Corporate Guarantee

CORPORATE GUARANTEE

THIS CORPORATE GUARANTEE is dated the _____ day of ________________, 2006 and made

BY:

X  FASHIONS LIMITED

________________________

________________________

(hereinafter referred to as the Guarantor)

IN FAVOUR OF:

(Party Nos. 2-3 are hereinafter collectively referred to as the “Lenders” which expression unless excluded by or repugnant to the context will mean and include their successor-in-interest, legal representatives, administrators, assigns).

WHEREAS:

IT IS AGREED as follows:

1 Interpretation

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Facility Agreement.

In this Guarantee, unless the context otherwise requires:

‘Affiliate’ shall mean, with respect to any party, any company or other entity directly or indirectly controlling, controlled by or under common control with the party. For the purposes of this definition, a company or other entity shall be deemed to be directly or indirectly controlled by persons, companies or other entities of the persons, companies or other entities individually or collectively when (i) they own, directly or indirectly, more than 50% of the issued and outstanding voting shares of the company or other entity or (ii) they otherwise have the power to direct or cause the direction of the management or influence the policies of the company or other entity.

‘Collateral Instruments’ means notes, bills of exchange, certificates of deposit and other negotiable and non-negotiable instruments, guarantees, indemnities and other assurances against financial loss and any other documents or instruments which contain or evidence an obligation (with or without security) to pay, discharge or be responsible directly or indirectly for, any indebtedness or liabilities of the Borrower or any other person liable and includes any documents or instruments creating or evidencing a mortgage, charge (whether fixed or floating), pledge, guarantee, lien, hypothecation, assignment, trust arrangement or security interest of any kind;

‘Guarantee’ includes each separate or independent stipulation or agreement by the Guarantor contained in this Guarantee;

‘Guaranteed Liabilities’ means the debt obligations of the Borrower under the Facility Agreement including, without limitation, the outstanding principal loan amount, interests (to the date of payment), commission, fees and other charges and all legal and other costs, charges and expenses on a full and unqualified indemnity basis which may be incurred by the Lenders in relation to any such moneys, obligations or liabilities or generally in respect of the Borrower, the Guarantor or any Collateral Instrument.

‘Incapacity’ means, in relation to a person, the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of that person whatsoever (and, in the case of a partnership, includes the termination or change in the composition of the partnership);

‘Security Documents’ shall have the same meaning as defined under the Facility Agreement.

‘Subsidiary’ of a person means any company or entity directly or indirectly controlled by such person, and for this purpose “control” means either ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise.

Words importing the plural shall include the singular and vice versa.

References to a person shall be construed as including references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity.

2          Guarantee

2.1       Covenant to pay

In consideration of the Lenders agreeing to grant the Facility to the Borrower pursuant to the Facility Agreement, the Guarantor hereby guarantees, to pay to the Lenders, on demand by the Lenders all moneys and discharge all Guaranteed Liabilities now or hereafter due, owing or incurred by the Borrower to the Lenders under or pursuant to the Facility Agreement and the other such Collateral Instruments when the same become due for payment or discharge whether by acceleration or otherwise, and whether such moneys, obligations or liabilities are express or implied, present, future or contingent, jointly or severally with any other person, incurred as principal or surety, originally owing to the Lenders or purchased or otherwise acquired by it, or incurred on any banking account or in any other manner whatsoever.

2.2       Guarantor as principal debtor: indemnity

As a separate and independent stipulation, the Guarantor agrees that if any purported obligation or liability of the Borrower which would have been the subject of this Guarantee had it been valid and enforceable is not or ceases to be valid or enforceable against the Borrower on any ground whatsoever whether or not known to the Lenders, including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the Borrower or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or Incapacity or any change in the constitution of the Borrower, the Guarantor shall nevertheless be liable to the Lenders in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Guarantor were the principal debtor in respect thereof. The Guarantor hereby agrees to keep the Lenders fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of the Borrower to perform or discharge any such purported obligation or liability.

2.3       Statements of account conclusive

Any certificate or determination of the Lenders as to the Guaranteed Liabilities shall, in the absence of manifest error, be binding and conclusive on and against the Guarantor.

