Explanatory notes for Deed of Guarantee:
1. A guarantee is a contractual promise to:
(a) Ensure that a third party fulfils its obligations (pure guarantee); and/or
3. Example: Deed of guarantee,a binding legal document where a person or company promises or guarantees that the obligations of another party will be met.
______________________________________________________
DEED OF GUARANTEE
________________________________________________________
BETWEEN
[Insert Party I]
AND
[Insert Party II}]
DATED THIS DAY OF 20
THIS DEED OF GUARANTEE (“Guarantee”) is executed on ______________day of 20 at ___________________ by ________________, a limited liability company formed in accordance with the laws of the _____________________and having its registered office at ___________________________ (hereinafter called “the Guarantor”, which expression shall, unless it be repugnant to the context or meaning thereof, be deemed to include its successors and assigns)
IN FAVOUR OF
________________________, a company incorporated under the laws of the ________________and having its registered office at _______________________ (hereinafter called “the Owner”, which expression shall, unless it be repugnant to the context or meaning thereof, be deemed to include its successors and assigns)
WHEREAS
1. ________________________, a company incorporated under the laws of ________________________ and having its registered office at ________________________ (hereinafter referred to as “the Contractor” which expression shall, unless it be repugnant to the context or meaning thereof, be deemed to include its successors and assigns) has entered into a contract with the Owner relating to ________________________ for a total lump sum contract price of ________________________ in the form set out in an amendment and restatement agreement dated ________________________ (such contract, as amended and restated, being hereinafter referred to as the “Contract”, which term includes any further amendments and supplements thereto and such contract as assigned, novated or otherwise transferred in accordance with its terms from time to time), the detailed terms and conditions of which are more particularly described in the said Contract.
2. It is a condition of the Contract that the Contractor procures the execution and delivery to the Owner of a guarantee in respect of the obligations of the Contractor under the Contract from a parent company of the Contractor suitable to the Owner in the form of this deed.
3. The Guarantor has agreed to guarantee due performance under the Contract by the Contractor.
NOW THIS DEED WITNESSETH AS FOLLOWS: –
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Guarantee, unless the context otherwise requires:
(a) “Due Date” has the meaning given in Clause 4.3.
(b) “________________________” means ________________________, a limited liability company formed in accordance with the ________________________ and having its registered office at ________________________, and its successors and assigns.
(c) “Lenders“ means any person or persons providing any form of finance or refinance or credit support to the Owner, including any agent or trustee of such person or persons.
(d) “LIBOR” means: (i) the applicable monthly Screen Rate; or (ii) (if no Screen Rate is available for US Dollars or for the month) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied upon request by the Guarantor or the Owner by the Reference Banks quoted to leading banks in the London interbank market, as of 11 am Greenwich Mean Time for the offering of deposits in US Dollars and for the relevant month on the date of calculation.
(e) “Maximum Aggregate Liability” means an amount as defined in Clause 2.2 of this Guarantee.
(f) “Reference Banks” means the principal London offices of three (3) leading international commercial banks active in the London interbank market nominated by the Owner prior to or upon submission of a demand under this Guarantee, or such other banks as may be nominated by the Owner from time to time with the agreement of the Guarantor.
(g) “Screen Rate” means the ________________________ Interest Settlement Rate for US Dollars for the relevant month, displayed on the appropriate page of the Reuters screen on any relevant day (or, if such page is replaced or the service ceases to be available, such other page or service displaying the appropriate rate as may be specified by the Owner).
(h) “Valid Demand” means a demand issued by the Owner in accordance with Clause 4.
1.2 Interpretation of certain references
(a) A reference to a “Clause” is a reference to a clause in this Guarantee.
(b) This “Guarantee” includes this Guarantee as amended, supplemented, novated, restated or replaced by any document from time to time and any document which amends, supplements, novates, restates or replaces this Guarantee.
(c) A “law” includes common or customary law and any constitution, decree, judgment, legislation, order, ordinance, regulation, statute, treaty or other legislative measure, in each case of any jurisdiction whatever.
(d) Any “obligation” of any Person under this Guarantee or any other document referenced herein is a reference to an obligation expressed to be assumed by that Person or imposed on that Person under this Guarantee or that other document, as the case may be.
(e) A “Person” includes any individual, company, corporation, firm, partnership, joint venture, association, organisation, trust, state or agency of a state.
