LEASE FACILITY AGREEMENT
This Lease Facility Agreement is made on the ______ day of ____________, 2008.
BETWEEN:
| THE LESSEE | : | COMPANY 1 ____________________________________________________________________________________
|
| THE AGENT | : | FINANCIAL COMPANY 1 ________________________________________________________________________ |
| THE LESSORS | : | ____________________________________________________________________________________ |
| : | ________________________________________________________________________________________________________________
____________________________ ____________________________ ____________________________ ____________________________ ____________________________ |
WHEREAS:
NOW THE PARTIES HERETO AGREE AS FOLLOWS:
OPERATIVE PROVISIONS:
1.DEFINITIONS
In this Agreement, the following expressions shall have (save where the context otherwise requires) the meanings respectively attributed to them:
‘ACQUISITION COST’ means the acquisition cost of the Leased Assets which shall be the aggregate amount of Facility under this Agreement, together with the financial expenses and other incidental expenses accrued on the sums paid by the Lessors as specified in Schedule-D hereunder and may be varied from time to time by the Amendment Agreement.
‘AMENDMENT AGREEMENT’ means such agreement(s) to be executed between the Lessors and Lessee from amendment of any of the terms herein, including the amendments to be made upon the Execution Date.
‘AVAILABILITY PERIOD’ means the period of _____(__________) months from the date of first drawdown under this Agreement. First drawdown under this Agreement shall be made within ____ (_____) months from the date of signing of this Agreement.
‘BANK BASIS’ means the basis calculated by using a multiplier consisting of the actual number of days elapsed divided by 360.
‘BUSINESS DAY’ means a day on which (i) banks, financial institutions are open for business in Dhaka, Bangladesh and (ii) dealings in Taka are carried on in the Dhaka interbank market.
‘CERTIFICATE OF LEASE EXECUTION’ means the certificate(s) issued by the Lessee forwarded to the Agent accepting the Leased Assets in accordance with Clause 15 of this Agreement.
‘CORPORATE GUARANTORS’ means (1) Baizid Steel Industries Limited of ______________________ and (2) Sylhet Steel Mills Limited of _________________________________ who shall issue corporate guarantee covering the Facility.
‘DELINQUENT CHARGES’ means the charges payable by the Lessee in the event of failure by the Lessee to make due payment of the Rentals as set forth in Schedule-F attached hereto.
‘DEPRECIATION ALLOWANCE’ means the depreciation deducted against the use of the Leased Assets. Depreciation Allowance shall be deducted proportionately by each Lessor in accordance to their respective participation in the Facility as shown in Schedule-A hereunder.
‘DRAWING NOTICE’ means a notice of drawing substantially in the form set out in Schedule E.
‘ENCUMBRANCE’ means any mortgage, charge, pledge, lien, assignment, hypothecation, title retention, right of set-off or any security interest whatsoever, howsoever created or arising and whether relating to existing or future assets.
‘EVENT OF DEFAULT’ means any of the events mentioned in Clause 10.
‘EXECUTION DATE’ means the date when the following requirements have been fully satisfied:
(i) The Leased Assets (in full) have been properly imported, installed and commissioned in accordance with requisite designs and specifications to the complete satisfaction of the Agent and other Lessors;
The Execution Date shall take place within __________ days from the date of retirement of the shipping documents in accordance with the L/C.
____________________________
‘EXISTING LENDER’ means _____________________________
‘FACILITY’ means the lease finance facility of an aggregate sum of BDT 160,000,000.00 (Taka one hundred sixty million) only will be utilised under the terms and conditions of which are set out in this Agreement.
‘FRONT BANKS’ mean one or more Lessor(s), as decided by the Agent, who will open the letter of credit to import the capital machinery for the Project and ‘FRONT BANK’ means any of them.
‘INITIAL STIPULATED LOSS VALUE’ means the Acquisition Cost, the Transfer Fee, Delinquent Charges accrued thereto (if any) and such other sum payable by the LESSEE to the LESSORS under this Agreement or the Finance Documents.
‘LEASED ASSETS’ means the plant, equipment and machinery, or any part thereof as described in Schedule-D.
‘LEASE DEPOSIT’ means the deposit of 1% of the Facility amount equivalent to BDT 1,600,000.00 (Taka one million six hundred thousand) only with regard to the Facility.
‘LEASE DOCUMENTS’ means all the agreements, deeds, instruments and documents executed between the Lessee and the Lessors or in favour of the Lessors/ in favour of the Agent for and on behalf of the Lessors, including the Security Documents, for effecting the Facility.
