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Guaranty Of Payment Of Instrument
Guaranty, dated as of [Date], is made and entered into by [Name], a [State) Corporation hereby (Guarantor).
This guaranty is entered into pursuant to a loan agreement dated as of [Date] (the Agreement) between [Name], a [State) Corporation (which together with any corporation that shall have become a successor thereto in the manner prescribed in [Section] of the Agreement being herein called the Obligor), and [Name], a [State) Corporation [Obligee].
The Agreement provides for the issuance of [$------] principal amount of [--%] Promissory Notes due [Date] of Obligor (the Notes), of which the note to which this guaranty is affixed (the Note) is one. The definitions of certain terms set forth in [Section] of the Agreement shall be applicable to this guaranty.
Obligor is a wholly-owned subsidiary of Guarantor. This guaranty is given as an inducement to, and as part of the consideration for, the purchase of and payment for the Notes.
Guarantor hereby unconditionally guarantees to the holder of the Note the prompt payment of the principal of, premium, if any, and interest on the Note whenever the same shall become due and payable in accordance with any of the terms of the Note, whether at maturity, pursuant to mandatory or optional prepayments, by acceleration or otherwise, all at the times and places, and at the rate and in the currency described in the Note and otherwise according to the tenor of the Note. Guarantor covenants, in case of default in the payment of any part of the principal, premium, if any, or interest by Obligor, to pay the principal, premium, and interest as the same shall become due, on demand of the holder of the Note. This guaranty shall be a continuing guaranty of any and all notes given in exchange, substitution, extension, or renewal of the Note.
This guaranty is an unconditional and absolute guaranty of payment and not of collectability. The liability of Guarantor on this guaranty shall be direct and immediate. If any amounts or any part of any amounts payable under or in connection with the Note shall not be paid promptly when due and payable, Guarantor shall forthwith pay such amounts to the holder of the Note, regardless of any defense, or set-off, or counterclaim between Obligor and Guarantor, and regardless of whether or not the holder of the Note (or any other holder of the Notes) or anyone on its behalf shall have instituted any suit, action, or proceeding, or exhausted its remedies, or taken any steps to enforce any rights against Obligor or any other person to collect all or part of any such amounts, either pursuant to the provisions of the Agreement, the Note, or any of the Notes, or at law or in equity, and regardless of any other condition or contingency. Guarantor hereby waives any requirement that any holder of the Note or any of the Notes, in the event of default by Obligor, first make demand on, or seek to enforce remedies against, Obligor before demanding payment under or seeking to enforce this guaranty. Guarantor covenants that this guaranty will not be discharged except by a complete payment of the principal of, premium, if any, and interest on, the Note and any other sums owing by Obligor in accordance with the provisions of the Note. Guarantor agrees that this guaranty shall remain in full force and effect without regard to, and shall not be affected or impaired by, any invalidity, irregularity, or unenforceability in whole or in part of the Agreement, the Note, or any of the Notes, or any limitation on the liability of Obligor thereunder, or any limitation on the method or terms of payment thereunder which may now or hereafter be caused or imposed in any manner whatsoever. Guarantor hereby unconditionally waives diligence, presentment, and protest, and any notice of default in the payment of any amount at any time payable by Obligor under or in connection with the Note, and notice of the breach of any obligation of Obligor or any other party contained in the Agreement or the Notes.
Guarantor agrees that in the event it shall make any payment in respect of the Note, any right of payment to Guarantor from Obligor, whether by way of reimbursement, indemnity, subrogation, or otherwise, shall constitute and be evidenced by indebtedness of Obligor subordinated in right and time of payment, and in every other way, to the unpaid amount, if any, of indebtedness represented by the Note. No payment shall be made on the subordinated indebtedness until prior payment in full has been made of the indebtedness represented by the Note.
