Pari Passu security sharing Agreement

PARI PASSU SECURITY SHARING AGREEMENT

BETWEEN

COMPANY 1.

as Borrower

AND

BANK 1

as Bank 1 and Lender

AND

BANK 2

as Lender

AND

BANK 3

as Lender

AND

BANK 4

as Lender

AND

BANK 5

as Lender

AND

BANK 6

as Lender

This PARI PASSU SECURITY SHARING AGREEMENT is made on the _______ day of _________________, 2005.

BETWEEN

1.  COMPANY 1,a private company limited by shares incorporated under the Companies Act, 1994, having its registered office at Plot 1/10, Block-K, Rupnagar I/A, Mirpur, Dhaka-1216, represented by its Managing Director, Mr. Mahmud Hasan Khan, hereinafter referred to as the ‘Borrower’ (which expression unless excluded by or repugnant to the context will mean and include its successor-in-interest, legal representatives, administrators, assigns) of the FIRST PART.

2.   BANK 1,Head Office, 61, Dilkusha Commercial Area, Dhaka-1000, hereinafter referred to as the ‘Bank 1’ (which expression unless excluded by or repugnant to the context will mean and include its successor-in-interest, legal representatives, administrators, assigns) of the SECOND PART.

3.  BANK 1,Head Office, 61, Dilkusha Commercial Area, Dhaka-1000, hereinafter referred to as ‘BANK 1’ (which expression unless excluded by or repugnant to the context will mean and include its successor-in-interest, legal representatives, administrators, assigns) of the THIRD PART.

4.   BANK 2,Head Office, Printers Building, 5, RAJUK Avenue, Dhaka-1000, hereinafter referred to as ‘BANK 2’ (which expression unless excluded by or repugnant to the context will mean and include its successor-in-interest, legal representatives, administrators, assigns) of the FOURTH PART.

5.  BANK 3,Head Office, 90, Motijheel Commercial Area, Dhaka-1000, hereinafter referred to as ‘BANK 3’ (which expression unless excluded by or repugnant to the context will mean and include its successor-in-interest, legal representatives, administrators, assigns) of the FIFTH PART.

6.   BANK 4,Head Office, Jiban Bima Bhaban (2nd floor), 10, Dilkusha Commercial Area, Dhaka-1000, hereinafter referred to as ‘BANK 4’ (which expression unless excluded by or repugnant to the context will mean and include its successor-in-interest, legal representatives, administrators, assigns) of the SIXTH PART.

7.  BANK 5,Head Office, Building No. 98, Main Road, Dhaka Cantonment, Dhaka-1206, hereinafter referred to as ‘BANK 5’ (which expression unless excluded by or repugnant to the context will mean and include its successor-in-interest, legal representatives, administrators, assigns) of the SEVENTH PART.

8.  BANK 6,Head Office, 1, Gulshan Avenue, Gulshan, Dhaka-1212, hereinafter referred to as ‘BANK 6’ (which expression unless excluded by or repugnant to the context will mean and include its successor-in-interest, legal representatives, administrators, assigns) of the EIGHTH PART.

(Parties Nos. 3-8 are hereinafter collectively referred to as the ‘Lenders’ and individually as the ‘Lender’)

WHEREAS:

A.  The Borrower is a private limited company incorporated under the Companies Act, 1994 and is engaged in the project of setting up a textile spinning mills at _________________;

B.  By Facility Agreement dated ____________ entered into between the Borrower, the Bank 1 and the Lenders (the “Facility Agreement”), the Lenders have agreed to grant the Borrower a syndicated term loan facility of a maximum amount of Tk. 48,00,00,000.00 (Taka forty eight crore) only (the “Term Loan”) on the terms and conditions contained therein;

C. As security for the Term Loan, the Borrower has executed/shall execute the documents as described in Clause 3 hereunder creating security interest over certain assets of the Borrower and pursuant to the Facility Agreement, the Lenders have agreed among themselves to share the security interests over the said assets of the Borrower;

F.  The Lenders have agreed between themselves and the Borrower to the matters set forth in this Agreement with a view to safeguarding their respective interests in the Borrower and to coordinating various actions which may be taken in respect thereof.