2.4       No security taken by Guarantor

The Guarantor warrants that it has not taken or received, and undertakes that until all the Guaranteed Liabilities of the Borrower have been paid or discharged in full, it will not take or receive, the benefit of any security from the Borrower or any other person in respect of its obligations under this Guarantee.

2.5       Compensation

The Guarantor agrees to pay compensation on each amount demanded of it under this Guarantee in such amount as the Lenders certify as representing the cost to it of any delayed payment or non-payment under the Agreement.

2.6       Continuing security and other matters

This Guarantee shall:

2.7       Liability unconditional

The liability of the Guarantor shall not be affected, nor shall this Guarantee be discharged or reduced by reason of:

(b)        The Lenders granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of the Borrower or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from the Borrower or any other person liable; or

(c)        Any act or omission which would not have discharged or affected the liability of the Guarantor had it been the principal debtor instead of the Borrower or by anything done or omitted which but for this provision might operate to exonerate the Guarantor.

2.8       Collateral Instruments

The Lenders shall not be obliged to make any claim or demand on the Borrower or to resort to any Collateral Instrument or other means of payment now or hereafter held by or available to it before enforcing this Guarantee and no action taken or omitted by the Lenders in connection with any such Collateral Instrument or other means of payment shall discharge, reduce, prejudice or affect the liability of the Guarantor under this Guarantee, nor shall the Lenders be obliged to apply any money or other property received or recovered in consequence of any enforcement or realisation of any such Collateral Instrument or other means of payment in reduction of the Guaranteed Liabilities.

2.9       Waiver of Guarantor’s rights

The Guarantor agrees that, without the prior written consent of the Lenders, the Guarantor shall not:

(b)        demand or accept repayment in whole or in part of any indebtedness now or hereafter due to the Guarantor, jointly or severally, from the Borrower or from any other person liable or demand or accept any Collateral Instrument in respect of the same or dispose of the same;

(c)        take any step to enforce any right against the Borrower or any other person liable in respect of any Guaranteed Liabilities; or

(d)        claim any set-off or counterclaim against the Borrower or any other person liable in competition with the Lenders in the liquidation of the Borrower or any other person liable or have the benefit of, or share in, any payment from the Borrower or any other person liable or any other Collateral Instrument now or hereafter held by the Lenders for any Guaranteed Liabilities or for the obligations or liabilities of any other person liable but so that, if so directed by the Lenders, it will prove for the whole or any part of its claim in the liquidation of the Borrower or any other person liable on terms that the benefit of such proof and of all money received by it in respect thereof shall be held on trust for the Lenders and applied in or towards discharge of the Guaranteed Liabilities in such manner as the Lenders shall deem appropriate.

2.10     Guarantor to deliver up certain property

If, contrary to clauses 2.4 or 2.9 the Guarantor takes or receives the benefit of any security or receives or recovers any money or other property, such security, money or other property shall be held on trust for the Lenders and shall be delivered to the Lenders on demand.

3          Payments and Taxes

3.1       No set-off or counterclaim

All payments to be made by the Guarantor under this Guarantee shall be made in full, without any set-off or counterclaim whatsoever and, subject as provided in clause 3.2, free and clear of any deductions or withholdings, on the due date to the account of the Lenders.

3.2       Grossing up for Taxes

If at any time the Guarantor is required to make any deduction or withholding in respect of Taxes from any payment due under this Guarantee for the account of the Lenders, the sum due from the Guarantor in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Lenders receive on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding) a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Guarantor shall indemnify the Lenders against any losses or costs incurred by it by reason of any failure of the Guarantor to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Guarantor shall promptly deliver to the Lenders any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid.

4          Representations and warranties

4.1       Continuing representations and warranties

The Guarantor represents and warrants that:

The Guarantor is duly incorporated and validly existing under the laws of its domicile as limited liability company and has requisite power to carry on its businesses as they are now being conducted and to own its property and other assets;

The Guarantor has power to execute, deliver and perform its obligations under this Guarantee; all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Guarantor to borrow or give guarantee will be exceeded as a result of this Guarantee;

This Guarantee constitutes valid and legally binding obligations of the Guarantor enforceable in accordance with its terms;

