TERM LOAN AGREEMENT CUM-HYPOTHECATION

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TERM LOAN AGREEMENT CUM-HYPOTHECATION Powered By Docstoc
					                                                            Photograph of the
                                                            Borrower to be
                                                            affixed and signed
                                                            across the photo by
                                                            the borrower as
                                                            well as by the
                                                            SIDBI official before
                                                            whom this
                                                            Agreement is
                                                            executed.




               TERM LOAN AGREEMENT CUM-HYPOTHECATION


      THIS AGREEMENT made at _______ on this ___ day of __________ Two
Thousand               between a company within the meaning of the Companies Act,
1956      (1    of     1956)     and     having   its  Registered     Office    at
_____________________________________ (hereinafter referred to as 'the
Borrower' which expression shall, unless it be repugnant to the subject or context
thereof, include its successors and assigns);

                                        and

Small Industries Development Bank of India, a Corporation established under the
Small Industries Development Bank of India Act, 1989 (39 of 1989) and having its
Head Office at SIDBI Tower, 15 Ashok Marg, Lucknow -226 001 and a Branch
 Office at _________________________________________ (hereinafter referred
to as “SIDBI” which expression shall, unless it be repugnant to the subject or context
thereof, include its successors and assigns);

WHEREAS

The Borrower has applied to SIDBI for financial assistance by way of a term loan of
_____________ (Rupee _________________ only) under__________ Scheme' for
the purpose of acquiring ___________________ for its project at
__________________ .         SIDBI has agreed to grant financial assistance of
Rs.____________ by way of term loan under ______________________ scheme' to
the Borrower inter-alia, against the hypothecation of assets acquired out of said
assistance and on the terms and conditions contained in the Letter of Intent No.
_______ dated ______________ as amended from time to time.

       In consideration of the aforesaid term loan amount/facility, including
enhancement thereof from time to time, or otherwise to obtain assistance from and
incur liability, now the Borrower agrees with SIDBI as under :-
                                          2

(1)     AMOUNT OF LOAN

       The Borrower agrees to borrow from SIDBI and SIDBI agrees to lend to the
Borrower, on the terms and conditions contained herein, a sum not exceeding Rs.
_______ (Rupees____________________________) by way of term loan under
SIDBI's scheme _________________________(hereinafter referred to as the 'Loan')
for the purpose of acquiring ___________________ for its project at
__________________ .

(2)      INTEREST

      The Borrower agrees to pay to SIDBI interest at the rate of ____% per annum
on the amount of the loan outstanding from time to time. The loan together with
interest is repayable in ______ equated monthly instalments of Rs.______________
commencing from _______________.

(3)       UP FRONT FEE

       The upfront fee at ______ % of the loan paid by the borrower to SIDBI shall
be non-refundable.

(4)      LAST DATE OF WITHDRAWAL

      Unless SIDBI otherwise agrees, the right to make drawals by the Borrower
from the Loan shall cease on 91st day from the date of this agreement.

(5)     DISBURSEMENT AND REPAYMENT

(i)    The Loan shall be disbursed in one or more tranches at the request of the
Borrower.

(ii)   The Borrower undertakes to repay the principal amount of the Loan together
with interest at the applicable rate for the loan, in accordance with the Amortization
Schedule set forth in First Schedule hereto.

(iii) If the due date for repayment falls on Saturday, Sunday or Holiday, the
equated monthly instalments will be paid on the next working day. Payment in such
manner does not constitute non-payment on due date or default and will not attract
penal interest/ liquidated damages.

(6)     PREMATURE REPAYMENT OF THE LOAN :

      The Borrower agrees not repay the outstanding principal of Loan in full or part
before the due date, except after obtaining prior approval of SIDBI in writing [which
may be granted subject to such conditions as SIDBI may deem fit including payment
of premium for such prepayment].

(7)     LIQUIDATED DAMAGES

        In case of default in payment of Equated Monthly Instalments on due dates,
the Borrower agrees to pay on the defaulted principal, interest and other monies,
liquidated damages at the rate of 2% per annum for the period of default. Arrears of
liquidated damages shall also carry interest at the applicable rate for the Loan.