NOW IT IS HEREBY AGREED AS FOLLOWS:

SECTION 1 – INTERPRETATION

1.1    “Amount Outstanding” means the aggregate of the amounts in any currency at any time and from time to time outstanding in respect of principal, interest, interest on interest, interest on overdue payment, penalty interest, commitment charge, front end fees and all other amounts then due and unpaid to a Chargee under this Agreement and Facility Agreement.

“Chargees” means the Lenders under the Facility Agreement and “Chargee” means any one of them.

“Facility Agreement” has the same meaning ascribed to it in Preamble B of this Agreement.

“Term Loan” has the same meaning ascribed to it in Preamble B of this Agreement.

“Distribution Moneys” mean any moneys received by all or by any one of the Chargees or any receiver appointed by all or by any one of them, by enforcement of the Securities.

“the Security” or “the Securities” means the security described in Clause 3 hereunder.

“the Secured Indebtedness” means the indebtedness secured by the Security.

References to Recitals, Sections, Clauses and Schedules are Recitals, Sections and Clauses of the Schedules to this Agreement.

1.2       The headings are inserted for convenience of reference only and shall not affect the construction of this Agreement.

SECTION 2 – CONSULTATION PROCEDURES

2.1Subject to Clause 2.4, each Chargee will comply with the following procedures hereunder in giving notice of default to the Borrower or in the enforcement of its Security, or in taking any other action pursuant to its Security or otherwise which could require payment or repayment by the Borrower of any Amount Outstanding under the Security, in advance of the scheduled payment or repayment date:

2.1.1  on the occurrence of any event which could give rise to any Chargee giving such notice of default or enforcing the Security, the Chargee shall inform the Borrower of the same (the “Information Notice”) and require the Borrower to remedy the same within the period of 15 (fifteen) days following the date of the Information Notice;

2.1.2  the Chargee shall also send a copy of the Information Notice to the other Chargee;

2.1.3    if no remedy is effected within the stipulated period, the Chargee desiring to give such notice of default, or to enforce the Security, will then inform the other Chargee of such intention (the “Notice of Intention”) and the reasons for giving such notice of default or enforcing its Security;

2.1.4    within 7 days of the date of the Notice of Intention, the Chargee to whom such Notice of Intention has been sent may request consultation with the other Chargee (the “Consultation Notice”); and

2.1.5    if no Consultation Notice is received within the said period of 7 days, the Chargee giving the Notice of Intention may, after 7 days further notice to the other Chargee of such intention, give notice of default to the Borrower, or enforce the Security.

2.2       If a Consultation Notice is issued by a Chargee, the Chargee who issued the Notice of Intention undertakes, within 7 days of the date of such Consultation Notice, to consult with the other Chargee. At the end of said period of 7 days the Chargee who issued the Notice of Intention may give notice of default to the Borrower or enforce the Security.

2.3       If any Chargee shall terminate or suspend disbursements to the Borrower under the provisions of the Facility Agreement, such Chargee will promptly inform the other Chargee of such termination or suspension and the reasons therefor.

If, in the judgment of the Chargee taking such action, the reasons therefor are susceptible to correction, such Chargee shall take into account the views of the other Chargee with regard to effecting such correction and resuming disbursements to the Borrower.

2.4       It is understood that nothing contained herein shall modify any of the respective rights of the Chargees against the Borrower under the Facility Agreement and any other documents contemplated thereby. It is further understood that any Chargee shall be free to disregard such foregoing provisions if, in its judgment, its Secured Indebtedness is in jeopardy or in threat of jeopardy.

2.5       If, in accordance with the provisions of this Section, any Chargee shall give notice of default to the Borrower or take any action in the enforcement of its Security, such Chargee shall contemporaneously send to the other Chargees a copy of such notice or details of such action (as the case may be).

SECTION 3 – SECURITY AND CUSTODY OF SECURITY DOCUMENTS

3.1       Term Loan granted by the Chargees under the Facility Agreement are secured by the securities as is described in the ‘Schedule A’ attached hereto amongst the Chargees on pari passu pro rata basis.

