Upstream Guarantee Clause Samples
An Upstream Guarantee is a contractual provision where a parent or affiliated company guarantees the obligations of its subsidiary or related entity to a third party. In practice, this means that if the subsidiary fails to fulfill its contractual duties—such as making payments or delivering goods—the upstream guarantor is legally required to step in and satisfy those obligations. This clause is commonly used to provide additional security to the counterparty, reducing the risk of non-performance by ensuring that a financially stronger entity stands behind the original obligor.
Upstream Guarantee. (a) As continuing security for the due and punctual fulfillment of the Issuer’s payment obligations towards the Secured Parties under the Bonds, the Issuer undertakes to deliver, on the Issue Date, the Upstream Guarantee duly executed by the Upstream Guarantors to the Secured Parties represented by the Agent.
(b) The Issuer shall procure that the Upstream Guarantee is perfected in accordance with its terms on or before the Issue Date.
(c) The Issuer shall procure that any Subsidiary that fulfills the requirement for being an Upstream Guarantor after the Second Amendment Effective Date or guarantees obligations under the Senior Loans becomes an Upstream Guarantor under the Upstream Guarantee within 15 Business Days from fulfilling such requirements.
(d) Unless and until the Agent has received instructions from the Bondholders in accordance with Clause 18 (Decisions by Bondholders), the Agent shall (without first having to obtain the Bondholders’ consent) be entitled to enter into agreements with the Upstream Guarantors, the Issuer or a third party or take any other actions, if it is, in the Agent’s opinion, necessary for the purpose of maintaining, altering, releasing or enforcing the Upstream Guarantee, creating further Security for the benefit of the Bondholders or the Secured Parties or for the purpose of settling the Bondholders’ or the Issuer’s rights to the Upstream Guarantee, in each case in accordance with the terms of the Finance Documents.