‘LEASE TERM’ means 66 months from the date of ______________________________________.
‘LETTER OF CREDIT or L/C’ means the letter of credit(s) to be opened by the Lessor under the Facility pursuant to the application of the Lessee for importing the Leased Asset.
‘RENTALS’ means the quarterly rentals payable by the Lessee in accordance to Clause 5.1 hereunder.
‘NOTICE OF FUNDING’ means a notice substantially in the form set out in Schedule B.
‘PROJECT’ means ________________________________.
‘SECURITY SHARING AGREEMENT’ means the Security Sharing Agreement dated as of this date amongst the Lessors, the Term Lenders, the Working Capital Lenders, the Existing Lenders and the Lessee with all modifications and amendments from time to time.
‘RENTAL PAYMENT DATES’ means the rental payment dates as stipulated in Clause 5.5.
‘SUPPLIER’ means _______________________________.
‘SCHEDULE or SCHEDULES’ shall mean any one or more Schedules as attached hereunder the contents of which may be amended from time to time under the Amendment Agreement as the Lessors deem fit.
‘SECURITY DOCUMENTATION’ or ‘SECURITY DOCUMENTS’ means the documents listed in Schedule C.
‘STIPULATED LOSS VALUE’ means Initial Stipulated Loss Value and the Stipulated Loss Value during each respective year which are payable in the amount specified in the Schedule D attached to this Agreement.
‘TAKA’ or ‘Tk.’ means Bangladesh Taka.
‘TAXES’ includes all present and future taxes, levies, imposts, deductions, charges, stamp duties and withholdings whatsoever, including all liabilities with respect thereto.
‘TERM LENDERS’ means __________________________________
‘TRANSFER COST’ means costs to be paid by the Lessee to acquire the Leased Assets upon payment of all liabilities under this Lease Facility Agreement. The costs shall be paid at the ratio mentioned in Clause 13 of the Agreement and subsequently to be distributed among the Lessors to the extent of their financing.
‘WORKING CAPITAL LENDERS’ means collectively __________________________________.
2. Facility
The participation of each of the Lessors to this Facility is detailed in Schedule-A hereunder.
3. Conditions precedent
3.1 The L/C will be opened by the Front Bank when the Agent has received in form and substance satisfactory to it the following documents upon fulfilment of the conditions stated below:
3.1.1 A copy of the Certificate of Incorporation and the latest copy of the Memorandum and Articles of Association of the Lessee duly certified to be a true copy by the Registrar of the Joint Stock Company;
3.1.2 Resolutions by the Board of Directors of the Lessee:
4. Opening L/C and Reimbursement
4.1.4 submission of the pro-forma invoice complete with all terms and conditions with the Agent within 15 (fifteen) days from the date of signing of this Facility Agreement;
the Lessee may serve on the Agent in writing a Drawing Notice, to be actually received by the Agent not later than 10.00 hours Dhaka time 7 (seven) Business Days before the proposed date of the drawdown and such drawdown to take effect not later than the last date of the Availability Period except Retention Money;
iv) The Lessee shall upon receipt of written notice from the Lessor for immediate repayment of the Facility and such other moneys pursuant to the foregoing, make full payment within _____ (____)Business Days from the date of the notice.
4.10 The Lease
4.10.1 That upon receipt of the Leased Asset the Lessee shall execute the Certificate of Lease Execution in accordance to the terms set forth hereunder.
5. Rentals
| Period when the Certificate of Lease Execution will be issued | Day of payment of the Rentals | |
| (a) | From 1st to 10th day of the month | 5th day of the month |
| (b) | From 11th to 20th day of the month | 15th day of the month |
| (c) | From 21st to the end of the month | 25th day of the month |
5.5 Revision of Rental Payments and Commission
5.5.1 Notwithstanding anything contained herein and in any other documents, the parties hereto have agreed that the computation of rental is based on an interest rate at ____% per annum
6. Service Fee, Depreciation Costs
7. Representations and warranties
8. Covenants
8.1 The Lessee covenants with the Lessors that, from the date hereof until all its liabilities under this Agreement have been discharged:
9. No set off/witholding of funds
9.1 All payments by the Lessee under this Agreement (whether in respect of principal, interest, fees or otherwise) shall be made in full, without any deduction or withholding (whether in respect of set-off, counterclaim, duties, taxes, charges, levies or otherwise) unless the Lessee shall be prohibited by law from so doing, in which event the Lessee shall:
10. Event of Default
10.1 If:
then or at any time thereafter, the Agent may, and upon the request of the Lessors shall, by notice to the Lessee, declare the Facility to be immediately due and payable whereupon:
10.2 If and whenever any Lessor is notified under this Agreement of the occurrence of an Event of Default, it shall promptly inform each of the other Lessors.