3.2       The Bank 1 shall retain the documents/papers relating to the Securities and all documents/papers relating to the land as mentioned in Clause 1 of the ‘Schedule A’ (“Security Instruments”) in trust for the benefit of the Chargees.

3.3       For the purpose of Clause 3.2, the extent of the obligation of the Bank 1 shall only be limited to acting as the custodian of the Security Instruments for and on behalf of the Chargees under this Agreement.

3.4       The Borrower hereby agrees that in the event of a necessity to discharge any Security by filing a Memorandum of Satisfaction with the relevant registering authority/authorities written intimation shall be given to the remaining Chargees and the Borrower shall execute and register such mortgage, charge or modification(s) to the Securities as may be necessary and required by the remaining Chargees.

SECTION 4 – SECURITY SHARING ARRANGEMENTS

4.1       In the event of any enforcement on the Securities by virtue of any provision under this Agreement or the Facility Agreement or due process of law, the assets or proceeds derived therefrom will be distributed among the Chargees or if any of the Chargees shall receive any moneys by enforcement of such Security, all such moneys so distributed or received by them or any of them on account of the Secured Indebtedness under the Facility Agreement shall be applied in the manner hereinafter appearing in Clause 4.2.

4.2       Unless and until the whole of the Amount Outstanding shall have been fully paid off, all Distribution Moneys received by any or all of the Chargees shall, as between the Chargees, be applied and divided as follows:

a.         first, in paying all costs and expenses necessarily incurred or to be incurred in or about the sale, realization and carrying on of the business of the Borrower or otherwise in the performance or exercise of the trusts, powers and duties vested in the Chargees or the Lenders under the Security or otherwise with respect of such security, including the remuneration of any receiver and manager (if any);

b.         secondly, in paying the interest and all reasonable fees for the time being due and owing under the Facility Agreement;

c.         thirdly, in paying the principal for the time being due and owing under the Facility Agreement;

d.         fourthly, in paying any other moneys due and payable under the Facility Agreement; and

e.         lastly, in paying the surplus (if any) to the person(s) entitled thereto.

PROVIDED THAT if the Distribution Monies shall be insufficient to pay in full all amounts due under Clause 4.2, then such Distribution Monies shall be apportioned for payment under such Clause ratably and without preference or priority between the Chargees in the proportions that the part of the Amount Outstanding which is due under each Security at the date of such payment bears to the whole of the Amount Outstanding at such date of payment.

4.3       If any Chargee shall receive any monies in excess of its entitlement under this Section, such Chargee shall hold any such excess monies in trust for the other Chargee, to whom it shall account therefor as soon as the respective entitlement of each Chargee has been established pursuant to the provisions of the Facility Agreement and this Agreement.

4.4       The Chargees hereby agree, each with the others of them, to ensure that timely and appropriate action will be taken in all matters connected with the enforcement of the Security and that all matters referred to in the Security Instruments and in the Facility Agreement which require that the Chargees be ad idem shall be agreed upon in a spirit of co-operation and with solicitude for the respective interests of the other Chargees.

SECTION 5 – UNDERTAKINGS

5.1       The Borrower undertakes with each of the Chargees not to create or agree to create or permit to subsist any mortgage, charge, pledge, lien, hypothecation or other encumbrance of whatsoever nature over any of its assets ranking in priority to or pari passu with the Securities, nor, without the prior written consent of the Chargees, ranking subsequent to the Securities except in accordance with Section 7 hereunder.

SECTION 6 – REPRESENTATION AND WARRANTIES

6.1       Each of the parties hereto represents and warrants that:

6.1.1    It has the power to enter into this Agreement;

6.1.2    The execution of this Agreement and the performance by it of its obligations have been duly authorised and constitutes valid and binding obligations on its part; and

6.1.3    Neither the execution nor the performance of this Agreement will conflict with, or result in a breach of, any of the terms, conditions or provisions of its documents of incorporation or, as applicable, its establishment nor conflict with or result in a breach of any provisions of or constitute a default or require any consents under any agreement or other instrument to which it is a party or by which it is bound, or violate the provisions of any judgement, decree or order, or any statute, rule or regulation applicable to it.