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                                           3

(8)     SECURITY

8.1 The Borrower hereby hypothecates and charge by way of first charge in favour
of the SIDBI, the computer hardwares/software/CVT servers/goods/ furniture and
fixtures and other assets acquired/ to be acquired by the Borrower out of the loan
and more particularly described movable property of any kind mentioned in the
Second Schedule to this agreement in favour of SIDBI, hereinafter called “the
hypothecated assets” which expression shall where required or necessary include
all fittings, fixtures, tools accessories and parts whatsoever pertaining to the said
hypothecated assets and all replacements of or additions made to the hypothecated
assets from time to time as security or escalation or accretion thereof of any type &
nature thereof, for repayment by the Borrower to the SIDBI of the amount due under
or arising out of this agreement and costs, expenses and any kind of charges
incurred by the SIDBI from time to time for purpose of such security/ hypothecated
assets and for all necessary steps till actual realisation. The Borrower specifically
agrees that in case of any such addition, escalation or accretion, etc. to the
hypothecated assets/securities as mentioned in Second Schedule to this agreement,
as the case may be, accruing in respect of such hypothecated assets/securities or by
way of production and profits thereto or any part thereof shall also be deemed to be
hypothecated/charged with the SIDBI and parties agree that there is no need for
signing any additional supplementary agreement in this respect.

8.2     The Borrower hereby declares and assures SIDBI that the said hypothecated
asset/movable property are and shall be the sole, absolute and unencumbered
property of the Borrower with full power of disposing there over and free from any
prior charge or encumbrances of any kind whatsoever and with a futher undertaking
that the Borrower shall not sell, dispose of, pledge, hypothecate or otherwise create
any further mortgage or lien or any charge or encumber or in any manner part with
the possession of the hypothecated assets or any part thereof, during the currency
of the aforesaid loan facility nor shall the Borrower permit to be done any act
whereby the security/hypothecated assets as mentioned in Schedule referred to
above, expressly given to the SIDBI shall in any way be prejudicially affected or
whereby any distress or attachment or execution may be levied thereon by any
creditor or other person including any government or municipal authority or body.

8.3     Till the entire dues of the SIDBI are adjusted/liquidated by the Borrower, the
Borrower shall not, without prior written consent of SIDBI, remove or cause or permit
to    remove      the    hypothecated     assets   from     the   place/premises      at
_______________________________________ where the same are presently kept
or lying or to which the same may, hereafter be removed or taken with the consent of
SIDBI.        SIDBI shall be entitled to put up and fix its name board at the
place/premises where ever the hypothecated                 assets are or may be
stored/kept/lying, in the manner the SIDBI may deem fit and proper and the
Borrower shall have no right to object and question this act of the SIDBI. It is further
assured and undertaken by the Borrower that the said name board of SIDBI shall not
be removed.

8.4   The Borrower shall at all times keep the hypothecated assets/securities in
good, marketable condition and in proper working order and shall not make any
change or alteration therein without the previous written consent of SIDBI.

8.5    The Borrower undertakes to indemnify SIDBI for any kind of loss or damage
by reason of damage or destruction or loss of the hypothecated assets/securities
from any cause or reason whatsoever or from any claims by third parties. The


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                                            4

Borrower also agree that the SIDBI shall not be responsible for the safety and
protection of the hypothecated assets nor for the preservation, maintenance, service
and take care of the said security.

8.6     The borrower hereby appoints SIDBI as its attorney and authorises and
empowers SIDBI or its authorised agents from time to time and at all times to act for
and in the name of the Borrower do whatever the Borrower may be required to do
under these present and to enter into and open any godowns or premises wherein
the hypothecated assets or any part thereof may for the time being be and to view,
inspect and value the same and make inventories and render to the SIDBI or its
agent all facilities as may be required for any of the purposes above said. All rents,
taxes, rates and other charges of the premises or godowns where such
hypothecated assets are lying/stored will be paid by the Borrower punctually and
kept free from distress. The expenses, incidental charges, charges for inspection
of the security by SIDBI Officers or duly authorised agent at the rate fixed by SIDBI
from time to time at its discretion and other charges shall be paid by the borrower to
SIDBI forthwith on demand.