11. Lessee’s obligations upon termination
11.1 In the Event of Default the Lessee shall forthwith return the Leased Assets to the Lessors in accordance with the terms of Clause 13 and simultaneously shall pay to the Lessors the following:
11.2 In the event the Lessee performs the obligation of return of the Leased Assets, and the Agent sells the Leased Assets, the Agent may offset any remaining balance, determining by deducting all expenses relating to the sale of the Leased Assets from the proceeds of the sale of the Leased assets, against the amount of the foregoing Clause 11.1.
12. Damages
13. Return and Transfer of Leased Assets
14. Acquisition of Leased Assets
15. Acceptance of Leased Assets
16. Delay in Delivery and Defects in Leased Assets
17. Insurance
(a) the payment of either repairing or replacing the Leased Assets.
(b) the payment of the damages mentioned in the Clause 12 and/or the payment of any debts or obligations of the Lessee to the Lessor.
(c) the payment for compensating damages incurred to any third party due to the occurrence of the insured events.
18. Scope of the obligations of the Agent
18.1 The Lessors hereby authorises the Agent to act on their behalf in connection with this Agreement and authorises the Agent to exercise such rights, powers and discretions as are specifically delegated to it by the terms under this Agreement, together with all such rights, powers and discretions as are reasonably incidental thereto.
18.2 When acting in connection with this Agreement, the Agent shall:
18.3 When acting in connection with this Agreement, the Agent may:
18.3.1 assume that none of the Events of Default have occurred and that the Lessee is not in breach of or default of its obligations hereunder unless it has actual knowledge or received actual notice to the contrary;
18.5.5.1 for the execution, validity, enforceability or effectiveness of this Agreement or any document delivered pursuant thereto or connected therewith; or
18.6 Where the Agent, in complying with instructions received by it from the other Lessors, incurs any costs, claims, damages, expenses and liabilities (at actuals), including all such costs in respect of the issuance of the Certificate of Lease Execution, in connection with the preservation and/or enforcement of any of the rights of the Lessors under this Agreement, the Lessors shall reimburse the Agent all such costs, claims, damages, expenses and liabilities in the proportion to their participation of the Facility within three (3) business days of notification by the Agent.
18.7 The other Lessors agree that the Agent shall not be responsible for the accuracy and completeness of any representation made (whether orally or otherwise) herein or in connection herewith, or for the validity, effectiveness, adequacy or enforceability of this Agreement or for the creditworthiness of the Lessee. Neither the Agent, nor any of its directors, officers or employees shall be under any liability for or in respect of any action taken by it or them in relation to this Agreement save for their own gross negligence or wilful misconduct.
18.8 With respect to its own participation in the Facility, the Agent shall have the same rights and powers under this Agreement as any other Lessor and may exercise them.
19 Change of Agent
19.1 In the event that the Agent considers itself not in a position to continue as the Agent, it may notify the Lessee and the Lessors of the proposed termination of its agency. After giving of such notice the Agent and/or the Lessors may propose a successor as Agent. Upon the written acceptance (in such form as the Lessors may approve) by the successor of its appointment as Agent:
19.2 In any proceedings relating to this Agreement:
19.2.1 a statement as to any amount due to the Lessors under this Agreement which is certified as being correct by an officer of the Agent; and a statement as to any amount due to a Lessor under this Agreement, which is, certified as being correct by an officer of the Lessor;
19.2.2 shall, unless otherwise provided in this Agreement and save from manifest error be conclusive evidence that such amount is in fact due and payable.
20.1 Set-off
The Lessee authorises each Lessor to the fullest extent permitted by law to apply any credit balance to which the Lessee is entitled on any account of the Lessee with that Lessor in satisfaction of any sum due and payable from the Lessee hereunder but unpaid. No Lessor shall be obliged to exercise any right given to it by this Clause.
20.2 Lessor’s contributions
20.2.1 Any Lessor which receives or recovers any amount (other than from the Agent) in respect of sums due from the Lessee under this Agreement (whether by set-off or otherwise) (a ‘Recovering Lessor’) shall promptly notify the Agent of such receipt or recovery and the amount thereof.. The Agent shall, as soon as practicable thereafter, ascertain from the Lessors the aggregate sums received or recovered by the Lessors (whether by the exercise of any right of set-off or otherwise) and what payments are required to be effected for such aggregate to be divided amongst the Lessors in proportion to their participation.