SECTION 7 – AVAILING FURTHER CREDIT FACILITIES

7.1       The Borrower shall be allowed to avail working capital facilities to the extent of Tk. 20,00,00,000.00 (Taka twenty crore) only from the Lenders in the form of L/C, LTR and CC(H) after implementation of the Project to start the commercial operation.

7.2       Each Lender will have the option to extend working capital facilities in the form of L/C and LTR to the extent proportionate to their participation in the Term Loan. CC(H) facility of a maximum amount of Tk. 5,00,00,000.00 (Taka five crore) only shall be granted by BANK 1 solely.

7.3       The Borrower shall be entitled to create further security interest over its assets as described in Schedule A to secure the working capital facilities to the extent of Tk. 20,00,00,000.00 (Taka twenty crore) only as aforesaid in favour of the Lenders on pari passu basis.

7.4       Except for the Term Loan and the working capital facilities as aforesaid, the Borrower shall not avail any further facilities without obtaining prior written consent of the Lenders.

SECTION 8 – NOTICES

8.1   Any notice to be given under this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or pre-paid post to the other Chargee and/or Borrower (as the case may be) to whom it is required or permitted to be given or made at such address(es) specified below or such other address as such the Chargees and/or the Borrower shall have designated by notice to the other parties to this Agreement.

8.2      The addresses referred to in the preceding Section are as follows:

8.2.1    In the case of a notice to the Borrower:

COMPANY 1

Plot 1/10, Block-K

Rupnagar I/A, Mirpur

Dhaka-1216

Tel: 9003182, 8015527, 8019605, 9016738, 8018869

Fax: 9007093

8.2.2    In the case of a notice to the Bank 1:

BANK 1

Head Office

61, Dilkusha Commercial Area

Dhaka-1000

Tel: 9559333

Fax: 9561213

8.2.3    In the case of a notice to the Chargees:

To BANK 1:

BANK 1

Head Office

61, Dilkusha Commercial Area

Dhaka-1000

Tel: 9559333

Fax: 9561213

To BANK 2:

BANK 2

Head Office

Printers Building

5, RAJUK Avenue

Dhaka-1000

Tel:

Fax:

To BANK 3:

BANK 3

Head Office

90, Motijheel Commercial Area

Dhaka-1000

Tel:

Fax:

To BANK 4:

BANK 4

Head Office

Jiban Bima Bhaban (2nd floor)

10, Dilkusha Commercial Area

Dhaka-1000

Tel:

Fax:

To BANK 5:

BANK 5

Head Office

Building No. 98

Main Road, Dhaka Cantonment

Dhaka-1206

Tel:

Fax:

To BANK 6:

BANK 6

Head Office

1, Gulshan Avenue, Gulshan

Dhaka-1212

Tel:

Fax:

SECTION 9 – MISCELLANEOUS

9.1       This Agreement shall bind and inure to the benefit of the respective successors of the parties hereto, but each Chargee undertakes with the others that in the event of its assigning or transferring its interests hereunder, such assignment or transfer will be made expressly subject to the terms of this Agreement and such Chargee will procure that any assignee or transferee will undertake, in form and substance to the reasonable satisfaction of the other Chargees, to be bound by the security sharing arrangements contained in this Agreement. The Borrower may not assign or otherwise assign or transfer all or any part of its rights and obligations under this Agreement without the prior consent of the Chargees.

9.2       No failure or delay by any of the Chargees in exercising any right, power or remedy shall operate as a waiver thereof or otherwise impair any of its rights, powers or remedies. No single or partial exercise of any such right shall preclude any other or further exercise thereof or the exercise of any other legal right. No waiver of any such right shall be effective unless notice is given in writing.

9.3       This Agreement shall remain in force till the Borrower has adjusted all of its Secured Indebtedness to the satisfaction of each Chargees under the Facility Agreement.

9.4       Neither this Agreement nor any terms hereof may be changed, waived, discharged, or terminated unless such change, waiver, discharge or termination is in writing signed by all the parties hereto.

9.5       There shall be one original copy of this Agreement which will be retained by the Bank 1 for the interest and benefit of the Chargees and each Chargee and the Borrower shall be provided with a copy of this Agreement duly certified to be true copy by the authorised signatory of the Bank 1.

