, instrument or
agreement to which it or any of its subsidiaries is a party or is
subject, or by which it, or its Property, is bound, or conflict
with or constitute a default thereunder, or result in, or require,
the creation or imposition of any Lien in, of or on the property of
Guarantor or a subsidiary thereof pursuant to the terms of any such
indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of,
or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or
authority, or any subdivision thereof, which has not been obtained
by it or any of its subsidiaries, is required to be obtained by it
or any of its subsidiaries in connection with the execution and
delivery of this Guaranty or the performance by it of its
obligations hereunder or the legality, validity, binding effect or
enforceability of this Guaranty.
SECTION 2.2. Covenants . The
Guarantor covenants that, so long as any Lender has any Commitment
outstanding under the Credit Agreement, any Reimbursement
Obligations remain outstanding, any Rate Management Transaction
remains in effect or any of the Guaranteed Obligations shall remain
unpaid, that it will, and, if necessary, will enable the Principal
to, fully comply with those covenants and agreements set forth in
the Credit Agreement. SECTION 3.
The Guaranty . Subject to Section 9 hereof, the
Guarantor hereby absolutely and unconditionally guarantees, as
primary obligor and not as surety, the full and punctual payment
(whether at stated maturity, upon acceleration or early termination
or otherwise, and at all times thereafter) and performance of the
Guaranteed Obligations, including without limitation any such
Guaranteed Obligations incurred or accrued during the pendency of
any bankruptcy, insolvency, receivership or other similar
proceeding, whether or not allowed or allowable in such proceeding.
Upon failure by the Principal to pay punctually any such amount,
the Guarantor agrees that it shall forthwith on demand pay to the
Agent for the benefit of the Lenders and, if applicable, their
Affiliates, the amount not so paid at the place and in the manner
specified in the Credit Agreement, any Note, any Rate Management
Transaction or the relevant Loan Document, as the case may be. This
Guaranty is a guaranty of payment and not of collection. The
Guarantor waives any right to require any Lender, or any Affiliate
of any Lender, to sue the Principal, any other guarantor, or any
other Person obligated for all or any part of the Guaranteed
Obligations, or otherwise to enforce its payment against any
Collateral securing all or any part of the Guaranteed Obligations.
SECTION 4. Guaranty
Unconditional . Subject to Section 9 hereof, the
obligations of th
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