The Parent Guarantee Agreement is commonly used in Danish commercial transactions where a subsidiary requires additional financial backing to secure its obligations. This document becomes particularly relevant when entering into significant commercial contracts, obtaining financing, or participating in major projects where counterparties seek additional security. The agreement, governed by Danish law, details the parent company's commitment to fulfill specified obligations if the subsidiary fails to do so. It typically includes comprehensive provisions regarding the scope of guaranteed obligations, enforcement mechanisms, and limitations of liability. The Parent Guarantee Agreement must comply with Danish corporate and contract law requirements, including necessary corporate authorizations and formal execution requirements. This document is essential for risk management and often serves as a prerequisite for various commercial arrangements involving subsidiaries of larger corporate groups.
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Key Requirements PROMPT example:
Parent Guarantee Agreement
I need a Parent Guarantee Agreement under Danish law where our parent company (Nordic Tech Holdings A/S) will guarantee a 5-year equipment supply contract worth 鈧2.5M that our subsidiary is entering into with a German manufacturer, to be effective from March 2025.
1. Parties: Identification of the Guarantor (parent company), the Beneficiary, and reference to the Principal Debtor (subsidiary)
2. Background: Context of the guarantee, reference to the underlying obligation or facility being guaranteed, and the relationship between the parties
3. Definitions: Definitions of key terms used throughout the agreement, including 'Guaranteed Obligations', 'Guarantee Period', and other relevant terms
4. Guarantee: Core provision setting out the guarantee obligation, including the scope and nature of the guarantee (whether demand, conditional, or performance guarantee)
5. Representations and Warranties: Guarantor's representations regarding its capacity, authority, and financial condition
6. Payment Provisions: Terms governing payment obligations, including currency, timing, and method of payment
7. Preservation of Rights: Provisions ensuring the guarantee remains valid despite variations to the underlying obligation or changes affecting the Principal Debtor
8. Enforcement: Procedures and conditions for making demands under the guarantee and enforcement mechanisms
9. Tax Gross-Up and Indemnities: Provisions dealing with tax implications and related indemnities
10. Duration and Release: Term of the guarantee and conditions for its termination or release
11. General Provisions: Standard boilerplate clauses including notices, amendments, assignment, and governing law
1. Currency Provisions: Additional provisions for multi-currency guarantees, including exchange rate mechanisms and currency conversion procedures
2. Counter-Indemnity: Where the Guarantor requires indemnification from the Principal Debtor for amounts paid under the guarantee
3. Security: Where additional security is provided to support the guarantee obligations
4. Step-In Rights: Rights of the Guarantor to take over the Principal Debtor's position in certain circumstances
5. Financial Covenants: Specific financial maintenance covenants applicable to the Guarantor
6. Information Undertakings: Obligations to provide financial and other information about the Guarantor's condition
7. Multiple Guarantors: Additional provisions when there is more than one guarantor, including contribution rights
1. Form of Demand: Template for making demands under the guarantee
2. Underlying Obligations: Details of the obligations being guaranteed, including relevant contract excerpts or summaries
3. Corporate Authorizations: Copies of relevant board resolutions and other corporate approvals
4. Guarantor Information: Key financial and corporate information about the Guarantor
5. Notice Details: Contact information and notice requirements for all parties
6. Calculation of Fees: If applicable, methods for calculating any guarantee fees or charges
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Construction and Infrastructure
Energy and Utilities
Manufacturing
Real Estate
Telecommunications
Transportation and Logistics
Mining and Natural Resources
Retail and Consumer Goods
Technology
Relevant Teams
Legal
Finance
Treasury
Corporate Secretariat
Risk Management
Compliance
Corporate Development
Executive Leadership
Commercial
Relevant Roles
General Counsel
Legal Director
Chief Financial Officer
Finance Director
Corporate Lawyer
Commercial Director
Risk Manager
Treasury Manager
Company Secretary
Chief Executive Officer
Contract Manager
Legal Counsel
Finance Manager
Corporate Finance Manager
Compliance Officer
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