9.6       The rights or remedies provided for herein are cumulative and are not exclusive of any other right, power, or remedy provided by law. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion of any other appropriate right or remedy.

9.7       This Agreement and its performance shall be governed by and construed in all respects in accordance with the laws of Bangladesh.

IN WITNESS WHEREOF THIS AGREEMENT HAS BEEN DULY EXECUTED THE DAY, MONTH AND YEAR FIRST ABOVE WRITTEN.

THE BORROWER COMPANY 1.By___________________________

Name:

Title:

Address: House No. 1/10, Block K

Rupnagar I/A, Mirpur-2

Dhaka

Telephone No.:

Fax No.:

WITNESS By__________________________Name:Title:

Address: House No. 1/10, Block K

Rupnagar I/A, Mirpur-2

Dhaka

 

THE BANK 1 BANK 1 By___________________________Name:

Title:

Address: 61, Dilkusha Commercial Area

Dhaka-1000

Telephone No.: 9559333

Fax No.: 9561213

WITNESS By__________________________Name:Title:

Address: 61, Dilkusha Commercial Area

Dhaka-1000

THE LENDERS BANK 1 By___________________________Name:

Title:

Address: 61, Dilkusha Commercial Area

Dhaka-1000

Telephone No.: 9559333

Fax No.: 9561213

WITNESS By__________________________Name:Title:

Address: 61, Dilkusha Commercial Area

Dhaka-1000

BANK 2By___________________________Name:

Title:

Address: Printers Building

5, RAJUK Avenue

Dhaka-1000

Telephone No.:

Fax No.:

WITNESS By__________________________Name:Title:

Address: Printers Building

5, RAJUK Avenue

Dhaka-1000

BANK 3By___________________________Name:

Title:

Address: 90, Motijheel Commercial Area

Dhaka-1000

Telephone No.:

Fax No.:

WITNESS By__________________________Name:Title:

Address: 90, Motijheel Commercial Area

Dhaka-1000

BANK 4By___________________________Name:

Title:

Address: Jiban Bima Bhaban (2nd floor)

10, Dilkusha Commercial Area

Dhaka-1000

Telephone No.: 9556360

Fax No.: 9562364

WITNESS By__________________________Name:Title:

Address: Jiban Bima Bhaban (2nd floor)

10, Dilkusha Commercial Area

Dhaka-1000

BANK 5By___________________________Name:

Title:

Address: Building No. 98

Main Road, Dhaka Cantonment

Dhaka-1206

Telephone No.:

Fax No.:

WITNESS By__________________________Name:Title:

Address: Building No. 98

Main Road, Dhaka Cantonment

Dhaka-1206

BANK 6By___________________________Name:

Title:

Address: 1, Gulshan Avenue, Gulshan

Dhaka-1212

Telephone No.:

Fax No.:

WITNESS By__________________________Name:Title:

Address: 1, Gulshan Avenue, Gulshan

Dhaka-1212

SCHEDULE A

PARTICULARS OF SECURITY:

Sl. Mortgage/Charge Chargees Amount secured
1. Mortgage of land measuring ____________ in the name of the Borrower by way of a Deed of Mortgage executed/to be executed by the Borrower in favour of the Chargees along with an Irrevocable General Power of Attorney executed/to be executed by the Borrower empowering the Chargees to sell the mortgaged land Lenders Tk. 48,00,00,000.00
2. Letter of Hypothecation by way of Floating Charge executed/to be executed by the Borrower in favour of the Chargees over all plant, machinery, stocks, book debts etc., both present and future, of the Borrower Lenders Tk. 48,00,00,000.00
3. Letter of Hypothecation by way of Fixed Charge executed/to be executed by the Borrower in favour of the Chargees over specific plant, machinery, equipment of the Borrower Lenders Tk. 48,00,00,000.00

Drafted by:

For: “The Lawyers & Jurists”
M.L.Hotel Tower Ltd,
208,Shahid Syed Nazrul Islam Sarani,
Bijoy Nagar, Dhaka-1000.

www.lawyersnjurists.com

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