LEGAL OPINION ON DRAFT COPIES OF CORPORATE GUARANTEE, LOAN AGREEMENT, LETTER OF HYPOTHECATION AND ADDENDUM TO THE LENDERS’ PARRIPASSU SECURITY SHARING AGREEMENT A/C COMPANY

Dated: July 17, 2005

Mr. A

Senior Vice President

National Credit and Commerce Bank Ltd.

Dilkusha Branch

43, Dilkusha Commercial Area

Dhaka-1000

Dear Sir,

RE:      LEGAL OPINION ON DRAFT COPIES OF CORPORATE GUARANTEE, LOAN AGREEMENT, LETTER OF HYPOTHECATION AND ADDENDUM TO THE LENDERS’ PARRIPASSU SECURITY SHARING AGREEMENT A/C COMPANY 1

We refer to your letter dated 06.07.2005 in relation to the captioned subject.

We have reviewed the documents attached therewith and considered the legal implications with regard to the said documents. Our comments on the same are as follows:

Letter of Hypothecation:

Sl. No. Reference of the draft Our Comments
1. Paragraph 1, line 8 Please delete the words ‘ranked parri passu basis’ in line 8 of paragraph 1.
2. List of Machinery Please attach the list of machinery and equipment as mentioned in line 11 of the first paragraph.
3. Page 2, Paragraph  2 Please insert the following new clause as (f):

“If there occurs any other Event of Default as mentioned in then Loan Agreement”
4. General All blanks should be filled in and appropriate dates should be inserted.

Loan Agreement:

Sl. No. Reference of the draft Our Comments
1.

 Execution Date Please insert the appropriate execution date of the Loan Agreement
2.

 Recital B Please note that the Facility granted is Term Loan, not Overdraft facility. Please amend accordingly.
3.

 Clause 1.1, Definition of Rate of Interest Please replace the word ‘profit’ by ‘interest’
4. Clause 1.1 Please insert the following definitions in the interpretation clause:

‘Agreement’

‘Interest Payment Dates’

‘Term Loan Facility’

‘Security Documents’

‘Environmental safety and protection guidelines’
5. Clause 2.1 The term ‘L/C facility’ and ‘Overdraft facility’ anywhere used in the Agreement shall be replaced with the term ‘Term Loan Facility’.

The term ‘bank’ anywhere used in the Agreement shall be replaced with the word “Bank”.
6. Clause 3.1 Please replace the word ‘Same’ by ‘Save’.
7. Clause 4.3 Please delete the clause.
8. Clause 5 Please replace the words ‘credit facility’ by ‘Facility’.
9. Clause 6 It is mentioned that interest is payable on demand which shall be replaced by ‘on Interest Payment Dates’.
10. Clause 11.1 Please insert the following sub-clause and renumber the subsequent sub-clauses:

‘The borrower shall avail the credit facility within 2 (two) months from the date of communication of sanction after completing all necessary formalities.’
11. Clause 14.2-14.5 Please note that these should be the sub-clause of clause 14.1. Please amend accordingly
12. Present Clause 14.3 (iii) Please add the following clause:

‘A clean and satisfactory CIB Report of the Borrower’
13. New condition precedent to be added

Please insert the following sub-clause:

‘The loan will be disbursed in full or in partial upon receipt of the 7 days notice from the borrower.’
14. Clause 15

 The First sentence shall be separately stated as an event of default. Please insert it as clause 15.7.
15. Clause 24

 Please replace the heading of the clause with ‘Severability’.
16. Clause 25:  INDEMNITY Please insert the following clause and renumber the subsequent clauses:

‘The borrower shall fully indemnify the Bank from and against any expense, loss, damage or liability which it may incur as a consequence of the occurrence of any Event of Default or arising out of or in connection with the performance or non-performance by the borrower of any of its obligation under this Agreement.’
17. Clause 26. SETTLEMENT OF DISPUTE Please insert the following clause and renumber the e subsequent clause

‘Any dispute arising out of this Agreement shall be settled through Court of Law.’
18. General

 Please ensure that the Agreement is executed on non-judicial stamp of Tk. 150.00 only.

Sixth Addendum to the Loan Agreement:

Sl. No. Reference of the draft Our Comments
1. Page 3, First paragraph In line 2 of the mentioned paragraph please delete the words ‘& Twelfth’.
2. General The term ‘Borrowers’ wherever expressed in the Addendum shall be replaced with the word “Borrower”.
3. Recital C.10 Two recitals have the same number C.10. Please amend accordingly.
4. Recital C.19 Please rephrase the clause as following:

‘Pursuant to the terms of NCCBL Term Loan Agreement dated __________, the Borrower has agreed to create further charge over the assets of the Borrower in favour of NCCBL on pari passu basis with the Lenders.’
5. Clause 2

 Please delete clauses 2(a) to (f) and insert the  following clauses:

2 (a) Whenever the term ‘Credit Contracts’ is used in the Pari Passu Security Sharing Agreement shall mean and include FSBL Term Loan Agreement, UCBL Term Loan Agreement, MTBL Term Loan Agreement, MBL Loan Agreement, SIBL HPSM Agreement, SJIBL Investment Agreement and NCCBL Term Loan Agreement’.

2 (b): ‘Whenever the Term ‘Lenders’ is used in the Pari Passu Security Sharing Agreement shall mean and include NCCBL, FSBL, UCBL, MTBL, MBL, SIBL and SJIBL.’

2 (c): ‘Whenever the Term ‘Credit Facilities’ is used in the Security Sharing Agreement shall mean and include ‘NCCBL Loan, MBL Loan, FSBL Loan, UCBL Loan, MTBL Loan, SIBL Loan & SJIBL Loan. ’

Corporate Guarantee

Please note that a contract of guarantee always involves three parties, namely the Principal Debtor, Surety and the Creditor. However, there is only principal debtor and the Creditor. Oman Bangladesh Leasing and Finance Limited (the Company) is liable to the Bank as principal debtor and as such a corporate guarantee from the Company shall not provide any additional comfort to NCCBL. Usually a third party i.e. Surety guarantees the performance of the obligations of the principal debtor, in whose default the surety becomes liable for the discharge of the liability of the principal debtor.

Also note that an Irrevocable General Power of Attorney to sell the hypothecated assets will be required. Letter of Hypothecation should be filed with RJSC with Form XVIII within 21 days of execution of the same.

Subject to the above, the documents referred to us seem to be in order.

If you have any queries, do not hesitate to contact us. All papers/documents referred to us are returned herewith.

Thanking you.

Yours faithfully,

(___________________)

Barrister-at-Law


The Lawyers & Jurists

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Bijoy Nagar, Dhaka-1000.

www.lawyersnjurists.com

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