2. GUARANTEE
2.1 Guarantee
As consideration for the Owner’s entry into the Contract, the Guarantor, as principal debtor and primary obligor, hereby:
(a) subject to Clause 2.2, irrevocably and unconditionally guarantees for the benefit of the Owner the due and punctual performance by the Contractor of each and all of the obligations, duties and undertakings of the Contractor under and pursuant to the Contract when and if such obligations, duties and undertakings shall become due and performable, including, if the Contractor defaults in the payment of any sum due and payable by the Contractor to the Owner in accordance with the terms of the Contract, the payment to the Owner of such sum upon receipt of a Valid Demand made by the Owner (the “Guaranteed Obligations”); and
(b) agrees, in addition to its obligations set out in Clause 2.1(a) above: (i) to indemnify the Owner, if for any reason any amount claimed by the Owner under Clause 2.1(a) is not recoverable on the basis of guarantee, against all losses, damage and reasonable costs and expenses which the Owner may incur by reason of any failure of the Contractor to pay any amount payable under the Contract on the date on which it is expressed to be due; and (ii) to indemnify the Owner against all losses, damage and reasonable costs and expenses which the Owner may incur by reason of any breach by the Contractor of its obligations, warranties, duties and undertakings under and pursuant to Clauses 25.2, 31.1 and/or 33.2 of the Contract, or any other obligation expressly excluded from the limitation of liability provisions thereunder, and/or by reason of any fraud, wilful misconduct and/or gross negligence on the part of the Contractor or any of its Sub-contractors. For the purpose of this Clause 2.1(b), the limitation set out in Clause 2.2 below will not apply.
2.2 Maximum Aggregate Liability
Subject to Clauses 2.1(b) and 4.3(a), the Guarantor’s liability to pay the Owner under this Guarantee in aggregate shall not exceed the Maximum Aggregate Liability, which is defined as ________________________% of the Contract Price as per Clause 34.3 and Appendix to the Contract, i.e. up to ________________________.
2.3 Guarantor’s Obligations
The liability of the Guarantor under this Guarantee shall not be released, affected or discharged by any act, matter or omission which (but for this clause) would have released, affected or discharged the liability of the Guarantor including without limitation and whether or not known to the Guarantor:
(a) subject to Clause 7, any change in the time, manner or place of performance of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of, or any consent to departure from, the terms of such Guaranteed Obligations including but not limited to the grant of time, concession or other indulgence to the Contractor by the Owner or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from a principal debtor or any other Person; or
(b) any present or future guarantee, indemnity, mortgage, charge or other security or right or remedy held by or available to the Owner being or becoming wholly or in part void, voidable or unenforceable on any ground whatsoever or by the Owner from time to time dealing with, varying, realising, releasing or failing to perfect or enforce any of the same; or
(c) any invalidity, unenforceability or voidability of the Contract (and, in such circumstances, this Guarantee shall be construed as if there were no such invalidity, unenforceability or voidability); or
(d) any change, restructuring or termination of the corporate structure or existence of the Contractor or any change in the status, function, control or ownership of the Contractor; or
(e) the bankruptcy, insolvency, dissolution, reorganisation, moratorium, liquidation or similar proceeding involving the Contractor, the appointment of an administrator or receiver of the Contractor or any other legal limitation, disability or incapacity of the Contractor; or
(f) the novation or termination of the Contract; or
(g) any other matter or occurrence (whether similar to the foregoing or otherwise) whereby the obligations of the Guarantor hereunder might under any applicable law be released, affected or discharged (and the Guarantor hereby waives any right it may have to apply such law so that in all respects its liability hereunder shall be irrevocable and, except as stated herein, unconditional in all respects),
(h) and the Guarantor hereby waives notice of the foregoing.
2.4 Guarantor’s Obligations Additional
This Guarantee shall be in addition to and not in substitution for any other rights, remedy, security or guarantees which the Owner may now or hereafter hold from or on account of the Contractor in respect of the Contractor’s obligations under the Contract and may be enforced without first having recourse to such other rights, remedy, security or guarantees.
2.5 Guarantor’s Obligations Continuing
(a) The Guarantor’s obligations under this Guarantee are a continuing guarantee and shall remain in full force and effect (notwithstanding any intermediate satisfaction by the Contractor, the Guarantor or any other Person) until all sums now or hereafter payable by the Contractor to the Owner under the Contract have been paid in full and all claims of the Owner (whether actual or contingent) have been satisfied or discharged or the obligations of the Contractor under the Contract have been fully and properly carried out by the Contractor.