The execution and delivery of, the performance of its obligations under, and in compliance with the provisions of, this Guarantee by the Guarantor will not (i) contravene any existing applicable law, statute, rule or regulation or any judgement, decree or permit to which the Guarantor is subject, (ii) conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which the Guarantor is a party or is subject or by which it or any of its property is bound, (iii) contravene or conflict with any provision of the Guarantor’s Memorandum and Articles of Association or (iv) result in the creation or imposition of or oblige the Guarantor to create any encumbrance on any of the Guarantor’s undertakings, assets, rights or revenues;

(e)        No litigation

No litigation, arbitration or administrative proceeding is taking place, pending or, to the knowledge of the officers of the Guarantor, threatened against the Guarantor which could have materially adverse effect on the businesses, assets or financial conditions of the Guarantor;

The financial statements of the Guarantor and its Affiliates delivered to the Lenders have been prepared in accordance with generally accepted accounting principles and practices which have been consistently applied and present fairly and accurately the financial position of the Guarantor and the consolidated financial position of the Guarantor and its Affiliates respectively as at such date and the consolidated results of the operations of the Guarantor and its Affiliates respectively for the financial year ended on such date and, as at such date, neither the Guarantor nor any of its Affiliates had any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements;

It is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of this Guarantee that it or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or similar tax or charge be paid or in relation to this Guarantee and this Guarantee is in proper form for its enforcement in the courts;

Every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Guarantor to authorise, or required by the Guarantor in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of this Guarantee or the performance by the Guarantor of its obligations under this Guarantee have been obtained or made and is in full force and effect and there has been no default in the observance of the conditions or restrictions (if any) imposed in, or in connection with, any of the same.

4.2       Initial representations and warranties

The Guarantor further represents and warrants that:

There has been no material adverse change in the constitution of the Guarantor or the consolidated financial position of the Guarantor and its Affiliates;

The obligations of the Guarantor under this Guarantee are direct, general and unconditional obligations of the Guarantor and rank at least pari passu with all other present and future unsecured and un-subordinated indebtedness of the Guarantor;

The Guarantor would, with the giving of notice or lapse of time or the satisfaction of any other condition or any combination thereof, be in breach of or in default under any agreement relating to indebtedness to which it is a party or by which it may be bound;

The information, exhibits and reports furnished by the Guarantor to the Lenders in connection with the negotiation and preparation of this Guarantee and the other Security Documents are true and accurate in all material respects and not misleading, does not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained therein; there are no other facts the omission of which would make any fact or statement therein misleading;

No taxes are imposed by withholding or otherwise on any payment to be made by the Guarantor under this Guarantee or are imposed on or by virtue of the execution or delivery by the Guarantor of this Guarantee or any document or instrument to be executed or delivered under this Guarantee; and

No event that would entitle the Lenders to terminate the Agreement has occurred and is continuing.

On and as of each day from the date of this Guarantee until all moneys due or owing by the Borrower under the Agreement and/or the other Security Documents and/or by the Guarantor under this Guarantee have been paid in full the Guarantor shall be deemed to repeat the representations and warranties in Clause 4.1 and Clause 4.2.

5          Undertakings

The Guarantor undertakes that, from the date of this Guarantee and so long as any moneys are owing under this Guarantee, it will:

Promptly inform the Lenders of any occurrence of which it becomes aware which might adversely affect its ability to perform its obligations under this Guarantee and of any event which would entitle the Lenders to terminate the Agreement forthwith upon becoming aware thereof and will from time to time, if so requested by the Lenders, confirm to the Lenders in writing that, save as otherwise stated in such confirmation, no such event has occurred and is continuing;

Without prejudice to clause 4.1, obtain or cause to be obtained, maintain in full force and effect and comply in all material respects with the conditions and restrictions (if any) imposed in, or in connection with, every consent, authorisation, licence or approval of governmental or public bodies or authorities or courts and do, or cause to be done, all other acts and things which may from time to time be necessary or desirable under applicable law for the continued due performance of all its obligations under this Guarantee;

Ensure that its obligations under this Guarantee shall, without prejudice to the provisions of Clause 5.2, at all times rank at least pari passu with all its other present and future unsecured and unsubordinated indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract;

­            Prepare or cause to be prepared its or its Affiliates’ financial statements and consolidated financial statements in accordance with generally accepted accounting principles and practices consistently applied in respect of each financial year and cause the same to be reported on by its or the Affiliates’ auditors, as the case may be and deliver copies of the same to the Lenders as requested from time to time; and

Provide the Lenders with such financial and other information concerning the Guarantor and its Affiliates and their respective affairs as the Lenders may from time to time reasonably require.