20.2.2 The Lessors shall promptly make such payments to each other, through the Agent, as the Agent shall direct to effect the proportionate division referred to above.
20.3 Invalidity of any provision
If any of the provisions of this Agreement becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.
20.4 Waivers
Time shall be the essence in this Agreement, but no failure to exercise nor any delay in exercising on the part of any Party hereto any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise thereof or the exercise of any other right or remedy. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law.
20.5 Cost Overrun and Arrangement of Further Facility
The Agent and the Co-Lessors shall have no obligation for arranging or providing any Facility exceeding the limit mentioned in Schedule-A. In case of any cost overrun the Lessee shall be obliged to provide the additional funds necessary for the importation, installation and commissioning of the Leased Assets failing which the Lessee shall be responsible towards the Lessors for any lost, costs or damage sustained due to its failure to arrange the funds and provide the Certificate of Lease Execution.
21. Notices
21.1 each communication to be made hereunder shall be in writing but, unless otherwise stated, may be made by facsimile or letter.
21.2 Any communication or document to be made or delivered pursuant to this Agreement shall be made or delivered to each party at the address or facsimile number identified with its signature below and shall be deemed to have been made or delivered when such communication or document has been dispatched (in the case of any communication made by facsimile) or (in the case of any communication made by letter) when left at that address or, as the case may be, seven days after being deposited in the post first class postage prepaid in an envelope addressed to it at that address, provided that any communication or document to be made or delivered to the Agent shall be effective only when received by the Agent at the address to which it is to be sent.
22. Entire Agreement
23. Assignment and transfers
23.1 Any Lessor may at any time and at its own costs assign or transfer all or any of its rights and benefits hereunder with the prior written approval of all the other Lessors.
24. Counterparts
There shall be one original copy of this Agreement and other Security Documents which shall be retained by the Agent for the benefit of the Lessors . Each Lessor and the Lessee shall be provided with a photocopy of the entire Security Documents duly certified to be true copy by an authorised officer of the Agent.
IN WITNESS WHEREOF, THE PARTIES HAVE CAUSED THIS AGREEMENT TO BE EXECUTED BY THEIR DULY AUTHORIZED REPRESENTATIVES AS OF THE DAY AND YEAR FIRST WRITTEN ABOVE.
| THE LESSOR | COMPANY 1 By___________________________Name:Title:
Address: Telephone No.: Fax No.: |
| WITNESS : | By__________________________Name:Title:Address:
|
| THE AGENT | FINANCIAL COMPANY 1 By___________________________Name:Title:
Address: Telephone No.: Fax No.: |
| WITNESS : | By__________________________Name:Title:Address:
|
| THE LESSOR | By___________________________Name:Title:
Address: Telephone No.: Fax No.: |
| WITNESS : | By__________________________Name:Title:Address:
|
| By___________________________Name:Title:
Address: Telephone No.: Fax No.: |
|
| WITNESS : | By__________________________Name:Title:Address:
|
SCHEDULE A
FUNDING PARTICIPATION OF LESSORS
| Participating Lessors | Funding Participation | Total Funding Participation in Tk. |
| Total |
SCHEDULE B
NOTICE FOR FUNDING
To:
FINANCIAL COMPANY 1
_______________________
_______________________
_______________________
Dear Sirs,
We refer to the Facility constituted by a Lease Facility Agreement (the ‘Facility Agreement’) dated _____________ and made between (1) COMPANY 1 (the ‘Lessee’), (2) FINANCIAL COMPANY 1 [the ‘Agent’], (3) FINANCIAL COMPANY 1 (4) _____________________ (Party Nos. 3-4 are hereinafter collectively referred to as “the Lessors”). Terms defined in the Lease Facility Agreement have the same meanings herein.
Please be informed that we have notice from ____________________ for retirement of shipping documents and payment of Tk. _______________________ (Taka ________________) only under Letter of Credit No. ________________________ dated ______________________________ opened by us under the Facility.
We hereby request you to pay a sum of Tk. _______________________ (Taka ____________________) only in accordance to the proportion of your participation under the Facility on _______________ not later than 10.00 a.m. in immediately available, freely transferable, cleared funds to FINANCIAL COMPANY 1 , ___________________________________________.