(b) When all sums now or hereafter payable by the Contractor to the Owner under the Contract have been paid in full in accordance with the Contract and all claims of the Owner (whether actual or contingent) have been satisfied or discharged, this Guarantee shall be of no further effect and shall be returned to the Guarantor by the Owner.
(c) This Guarantee shall not be determined or in any manner prejudiced by any absorption or amalgamation or re-constitution or alteration in the status or change in constitution of the Guarantor and/or the Contractor and this Guarantee shall be binding on the Guarantor’s executors, administrators or successors as the case may be.
(d) This Guarantee shall be valid up to ________________________ 20, without prejudice to any claim made prior to such date.
2.6 Avoidance of Payments
If all or part of any payment received or recovered by the Owner in respect of the Guaranteed Obligations is, on the subsequent bankruptcy, insolvency, corporate reorganisation or other similar event of the Contractor, avoided or set aside under any laws relating to bankruptcy, insolvency, corporate reorganisation or other such similar events, and the amount of such payment is required to be refunded to the Contractor or other persons entitled through the Contractor, such payment shall not be considered as discharging or diminishing the liability of the Guarantor and this Guarantee shall continue to apply as if such amount had at all times remained owing by the Contractor.
3. LIMITATION ON EXERCISE OF GUARANTOR’S RIGHTS
Notwithstanding any payment or payments made by the Guarantor hereunder, so long as any Guaranteed Obligation remains outstanding:
(a) the Guarantor hereby irrevocably waives any right of subrogation to the rights of the Owner against the Contractor and any right to be reimbursed or indemnified by the Contractor or by any other guarantor of all or any part of the Guaranteed Obligations and the Guarantor shall not hold any security from the Contractor in respect of this Guarantee or claim or prove in competition with the Owner against the Contractor or demand or accept repayment of any monies from the Contractor; and
(b) if, notwithstanding the foregoing, any amount is received or recovered by the Guarantor as a result of exercising such rights, holding such security, claiming or proving in competition with the Owner against the Contractor or demanding or accepting repayment of monies from the Contractor, such amount shall be held by the Guarantor in trust for the Owner and shall, forthwith upon receipt by the Guarantor, be paid to the Owner, to be applied against the Guaranteed Obligations in such order as the Owner may determine.
4. VALID DEMAND UNDER THE GUARANTEE
4.1 Guarantor’s liability subject to valid demand
The Guarantor is only liable under this Guarantee in accordance with Clause 2.1 if it receives from the Owner a demand in writing complying with Clause 4.2 (“Valid Demand”). The Guarantor’s liability under this Guarantee is conditional solely upon the delivery of a Valid Demand and shall not be dependent upon any further endorsements being obtained or upon any further documents being delivered or upon any further action being performed by the Owner, notwithstanding any applicable laws or regulations.
4.2 Valid Demand
(a) A demand may be made under this Guarantee in any of the following circumstances:
(i) if a demand has been made by the Owner under the deed of guarantee (the “Guarantee”) between _____________________[Payee] and the Owner in respect of the Contractor’s obligations under the Contract and _____________________[Payee] has not satisfied such demand within ten (10) days of its receipt of the same;
(ii) if any limit on the liability of _____________________[Payee] under the _____________________[Payee] Guarantee has been reached such that _____________________[Payee] is not liable to satisfy in whole or in part any demand made by the Owner under the _____________________[Payee] Guarantee (and if and to the extent that _____________________[Payee] is, as a result of any limit on its liability under the _____________________[Payee] Guarantee, only liable to satisfy a demand in part, _____________________[Payee] has not so satisfied such demand in part within ten (10) days of its receipt of such demand); or
(iii) if any limit on the validity or term of the _____________________[Payee] Guarantee has passed such that a demand may no longer be made by Owner under the _____________________[Payee] Guarantee,
provided always that the Owner shall not be required to make a prior demand under the __________________[Payee] Guarantee, or be precluded from making a demand under this Guarantee, in any circumstances where the _____________________[Payee] Guarantee is for any reason void, invalid, unenforceable, rescinded, terminated, expired or otherwise not in full force and effect, or the Owner is unable to make such prior demand due to any applicable legal restriction or otherwise.