5.2       Negative undertakings

The Guarantor undertakes that, from the date of this Guarantee and so long as any moneys are owing under this Guarantee, it will not, without the prior written consent of the Lenders:

(i)         Cause any encumbrance by the Guarantor or the Borrower to subsist, arise or be created or extended over all or any part of present or future undertakings, assets, rights or revenues to secure or prefer any present or future indebtedness of the Guarantor or the Borrower or any other person; or

(ii)        Permit any indebtedness of the Guarantor or the Borrower to be guaranteed or otherwise assured against financial loss by any person other than the Guarantor or the Borrower;

Merge or consolidate with any other company or person; and

Procure that neither the Borrower will and will not sell, transfer, lend or otherwise dispose of or cease to exercise direct control over any part of its present or future undertaking, assets, rights or revenues (otherwise, than by transfers, sales or disposals for full consideration in the ordinary course of trading) whether by one or a series of transactions related or not.

6          Set-off

The Guarantor authorises the Lenders to apply any credit balance to which the Guarantor is then entitled on any account of the Guarantor with the Lenders at any of its branches in or towards satisfaction of any sum then due and payable from the Guarantor to the Lenders under this Guarantee. The Lenders shall not be obliged to exercise any right given to it by this Clause. The Lenders shall notify the Guarantor forthwith upon the exercise or purported exercise of any right of set-off giving full details in relation thereto.

7          Benefit of this Guarantee

This Guarantee shall be binding upon the Guarantor and its successors in title and shall ensure for the benefit of the Lenders and its successors in title and its assignees and transferees.

For the avoidance of doubt and without prejudice to the provisions of clause 7.1, this Guarantee shall remain binding on the Guarantor notwithstanding any change in the constitution of the Lenders or its absorption in, or amalgamation with, or the acquisition of all or part of its undertaking or assets by, any other person, or any reconstruction or reorganisation of any kind, to the intent that this Guarantee shall remain valid and effective in all respects in favour of any assignee, transferee or other successor in title of the Lenders in the same manner as if such assignee, transferee or other successor in title had been named in this Guarantee as a party instead of, or in addition to, the Lenders.

The Guarantor may not assign or transfer any of its rights or obligations under this Guarantee.

No failure or delay on the part of the Lenders to exercise any power, right or remedy under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise by the Lenders of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. The remedies provided in this Guarantee are cumulative and are not exclusive of any remedies provided by law.

The Guarantor agrees to be bound by this Guarantee notwithstanding that any other person intended to execute or to be bound by any other guarantee or assurance under or pursuant to the Agreement may not do so or may not be effectually bound and notwithstanding that such other guarantee or assurance may be determined or be or become invalid or unenforceable against any other person, whether or not the deficiency is known to the Lenders.

The Guarantor agrees to reimburse the Lenders on demand for all legal and other costs, charges and expenses on a full and unqualified indemnity basis, which may be incurred by the Lenders in relation to the enforcement on this Guarantee against the Guarantor.

The undertakings, warranties, declarations, rights and obligations of the Guarantor under this Guarantee are joint and several with any other guarantors under the Facility Agreement.

The tenure of this Guarantee shall be for the period from the date of execution until the Guaranteed Liabilities under the Facility Agreement are full discharged to the satisfaction of the Lenders.

This Guarantee shall be governed by the laws of Bangladesh and shall be under the non-exclusive jurisdiction of the courts of law of Bangladesh.

IN WITNESS WHEREOF THE PARTIES TO THIS GUARANTEE HAVE CAUSED THIS GUARANTEE TO BE DULY EXECUTED AS A DEED ON THE DATE FIRST ABOVE WRITTEN.

Signed, sealed and delivered byMr. ________________

____________________

in terms of Board Resolution dated _____________ in presence of the following persons:-

1.

2.

 For: X  FASHIONS LIMITED___________________________

Name:

Title:

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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