KRS 355.8-306: Effect of guaranteeing signature, indorsement, or instruction.

(1) A person who guarantees a signature of an indorser of a security certificate warrants

that at the time of signing:

(a) The signature was genuine;

(b) The signer was an appropriate person to indorse, or if the signature is by an

agent, the agent had actual authority to act on behalf of the appropriate person;

and

(c) The signer had legal capacity to sign.

(2) A person who guarantees a signature of the originator of an instruction warrants that

at the time of signing:

(a) The signature was genuine;

(b) The si gner was an appropriate person to originate the instruction, or if the

signature is by an agent, the agent had actual authority to act on behalf of the

appropriate person, if the person specified in the instruction as the registered

owner was, in fact, the registered owner, as to which fact the signature

guarantor does not make a warranty; and

(c) The signer had legal capacity to sign.

(3) A person who specially guarantees the signature of an originator of an instruction

makes the warranties of a signature guarantor under subsection (2) of this section

and also warrants that at the time the instruction is presented to the issuer:

(a) The person specified in the instruction as the registered owner of the

uncertificated security will be the registered owner; and

(b) The transfer of the uncertificated security requested in the instruction will be

registered by the issuer free from all liens, security interests, restrictions, and

claims other than those specified in the instruction.

(4) A guarantor under subsecti ons (1) and (2) of this section or a special guarantor

under subsection (3) of this section does not otherwise warrant the rightfulness of

the transfer.

(5) A person who guarantees an indorsement of a security certificate makes the

warranties of a signatur e guarantor under subsection (1) of this section and also

warrants the rightfulness of the transfer in all respects.

(6) A person who guarantees an instruction requesting the transfer of an uncertificated

security makes the warranties of a special signatur e guarantor under subsection (3)

of this section and also warrants the rightfulness of the transfer in all respects.

(7) An issuer may not require a special guaranty of signature, a guaranty of

indorsement, or a guaranty of instruction as a condition to registration of transfer.

(8) The warranties under this section are made to a person taking or dealing with the

security in reliance on the guaranty, and the guarantor is liable to the person for loss

resulting from their breach. An indorser or originator of an instruction whose

signature, indorsement, or instruction has been guaranteed is liable to a guarantor

for any loss su ffered by the guarantor as a result of breach of the warranties of the

guarantor.