8.7       The hypothecated assets/security shall be insured comprehensively and the
policies shall be taken out in the name of the SIDBI or in the joint names of the
SIDBI and the borrower, by the borrower, with the Bank clause with all rights and
benefits of the policy and that all policies alongwith premium receipts on such
insurance shall be delivered to SIDBI. Such insurance cover shall be taken against
loss and damage by fire, burglary, war, riots and civil commotion risks, natural
clamities/risks, theft transit risks and risk of any other description and/or special risks
any, particularly the risk which cannot be envisaged normally but is or is likely to be
in the knowledge of the Borrower, with some reputed/approved insurance company
by SIDBI for full value of such security irrespective of balance due against the
Borrower. In case the borrower fails to ensure or to deliver the policies and
premium receipts as aforesaid, the SIDBI shall be at liberty and have the option but
not bound to effect such insurance including renewal from time to time, of the same,
at the risk, responsibility and cost of the Borrower in its absolute and unfettered
discretion as the sole judge. Provided, however, that in the event of rejection of any
claim against such insurance wholly or partly for the omission/deficiency of any type
whatsoever, to insure any risk the SIDBI shall not be held responsible as insurance,
including its renewal from time to time, of hypothecated stocks/ goods, plant and
machinery, furniture and fixture or any other movable property et. by the SIDBI, the
entire liability of the Borrower to the SIDBI shall continue notwithstanding such
rejection of the claim as aforesaid and the SIDBI shall not be held liable for such act
of omission to insure or deficiency insurance as aforesaid. The Borrower shall keep
the SIDBI fully indemnified in this respect. All such expense, costs and incidental
incurred by the SIDBI shall form part of the dues recoverable from the Borrower and
subject to interest as applicable and be debited to the Borrower's account. Further,
that all the sums received under any such insurance as aforesaid shall be received
by the SIDBI and applied in or towards the liquidation of the balance due to SIDBI for
the time being due and in the event of there being a surplus the SIDBI shall be
entitled to appropriate such surplus. Provided that the SIDBI shall not incur any
liability to the Borrower if it fails to lodge any claim under the policy within the
prescribed time or for any reason whatsover. Nor shall the SIDBI incur any liability
to the Borrower for not bringing any suit for recovery of insurance money or allowing
such suit to be time barred.          In case of any dispute arising with the insurance
company, the SIDBI shall have the absolute right to adjust, settle, compromise the
same without reference to or consent of the Borrower and same shall be valid and
binding on the Borrower but shall not impair the right of the SIDBI to otherwise


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                                             5

recover its dues from the Borrower. It is further agreed and declared that if the
insurance policy is taken by the Borrower in his own name and assigned by him in
favour of the SIDBI, the SIDBI shall in addition to the rights and remedies provided in
the Bank's favour as mentioned above, be entitled to realise the policy money from
the insurance company.

8.8    The hypothecated assets/ securities would be continuing security to the
SIDBI for all monies which are or may be due from the Borrower. It is declared that
the said securities are free from any charge, lien prior to this charge and the same
are free from all encumbrances etc. and the Borrower undertake to keep them as
such during the time said securities are hypothecated/charged with the SIDBI.

9)      The Borrower shall procure irrevocable and unconditional personal
guarantees       from       _________________,       ______________________,
________________
__________________________,                          ______________________,
_______________________
__________________________, _______________________ in favour of SIDBI
for the due repayment of the Loan and the payment of all interest and other monies
payable by the Borrower in the form prescribed by SIDBI and to be delivered to
SIDBI before any part of the Loan is advanced. The Borrower shall not pay any
guarantee commission to the said Guarantors.