(b) Each demand shall:
(i) state the reasons for making such demand;
(ii) identify the obligations under the Contract in respect of which the Contractor has defaulted (or, where a period for remedial action is permitted under the Contract following a default by the Contractor, shall identify the relevant obligation in respect of which the Contractor has defaulted and the relevant failure of the Contractor to remedy such default within the permitted period); and
(iii) in the case of a payment default, include a calculation of the amount owing by the Contractor and under demand.
(c) Each demand shall be delivered or sent by post or facsimile to the Guarantor at its address or facsimile number as provided under Clause 9.
4.3 Payment
(a) The Guarantor shall upon receipt of a Valid Demand (the date of receipt being the “Due Date”) forthwith make payment in full to the Owner of any amount due under this Guarantee. The Guarantor shall pay interest on any amount due under this Guarantee (in addition, for the avoidance of doubt, to any interest accrued, in accordance with the terms of the Contract, on any amount due under the Contract) from the Due Date until the date of payment in full calculated on a daily basis at the annual rate of ________________________ per cent (_________%) above LIBOR. The limitation set out in Clause 2.2 above will not apply to the Guarantor’s obligation to pay interest in accordance with this Clause 4.3(a).
(b) Each payment to be made by the Guarantor under this Guarantee shall be made in the relevant currency of payment under the Contract, without any set-off or counterclaim and free and clear of all deductions or withholdings of any kind whatsoever or howsoever arising. If any deduction or withholding must be made by law (including double taxation treaties) the Guarantor will pay the additional amount which is necessary to ensure that the Owner receives on the Due Date a net amount equal to the full amount which it would have received if the payment had been made without the deduction or withholding. The Guarantor shall promptly deliver to the Owner any receipts, certificates or other proof evidencing the amounts paid or payable in respect of any such deduction or withholding.
5. COSTS AND EXPENSES
The Guarantor shall pay the Owner within 30 days of written notice all costs and expenses reasonably incurred by the Owner in connection with the enforcement or preservation of its rights hereunder.
6. NO IMPLIED WAIVERS
(a) Except as to applicable statutes of limitation, no failure on the part of the Owner to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.
(b) A waiver given or consent granted by the Owner under this Guarantee shall be effective only if given in writing and then only in the instance and for the purposes for which it is given in writing.
7. AMENDMENT TO THE CONTRACT
The Guarantor and Owner each expressly confirm that it intends that this Guarantee shall extend from time to time to any (however fundamental) alteration, variation, increase, extension or addition of or to the Guaranteed Obligations subject to any such alteration, variation, increase, extension or addition having been made in accordance with the provisions of the Contract.
8. ASSIGNMENT AND TRANSFER
(a) Burden and Benefit
This Guarantee shall be binding upon the Guarantor, its successors and assigns and shall inure to the benefit of the Owner, its successors and assigns. Any reference in this Guarantee to the Guarantor and the Owner shall be construed to refer to its relevant successors and assigns accordingly.
(b) Transfer by Guarantor
The Guarantor shall not (without the prior written consent of the Owner, such consent not to be unreasonably withheld or delayed) assign, novate or transfer to any entity its rights or obligations under this Guarantee.
(c) Transfer by Owner
The Owner shall not (without the prior written consent of the Guarantor, such consent not to be unreasonably withheld or delayed) assign, novate or transfer to any entity its rights or obligations under this Guarantee, except the Owner shall be entitled (i) to assign its rights under this Guarantee to the Lenders by way of security or (ii) by giving prior written notice to the Guarantor, to assign, novate or transfer its rights or obligations under this Guarantee to a Person to whom all its rights with respect to the Guaranteed Obligations have also been transferred in accordance with the Contract.
9. COMMUNICATIONS
9.1 Addresses
(a) Guarantor
Any demand or other communication made of the Guarantor under this Guarantee shall be delivered or sent by post or facsimile to the Guarantor at its office located at ________________________, Fax Number ________________________, Attention: Chief Executive Officer, or to such other address and/or addressed to such other officers as may be provided in writing by the Guarantor to the Owner for such purpose and, in the absence of evidence of earlier receipt, shall be deemed to have been made:
(i) in the case of a demand or other communication left at the address provided by the Guarantor, upon delivery at that address;
(ii) in the case of a posted letter, on the third day after posting or, if posted from a place outside Singapore, the seventh day after posting; and
(iii) in the case of a facsimile, on production of a transmission report from the machine from which the facsimile was sent which indicates that the facsimile was sent in its entirety to the facsimile number of the Guarantor.
