German Guarantor Limitations Clause Samples
The "German Guarantor Limitations" clause defines the specific legal and regulatory restrictions that apply to guarantees provided by German entities. In practice, this clause ensures that any guarantee or security granted by a German guarantor complies with German corporate benefit rules, capital maintenance requirements, and insolvency laws. For example, it may limit the guarantor’s liability to the extent permitted by German law or require that guarantees do not jeopardize the guarantor’s financial stability. The core function of this clause is to ensure that guarantees remain enforceable and valid under German law, thereby protecting both the guarantor and the parties relying on the guarantee from unintended legal or financial consequences.
German Guarantor Limitations. The following limitations apply to the Guarantees of the Guarantors incorporated in Germany:
3.1 The right to enforce the guarantee given by a Guarantor incorporated in Germany as a GmbH (a “German Guarantor”) shall be excluded if and to the extent that the Guarantee secures the obligations of an affiliated company (verbundenes Unternehmen) within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) of such German Guarantor (other than any of the German Guarantor’s direct or indirect subsidiaries), and if and to the extent that (x) the enforcement of the Guarantee would cause such German Guarantor’s assets (the calculation of which shall include all items set forth in section 266(2) A, B and C of the German Commercial Code (Handelsgesetzbuch)) less such German Guarantor’s liabilities (the calculation of which shall include all items set forth in section 266(3) B, C and D of the German Commercial Code) (the “Net Assets”) being less than its registered share capital (Stammkapital) (Begründung einer Unterbilanz) or (y) (if such German Guarantor’s Net Assets are already less than its registered share capital) causing such amount to be further reduced (Vertiefung einer Unterbilanz).
3.2 For the purposes of such calculation the following balance sheet items shall be adjusted as follows:
(a) The amount of the increase of the relevant German Guarantor’s registered share capital out of retained earnings (Kapitalerhöhung aus Gesellschaftsmitteln) after the date of this Agreement that has been effected without the prior written consent of the Trustee (acting on behalf of the Holders) shall be deducted from the registered share capital; and
(b) Obligations arising out of loans made to the relevant German Guarantor and other liabilities shall be disregarded if and to the extent such loans and other liabilities are subordinated; and
(c) Loans and other contractual liabilities incurred in violation of the provisions of the Indenture or the Guarantee shall be disregarded; and
(d) Claims of the relevant German Guarantor against its shareholders arising out of any upstream loans permitted under the Indenture or the Guarantee shall only be taken into account (aktiviert) if and to the extent this is permitted pursuant to the jurisprudence of the German Federal High Court (Bundesgerichtshof) relating to the permissibility of loans to shareholders under Sections 30 and 31 of the German Limited Liability Companies Act (Gesetz betreffend die Gesellschaften...
German Guarantor Limitations. The Lenders, acting through the Administrative Agent, agree not to enforce against a Guarantor incorporated in Germany and constituted in the form of a GmbH (a "German GmbH Guarantor") or GmbH & Co. KG ((a "German GmbH & Co. KG Guarantor", and together with any German GmbH Guarantor hereinafter referred to as a “German Guarantor”) any payment obligation arising out of the guaranty contained in this Section 11 (the "Payment Obligation") if and to the extent such guarantee secures obligations of an affiliated company (verbundenes Unternehmen) of such German Guarantor within the meaning of section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the German Guarantor's subsidiaries) if and to the extent the enforcement of the Payment Obligation would otherwise lead to a situation where that German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner (persönlich haftender Gesellschafter) does not have sufficient net assets (Reinvermögen) (i.e. the amount of its net assets (Reinvermögen) is less than its registered share capital (Stammkapital)) or if the amount of its net assets (Reinvermögen) have already fallen below the amount of its registered share capital (Stammkapital), further increase of such shortfall.