10)       Event of default

       Notwithstanding anything to the contrary herein contained and upon the
happening of any of the events as provided hereinafter of which the SIDBI shall be
the sole judge, the entire amount/sum due/ amount outstanding in the Borrower's
account together with interest to be charged as agreed and costs, expenses, and
other usual SIDBI charges, shall become due on demand being made in writing and
the SIDBI will be entitled to realise the same and enforce the hypothecated
assets/security at the cost and expenses of the Borrower.

a)        Any default in payment of any of the instalments on the due date.

b)        Any representation or statement in the Borrower's loan application being
          found to be materially incorrect.

c)        The Borrower committing any breach or default in the performance or
          observance of any term, condition, provision or any clause contained in these
          presents or in the loan application or Bank's sanction letter, as the case may
          be;

d)        Execution or distress or other process being enforced or levied upon or
          against the whole or any part of the Borrower's property whether secured to
          the SIDBI or not;

e)        The Borrower being adjudicated insolvent or taking advantage of any law for
          the relief of insolvent debtors or entering into any arrangement or
          composition with the creditors or committing any act of insolvency.

f)        In case of diversion of funds/ amount of loan/ advance or attempt to divert the
          same, so disbursed/paid.




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                                            6

g)        In case the Borrower change in its constitution, more particularly in promoter
          directors or in the core management team or any merger/acquisition/
          amalgamation without the previous written permission of the SIDBI.

h)        In case the Borrower undertakes any new project/ any further expansion,
          without the written prior approval of SIDBI.

i)        If the Borrower shall without the consent in writing of the SIDBI create or
          attempt or purport to create any mortgage, charge, pledge, hypothecation or
          lien or encumbrance on the assets which is the subject of the SIDBI's security
          hereunder;

j)        If any other event or circumstances shall occur which shall in opinion of the
          SIDBI be prejudicial to or endanger or be likely to prejudice or endanger its
          security hereunder;

11)    The Borrower shall furnish and verify all statements and information from
time to time including the financial status or tax returns or any other documents,
related to the Borrower, as required by the SIDBI and give and execute any
necessary documents required to give effect to this security.

12)    The Borrower hereby agrees to accept as conclusive proof of the correctness
of any sum claimed to be due from him to the SIDBI under this agreement on the
basis of statement of account made out from the books of the SIDBI and signed by
the manager/agent/ accountant and/or other duly authorised officer of the SIDBI
without the production of any other voucher, document or paper and shall not
challenge or question or dispute the same.

13)     That the Borrower undertakes to inform SIDBI promptly of any notice or
intimation received from any Government, Revenue, Municipal or local or other,
authorities regarding any default, delay etc. by the Borrower in payment of any dues
in the performance of the Borrower obligations towards them.

14)    It is declared by the Borrower that his/her name or the name of the
firm/company/Trust/Society where his/her name is directly or indirectly related does
not appear in the defaulters list issued by the Reserve Bank of India or any other
Financial Institutions.

15)    the Borrower has represented, assured, declared and undertaken to the
SIDBI that the financial assistance/credit facility raised/ availed or to be raised/
availed by him from the SIDBI and lien & charges created hereby, is being done by
duly authorised, empowered person/partner/director/member/ coparcenar of the
Borrower and the same is for the benefit and advantage of the Borrower.

16)    This agreement constitutes an exclusive and irrevocable agreement between
the SIDBI and the Borrower with respect to the subject matter/schedules hereof.

17)    It is specifically agreed that none of the provisions of this agreement shall be
deemed to have been waived by any act of or acquiescence on part of the SIDBI, its
employees, official or agent, but only by an instrument in writing signed by an
authorised and empowered officer of the SIDBI. No waiver of any provision of this
agreement shall constitute a waiver of any other provision or of the same provision
on another occasion.




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                                             7

18)     It is also agreed that except as otherwise provided herein, if any provision of
this agreement shall be held by a Court of competent jurisdiction to be illegal, invalid
or unenforceable, the remaining provisions and clauses shall remain in full force and
effect.