(b) Owner
Any communication made to the Owner under this Guarantee shall be delivered or sent by post or facsimile to the Owner at its office located at ________________________, Fax Number: ________________________, Attention: Chief Executive Officer, or to such other address and/or addressed to such other officers as may be provided in writing by the Owner to the Guarantor for such purpose and, in the absence of evidence of earlier receipt, shall be deemed to have been made:
(i) in the case of a communication left at the address provided by the Owner, upon delivery at that address;
(ii) in the case of a posted letter, on the third day after posting or, if posted from a place outside ________________________, the seventh day after posting; and
(iii) in the case of a facsimile, on production of a transmission report from the machine from which the facsimile was sent which indicates that the facsimile was sent in its entirety to the facsimile number of the Owner.
10. THIRD PARTY RIGHTS
Except as expressly provided for under this Guarantee, a Person who is not the Owner has no right under ________________________ to enforce or enjoy the benefit of any term of this Guarantee.
11. GOVERNING LAW AND DISPUTE RESOLUTION
11.1 Governing Law
This Guarantee shall be governed by and construed in accordance with the laws of ____________________.
11.2 Dispute Resolution
(a) Any dispute, difference or claim between the Owner and the Guarantor arising out of or in connection with this Guarantee, including (without limitation) any question regarding its formation, existence, interpretation, validity, breach or termination (a “Dispute”), shall be referred to and finally resolved by court / arbitration in accordance with _________________ for the time being in force.
(b) The arbitration tribunal shall consist of three (3) arbitrators and shall be appointed in accordance with the ______________________.
(c) The seat and venue of the arbitration shall be _________________________. The arbitration shall be conducted in the ___________________ language and the award of the arbitration tribunal shall be final and binding on the Owner and the Guarantor. A judgment confirming or enforcing such award may be rendered by any court of competent jurisdiction.
(d) Subject to any awards of the arbitration tribunal as to fees, costs and expenses, the Owner and the Guarantor shall contribute in the interim in equal shares towards any fees, costs and expenses of the arbitration tribunal as the case may be.
12. COUNTERPARTS
This Guarantee may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.
13. SEVERABILITY
The invalidity, illegality or unenforceability in whole or in part of any of the provisions of this Guarantee shall not affect the validity, legality and enforceability of the remaining part or provisions of this Guarantee.
14. MISCELLANEOUS
(a) The Guarantor warrants and represents that this Guarantee is its legally binding obligation, enforceable in accordance with its terms, and that all necessary consents and authorizations for the giving and implementation of this Guarantee have been obtained.
(b) The Guarantor warrants and undertakes to the Owner that it shall take all necessary action to perform the obligations expressed to be assumed by it or contemplated by this Guarantee and to implement the provisions of this Guarantee.
(c) The Guarantor warrants and confirms to the Owner that it has not entered into this Guarantee in reliance upon, nor has it been induced to enter into this Guarantee by any representation, warranty or undertaking made by or on behalf of the Owner (whether express or implied and whether pursuant to statute or otherwise) which is not set out in this Guarantee.
(d) The Guarantor hereby certifies that the legally constituted Board of Directors / Management of the Guarantor has considered and approved execution of this Guarantee by the Guarantor.
15. TERMINATION, RELEASE AND DISCHARGE
(a) This Guarantee is intended to replace and supersede the deed of guarantee dated ________________________ between the Guarantor and the Owner (the “Previous Guarantee”).
(b) Accordingly, the Previous Guarantee shall be terminated by mutual agreement with effect on and from the date of this Guarantee, and the Owner and the Guarantor shall be fully and unconditionally released and discharged from all claims, demands, liabilities, duties and obligations whatsoever under the Previous Guarantee, which shall be of no further effect.
IN WITNESS WHEREOF, this Guarantee has been executed and delivered as a Deed as of the date first stated above
Executed and delivered as a deed by )
________________________ )
pursuant to a resolution passed )
by its Board of Directors at a )
meeting held on the _____ day )
of _________________, 20 )
Signature: _________________
Name: _________________
Director / Company Secretary / Authorised Signatory
Signature: _________________
Name: _________________
Director / Company Secretary / Authorised Signatory
The Common Seal of )
________________________ )
________________________ )
was affixed in the presence of: )
Signature: _________________
Name: _________________
Director
Signature: _________________
Name: _________________
Director/Secretary