The obligations, covenants, agreements, and duties of Guarantor under this guaranty shall not be affected or impaired by any assignment or transfer in whole or in part of the Note without notice to Guarantor; or any waiver by the holder of the Note, or by any of the holders of the Notes, of the performance or observance by Obligor or any other party of any of the agreements, covenants, terms, or conditions contained in the Agreement or the Notes; or any indulgence in or the extension of the time for payment by Obligor of any amounts payable under or in connection with the Note, or any of the Notes, or the Agreement, or of the time for performance by Obligor or any other party of any other obligation under or arising out of the Note, or any of the Notes, or the Agreement, or the extension or renewal thereof; or any change, amendment, modification, waiver, discharge, or termination (whether material or otherwise, and whether or not made without notice to or further assent by Guarantor) of any duty, agreement, or obligation of Obligor or any other party set forth in the Note or any of the Notes or the Agreement; or the voluntary or involuntary liquidation, sale, or other disposition of all or substantially all of the assets of Obligor; or any receivership, insolvency, bankruptcy, reorganization, or similar proceedings affecting Obligor or its assets; or the release or discharge of Obligor from the performance or observance of any agreement, covenant, term, or condition contained in the Note or any of the Notes, or the Agreement without the consent of the holders of the Notes by operation of law; or any other cause, whether similar or dissimilar to the foregoing. Notwithstanding the foregoing, however, no such changes, amendment, modification, or waiver shall, without the written consent of Guarantor, increase the principal amount of the Note, or any of the Notes, or increase the interest rate thereon, or increase any premium payable on prepayment thereof.
With the written consent of the holders of at least [--%] in aggregate principal amount of all the outstanding Notes, this guaranty may be terminated, or any covenant, agreement, or condition contained herein may be waived (either generally or in a particular instance, and either retroactively or prospectively), or such holder or holders and Guarantor may from time to time enter into agreements for the purpose of amending any covenant, agreement, or condition herein. However, no such amendment or waiver shall reduce the percentage of holders of the Notes required to approve any such termination or amendment or effectuate any such waiver, without the consent of the holders of all the outstanding Notes. Any such termination, amendment, or waiver shall apply equally to all the holders of the Notes, and shall be binding on them, on each future holder of any Note, and on Guarantor, whether or not this instrument or the Notes shall have been marked to indicate such termination, amendment, or waiver.
FINANCIAL STATEMENTS AND REPORTS
Guarantor covenants and agrees to furnish to Obligee, so long as it shall hold any of the Notes, and on request from each other holder of a Note or Notes representing [--%] or more of the unpaid principal amount of all outstanding Notes, in duplicate:
(a) As soon as available, but, in any event, within [--] days after the end of the first, second, and third quarterly periods in each fiscal year of Guarantor, copies of a [consolidated balance sheet of Guarantor] (and its consolidated subsidiaries) as of the end of each such quarterly accounting period, and copies of a [consolidated] statement of earnings and retained earnings of [Guarantor] (and its consolidated subsidiaries) for the part of the fiscal year ended with the last day of each quarterly accounting period, all in reasonable detail and stating in comparative form the figures for the corresponding date and period in the previous year and certified by an authorized financial officer of Guarantor, subject, however, to year-end audit adjustments;
(b) As soon as available, but, in any event, within [--] days after the end of each fiscal year of Guarantor, copies of a [consolidated balance sheet of Guarantor] (and its consolidated subsidiaries) for such fiscal year, all in reasonable detail and stating in comparative form the (consolidated) figures as of the end of and for the previous fiscal year, and certified by independent public accountants, as the case may be, of recognized standing and selected by Guarantor. With the financial statements for each fiscal year, Guarantor shall furnish a written statement of the accountants that, in making the examination necessary for certification of the financial statements, they have not obtained any knowledge of any default by Guarantor in the performance of any of the covenants contained in this guaranty. If the accountants have obtained any knowledge of any default, they shall disclose in their statement the nature of the default or defaults, it being understood that the accountants shall not be liable, directly or indirectly, for any failure to obtain knowledge of any default;
(c) Within [--] days after the end of each fiscal year of Guarantor, a certificate of the Chairman of the Board of Directors, the President, any Vice-Chairman of the Board of Directors, any Vice-President, or the Treasurer or Assistant Treasurer of Guarantor stating that Guarantor has kept, observed, and performed all of, and is not in default in the performance or observance of any of, the terms, covenants, or conditions of this guaranty or, if there shall be any default, specifying all such defaults and their nature;
(d) Promptly after the receipt thereof by Guarantor, copies of any detailed audit reports of [Guarantor] (or of Guarantor and its consolidated subsidiaries) submitted to Guarantor by independent public accountants in connection with each annual audit of the accounts of [Guarantor] (or of Guarantor and its consolidated subsidiaries) and each interim audit of the accounts of [Guarantor] (or of Guarantor and its consolidated subsidiaries) made by the accountants;
(e) Promptly after the same are available, copies of all proxy statements, financial statements, and reports as Guarantor or any of its subsidiaries which is not wholly owned shall send to its stockholders, and copies of all regular and periodic reports which Guarantor may be required to file with the Securities and Exchange Commission or any similar or corresponding governmental commission, department, or agency substituted therefor;
(f) Such other reasonable information relating to the affairs of Guarantor and its subsidiaries, as the case may be, which might be helpful to Obligee or any holder of any of the Notes in evaluating its investment in the Notes, as may from time to time be reasonably requested.