19)     OTHER TERMS AND CONDITIONS

The Loan hereby granted shall also be subject to the Borrower complying with the
special conditions set out hereunder :
(i) Pre disbursement Conditions
Before seeking disbursement of any part of the term loan, BORROWER shall :




(ii) OTHER CONDITIONS




20)      Credit Information Bureau
a.The Borrower agrees that as a pre-condition, relating to the credit facility in the
form of a loan sanctioned / granted to the Borrower by SIDBI, SIDBI requires the
consent of the Borrower for the disclosure by SIDBI of, information and data relating
to the Borrower, of the credit facility availed of/to be availed, by the Borrower,
obligations assumed/to be assumed, by the Borrower, in relation thereto and default,
if any, committed by the Borrower, in discharge thereof.

b.The Borrower agrees that all or any such :
ii.information and data relating to the Borrower.
iii.the information or data relating to any credit facility availed of/to be availed, by the
Borrower, and
iv.default, if any, committed by the Borrower, in discharge of the Borrower's such
obligation,

as SIDBI may deem appropriate and necessary may be disclosed and furnished by
SIDBI to Credit Information Bureau (India) Ltd. and any other agency authorised in
this behalf by RBI.

a.The Borrower agrees that the information and data furnished by the Borrower to
SIDBI are true and correct.

b.The Borrower agrees that
v.the Credit Information Bureau (India) Ltd. and any other agency so authorised may
use, process the said information and data disclosed by SIDBI in the manner as
deemed fit by them; and
vi.the Credit Information Bureau (India) Ltd. and any other agency so authorised may
furnish for consideration, the processed information and data or products thereof



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                                                8

prepared by them, to banks/financial institutions and other credit grantors or
registered users, as may be specified by the Reserve SIDBI in this behalf.



21)     EFFECTIVE DATE OF AGREEMENT

       This Agreement shall become binding on the Borrower and SIDBI on and
from the date hereinabove written. It shall be in force till all the monies due and
payable under this Agreement are fully paid off by the Borrower to the satisfaction of
SIDBI.



                             FIRST SCHEDULE
                        (REPAYMENT SCHEDULE)
    The loan shall be repaid in ____ monthly instalments of Rs _____ each
commencing after ___ months from the date of first disbursement of the loan.
             Second Schedule of movable assets hypothecated

      All computers, Hardwares, softwares, CVT, servers and other assets acquired/
to be acquired by the Borrower out of the Loan together with all spares, tools and
accessories and whether installed or not and whether now lying loose or in cases or
which are now lying or stored in or about or shall hereafter from time to time during
the continuance of the security of these presents be brought into or upon or be
stored or be in or about all the Borrower's factories, premises and godowns or
wherever else the same may be or be held by any party to the order or disposition of
the Borrower or in the course of transit or on high seas or on order, or delivery,
howsoever and wheresoever in the possession of the Borrower and either by way of
substitution or addition the major items of which equipment etc. are described below
:

      S.No.                   Particulars of assets              Value




 IN WITNESS WHEREOF the Borrower has caused its common seal to be affixed
 hereto and to a duplicate hereof on the day, month and year first hereinabove
 written and SIDBI has caused these presents and the said duplicate to be
 executed by the hand of Shri __________________ its authorised official as
 hereinafter appearing.

 THE       COMMON         SEAL       OF
 ___________________________ has,
 pursuant to the Resolution of its Board
 of Directors passed in that behalf on
 _________________ hereunto, been
 affixed in the presence of Shri
 _____________          and         Shri
 _________________ directors who


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                                            9

 have singed these presents in token
 thereof and Shri _________________
 Secretary/ Authorised person who has
 countersigned the same in token
 thereof.
 SIGNED AND DELIVERED by the
 withinnamed Shri___________ by the
 hand of Shri ____________________ ,
 an authorised official of SIDBI



       Notes

i)        This agreement to be stamped as agreement plus Power of Attorney as per
          the stamp laws applicable at the place of execution.

ii)       No blank should be left in the document.

iii)      In case of company, common seal to be affixed in accordance with the
          relative provisions in the Articles of Association of the Borrower and
          Resolutions passed at Board of Directors in that behalf.

iv)       Form No. 8 & 13 to be filed with the concerned Registrar of Companies within
          30 days from the execution of this document, if the Borrower concern is a
          company




* Delete if not applicable.