__________________
Agent
SCHEDULE C
SECURITY DOCUMENTATION
| Sl. | Security | Instrument |
| 1. | Lease Deposit : | Deposition of 1% of the Facility amount with the Agent in accordance to Clause _____ of the Lease Facility Agreement. |
| 2. | Legal mortgages on land measuring _____________ in the name of _____________ along with an irrevocable general power of attorney to sell the said land. | |
| 3. | A first priority floating charge over all current assets including but not limited to stocks, book debts, receivables, insurance, contracts and all accounts of the Lessee in favour of the Lessors on pari passu basis | |
| 4. | Corporate Guarantee | Corporate Guarantee executed by the following companies in favour of the Lessors guaranteeing the liabilities and obligations of the Lessee under the Lease Facility Agreement till adjustment of the liability: |
| 5. | Personal Guarantee by the Directors of the Lessee undertaking repayment of the debt obligation of the Lessee | Personal guarantees to be executed by the following persons in favour of the Lessors: |
| 6 | Sharing of Security by the Lessors, the Term Lenders,the Working Capital Lenders and the Existing Lender. | A Security Sharing Agreement to be executed between the Lessors, the Term Lenders, the Working Capital Lenders and the Existing Lender. |
| 7. | Such other security documents to be executed by the Lessee in favour of the Lessors | Promissory Note along with Letter of Continuity etc. |
SCHEDULE-D
TERMS AND CONDITIONS OF THE LEASE
1. LEASE ASSET :
| Name of Machinery | Description | Imported/Local | Amount in Tk. |
| 2. | ACQUISITION COST | : | Taka ____________________ | ||
| 3. | SUPPLIER | : | |||
| 4. | INSTALLATION PLACE | : | |||
| 5. | LEASE TERM | : | 66 months from the date of ________________ | ||
| 6. | RENTAL | : | |||
| 7. | LEGAL FEES & OTHER EXPENSES | : | Includes all reasonable expenses incurred by the Agent in connection with the arrangement of this Facility and any legal expenses incurred in connection with the due diligence, negotiation, syndication and documentation of the Facility. Enforcement costs, if any, will be recoverable at actual. In the event that the Facility is not signed, legal fees and other expenses will be reimbursed to the Arranger against evidence of expenditure. | ||
| 8. | STIPULATED LOSS VALUE | : | |||
| 1st Year | |||||
| 2nd year | |||||
| 3rd year | |||||
| 4th year | |||||
| 9. | Special Covenants: |
SCHEDULE-E
DRAWING NOTICE
To
FINANCIAL COMPANY 1
_________________
__________________
BDT ……………………
Lease Facility Agreement dated ________________ 200____
We refer to the Facility constituted by a Lease Facility Agreement (the ‘Lease Facility Agreement’) dated _________ and made between COMPANY 1 (the ‘Lessee’), the Agent and the Lessors named therein. Terms defined in the Lease Facility Agreement have the same meanings herein.
Please be informed that we have notice from ____________________ for retirement of shipping documents and payment of Tk. _______________________ (Taka ________________) only under Letter of Credit No. ________________________ dated _____________.
We hereby:
(i) give you notice that we wish to draw an amount of BDT [amount] on ………….. 200 …….;
(ii) request you to pay the amount to [name and address of bank to which remittance is to be made and account number]; and
(iii) confirm that as at today’s date each of the conditions contained in Clause 2 is satisfied and we know of no reason why they should not be satisfied as at the date referred to in (i) above.
COMPANY 1
By …………………………………
SCHEDULE F– AUTHORISATION TO
FRONT BANK FOR SERVING L/C DRAWING NOTICE
To:
________(Front Banks)____
______________________
Lease Facility Agreement dated ________________
We refer to the Facility constituted by a Lease Facility Agreement (the ‘Facility Agreement’) dated __________________ and made between COMPANY 1 (the ‘Lessee’) and theAgent and Lessors named therein. Terms defined in the Lease Facility Agreement have the same meanings herein.
We, the Lessee do hereby irrevocably and unconditionally authorise you in accordance to Clause 4.3 of the Lease Facility Agreement, as Front Bank in the transaction to serve the L/C Drawing Notice to the Agent for drawdown on the Facility for payment against the letter of credit (s) opened under the Letter of Credit Facility.
By …………………………………
COMPANY 1
Drafted by:
For: “The Lawyers & Jurists”
M.L.Hotel Tower Ltd,208,Shahid Syed Nazrul Islam Sarani,
Bijoy Nagar, Dhaka-1000.
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