INSPECTION OF PROPERTIES AND BOOKS
Obligee, or any holder of a Note or Notes representing [--%] or more of the unpaid principal amount of all outstanding Notes (or such persons as either Obligee or such holder may designate), shall have the right to visit and inspect any of the properties of Guarantor or its subsidiaries to examine their respective books of account and to discuss their respective affairs, finances, and accounts with their respective officers all at such reasonable times and at such reasonable intervals as Obligee or such holder may desire.
Guarantor covenants and agrees as follows:
(a) Corporate Existence. Subject to the provisions of Subdivision (c) of this Section Four, Guarantor agrees that it will do or cause to be done all things necessary or appropriate to preserve and keep in full force and effect its corporate existence, rights, and franchises;
(b) Compliance with Agreement. Guarantor hereby agrees that it will cooperate with Obligor in the compliance with such of the covenants and agreements of Obligor contained in the Agreement which require action by Guarantor;
(c) Consolidated Merger or Disposition of All or Substantially All the Assets. Guarantor agrees that it shall not consolidate with, merge into, or sell, transfer, lease, or otherwise dispose of all or substantially all of its properties as an entirety to any person, unless
(1) the successor formed by or resulting from such consolidation or merger, or to which such sale, lease, or other disposition shall have been made, shall be a corporation organized under the laws of the United States or any state, district, or territory of the United States;
(2) such successor corporation (if other than Guarantor) shall expressly assume its guaranty, according to its tenor and effect, and the due and punctual performance and observance of all the covenants, agreements, and conditions of this guaranty to be performed or observed by Guarantor as if the successor corporation had been the original maker of this guaranty (and such assumption of this guaranty shall, on the request of the holder of any Note, be evidenced by the endorsing of an appropriate legend on this guaranty attached to the Note; the guaranty attached to each Note executed pursuant to [Section] and [Section] of the Notes after such assumption shall, unless executed in the name of the successor corporation, have a similar legend endorsed on it); and
(3) immediately after such consolidation, merger, sale, lease, or other disposition, Guarantor, or such successor corporation, as the case may be, shall not be in default in the performance of any of the covenants, agreements, or conditions applicable to Guarantor contained in this guaranty;
(d) Disposition of Substantial Part of Assets. Guarantor shall not sell, transfer, lease, or otherwise dispose of any of its properties or assets unless
(1) the sale, transfer, lease, or other disposition is in the ordinary course of business or is permitted by Subsection (c) of this Section Four; or
(2) the total book value, less applicable reserves, of all such properties and assets so sold, transferred, leased, or disposed of during any fiscal year (except as permitted by (1), as determined as of the end of the next preceding fiscal year, does not exceed [--%] of the total book value, less applicable reserves, of the assets and properties of [Guarantor] (and its consolidated subsidiaries) as determined at the end of the preceding fiscal year; or
(3) Guarantor, within [--] days after the sale, transfer, lease, or other disposition, shall cause Obligor to give notice of prepayment in accordance with [Section] of the Notes, and thereafter to prepay part of the outstanding principal amount of the Notes which bears the same relation to the total unpaid principal amount as the book value of the assets and properties so sold, transferred, leased, or disposed of bears to the total book value of the assets and properties of [Guarantor] (and its consolidated subsidiaries).
On any exchange or replacement of the Note for a new Note or Notes pursuant to the provisions of [Section] or [Section] of the Note, Guarantor agrees to execute and deliver on request a guaranty in substantially the form of this guaranty, to be affixed to the Note or Notes issued in exchange or replacement therefor.
All the covenants, stipulations, promises, and agreements contained in this guaranty shall bind Guarantor and its successors and assigns, and shall inure to the benefit of the holder and any future holders of the Note.
This guaranty shall be governed by the laws of the state of [State].
In Witness Whereof, Guarantor has caused this instrument of guaranty to be executed by its duly authorized officer.
(Signature and Title)
*** If Required By State Law ***
This Section for Notary:
State of _________
County of ________ [County]
On [Date] before me, [Name of Notary], notary, personally appeared [Name of Person(s) Involved], personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
Witness my hand and official seal.
My commission expires: _____