Dated: September 17, 2007
Senior Asstt. Vice President
Loan Administration & Monitoring Dept.
46 Kawran Bazar C.A.
Dhaka – 1215
Re: Opinion of General Letter of Hypothecation & Packing Trust Receipt.
We refer to your letter __________________ dated 10 September, 2007 received by us on 15 September, 2007 on the above subject.
We have perused the contents of you letter and Packing Credit Trust Receipt and the General Letter of Hypothecation. Our comments on the same are given below:
Our Comments on the Packing Credit Trust Receipt:
The Packing Credit Trust Receipt along with the corrections made to it vide your letter are in order.
Our Comments on the General Letter f Hypothecation:
In the General Letter of Hypothecation, the maximum facility amount be granted to the borrower is not mentioned. As such, the amount secured by hypothecation is not definite. Please note that at the time of filing the Letter of Hypothecation with the Register of Joint Stock Companies and Firms (“RJSC”) the particulars of the Letter of Hypothecation including the amount secured by hypothecation has to be specified. Therefore suggest you to delete the first paragraph and Clause 1 of the General Letter of Hypothecation and replace it with the following:
“In consideration of you granting us various credit facilities, including but not limited to allowing us to open and/or continue our account with you, allowing us to overdraw the permitted amount from such account or allowing our overdrawn account to remain overdrawn, of an aggregate amount of Tk. ________________ (Taka ________________) only (“the Loan”) on the terms and conditions as contained in the Sanction Letter No. ______________/Loan Agreement dated ___________ and any addition to or modification thereof (“the Sanction Letter”); we agree as follows:
1. We do hereby hypothecate to you by way of first priority floating charge with full title guarantee of all our fixed and floating assets including but not limited to book debts, receivables, plant, machinery, equipment, merchandise, work-in-progress, finished goods, stocks, stores etc. both present and future, belonging to and/or accrued from us (hereinafter called the “Securities”) to secure as a continuing security until the full and final repayment of the Loan on the terms and conditions in the Sanction Letter and all reasonable legal and other costs, charges and expenses incidental to this security and to the enforcement thereof (hereinafter called the “Secured Liabilities”) and this security shall be kept in deposit with you and the same may be enforceable by you in an event of default by us under the Sanction Letter.
2. That if we fail to make any payment due under the Sanction Letter to you in the manner stipulated therein or any other payment due to you or we default in the due performance of any undertaking or any other obligation under the Sanction Letter, the floating charge created hereby shall be crystallised and you may, without any authority from us or any other person, sell, assign or otherwise dispose the Securities, in such manner and generally on such terms and conditions and for such consideration (whether payable or deliverable immediately or by installments) as you in your absolute discretion thinks fit without being under any responsibility to us for the price obtained thereby.
3. That you shall have the right to apply the proceeds of any disposal of the Security in or towards the discharge of our liability whether or not then due and payable and in such order as you may from time to time conclusively determine. If such proceeds are insufficient for such purpose, we hereby undertake immediately to make good such deficiency.
4. We further agree and undertake as follows: –
(1) that the Securities are our exclusive and absolute property in which no one else has any material claim, concern, right or interest of whatever nature, as far as possible we shall ensure the same shall continue to be free from any defect of title;
(2) that the Securities are free from encumbrances and charges and during the continuance of this Letter of Hypothecation we shall not create any charge or encumbrance over or allow any material lien to arise or affect the Securities;
(3) we have legal right, full power and absolute authority to hypothecate the Securities and, we have not concealed any material fact from you;
(5) we shall during the continuance of this security pay all rates, taxes, cesses, assessments and such other impositions and/or liabilities of whatsoever nature levied by the tax and/or other governmental agencies/authorities as are or may be payable in respect of the Securities or any part thereof and shall keep you fully indemnified at all times against any and all actions, proceedings, claims, demands, damages, penalties, costs, charges and expenses arising there from;
(6) we shall keep and hold you secured, harmless and indemnified against all losses and damages suffered or sustained by you as a result of any defect in our title or any claim or demand preferred by anyone with respect to the Securities or any part thereof arising from such a defect in title;”
Please re-number the remaining clauses accordingly.
Please delete Clause 2 and replace it with the following:
“5. We shall hold the Securities as a continuing security for the repayment or discharge on demand of advances made or which may be made to us or any one or more of us whether alone or jointly under the Sanction Letter and also for any other liability on our part to you incurred or which may be incurred on any account whatsoever, including any amount owed as principal debtor, surety or guarantor together with interest and customary charges thereon.”
In the third line of Clause 4, please delete “Clause 2” and replace it with “Clause 5”
In the last line of Clause 7, please delete “Clause 2” and replace it with “Clause 5”
In the third line of Clause 11, please delete “Clause 2” and replace it with “Clause 5”
Apart from our above observations, the General Letter of Hypothecation is in order. Apart from your first thee corrections, the corrections made to the General Letter of Hypothecation vide your letter are in order.
If you have any further query, please do not hesitate to contact the undersigned.
The Lawyers & Jurists
M.L.Hotel Tower Ltd, 208, Shahid Syed Nazrul Islam Sarani,
Bijoy Nagar, Dhaka-1000.