AGREEMENT TO PLEDGE MOVABLE PROPERTIES TO SECURE ADVANCE
THIS AGREEMENT made this __________ day of _____ 20 ___ between ___________________________ (hereinafter called “the Borrowers” (which term shall include their heirs, executors, administrators and assigns) of the ONE PART.
______________________ Bank, a body corporate constituted under the Act and having its Head Office at ______________ and a Branch Office inter alia at _____________ hereinafter called “the Bank”) (which expression shall unless excluded by or repugnant to the context be deemed to include its successors and assigns) of the OTHER PART.
The Bank having at the request of the Borrowers opined or agreed to open in the books of the Bank at ________ branch in ______ a Cash Credit Account to the extent of Rs. ______ (Rupees_________ ) only in the name of the Borrowers to remain in full force until closed by the Bank to be secured by goods to be pledged with the Bank and upon the terms and conditions hereinafter appearing.
IT IS HEREBY AGREED BY AND BETWEEN and the Bank and the Borrowers as follows:
1. That the Borrowers will pledge and hypothecate the goods and employ as fully described in the Schedule hereto from time to time belonging to or coming into the possession or under the control of the Borrowers (hereinafter referred to as “the said Goods” whether delivered to the Bank as aforesaid for the purpose of additional security for any sum already drawn or for additional security for any sum or sums to be drawn against the cash credit account.
2. The said goods which may from time to time have been delivered or may be delivered to the Bank under this agreement or otherwise shall form security for the payment by the Borrowers against the said each credit account and for the payment of all debts and liabilities agreed hereunder, which sum shall include the principal money, the interest thereon and the amount of all other costs, charges and expenses which may be incurred, sustained or paid by the bank or by its agents in connection with safeguarding the security created or to be created by the pledge of the said goods against fire, burglary, riot and civil commotion risk paid on borne by the Bank.
3. That the said goods as coming into the possession of the Borrowers from time to time shall be delivered to the Bank or to its agents by way of pledge and shall be stored or kept in godown or godown belonging to or rented by the Bank or the Borrowers as may be approved by the Bank from time to time and the Borrowers shall pay necessary rents for storage and all other expenses incidental thereto.
4. The said goods stored in the godown or godowns shall continue to remain pledged with the Bank and the borrowers will keep the same and its contents free from attachment. In case the godown or godowns where the said goods are stored or kept shall have no direct or independent access from any public road or if access thereto can be had only through any other building or passage in the possession or control of the Borrowers or of a third part, the Bank shall not be responsible for any loss or damage whatsoever to the said goods stores in the godown or godowns or any portion thereof due to or arising from any cause or causes or reason whatsoever including theft, larceny, house-breaking, misappropriation, negligence, conspiracy by any person or persons whomsoever including the Bank’s employees and any such loss or damage shall be borne entirely by the Borrowers.
5. That the amount due to the Bank for the time being shall immediately become payable on demand against release of such godown or godowns and there will be no obligation on the part of the Bank to deliver the said goods lying in such godown or godowns to the Borrowers.
6. That the Borrowers shall not during the continuance of this agreement pledge or otherwise charge or encumber, dispose of or deal with any of the said goods for the time being offered as security nor shall do or permit any act whereby such security shall be in any way prejudicially affected.
7. That the said goods stored in the said godown or godowns shall be deemed to be in the possession of the Bank who have all the rights conferred by law as a Pawnee with the absolute and exclusive power of possession custody and control over the said goods including (inter alia) the following powers:
i. to affix to all premises in which the said goods shall be stored a notice or notices for public knowledge showing bank interest in the said goods:
ii. to appoint guards or watchmen at the cost of the Borrowers for security of the said goods stored therein;
iii. to maintain custody and control of the said goods by putting its own lock or padlocks to the godown doors by the Bank retaining the key or keys under its custody;
iv. to issue delivery orders authorising removal of the said goods or any part thereof from the said premises by the Borrowers for the purpose of manufacture, sale, or supply thereof in the due course of the business of the Borrowers subject to the conditions and stipulations governing such removal.
8. That the Borrowers agree to bear the necessary costs and expenses that may be incurred by the Bank to maintain godown-keepers and/or chowkidars for the said godown/godowns and taking out appropriate Insurance policy covering risks of burglary, fire and any other risks that are necessary for the safety, security and preservation of the said goods.
9. That the Bank shall have unfettered discretion though not bound to do so, to appoint godown-keeper or chowkidars for the godown or godowns charged or pledged or to take out fire insurance on the goods stored in such godown or godowns and to debit all such expenses including premium of such insurance in the account of the Borrowers. PROVIDED HOWEVER, that where special type of insurance is considered necessary by the Bank to cover any risk, loss or damage, fire, burglary, riot, civil commotion, and war risks, such policy of insurance shall be taken out in the joint name of the Bank and the Borowers covering the full extent of the value of the said goods and from time to time the premium therefor shall be paid by the Borrowers. In case it shall at any time be required to vary the amount of insurance effected, unless it is fully covered by the Borrowers in respect of the limit or margin against the cash credit account, the bank shall take out that additional insurance and the benefit of such insurance/insurances and/or right/power/privilege therein shall belong to the bank without prejudice to any other rights, powers and privileges which the bank is entitled to by virtue of this agreement and the bank shall not be accountable to the Borrowers for any money which it may receive under such policy or policies.
10. That all sums received under such insurance policy as aforesaid shall be applied in or towards the liquidation of the balance due to the bank for the time being and in the event of there being a surplus as provided hereinafter in clause No.9 the same shall be credited to Cash Credit A/c or any other A/c of the Borrowers maintained by the Bank.
11. That the Borrowers shall make and furnish to the bank such statements and returns of the cost and market value of the said goods and a full description thereof and produce such evidence in support thereof as the Bank may from time to time require and shall maintain with the Bank a margin or _______ per cent or such margin as may from time to time be fixed, on the invoice/market value of the said goods whichever be lower or in relation to any ceiling for the value of the said goods that may be fixed by the Bank from time to time in its discretion. The stipulated margin shall be maintained by the Borrowers either by the delivery of further security to be approved by the Bank or by cash payment by the Borrowers immediately on market value for the time being of the securities becoming less than the aggregate of the balance due to the Bank, plus the amount of the margin as calculated above.
12. That the Borrowers shall be responsible for the correctness of the statements and returns furnished by them to the bank from time to time as required in the foregoing clause and the Borrowers do hereby assure and undertake that all the information regarding the quantity, quality etc and other description of the goods pledged with the Bank as given in the said statements/returns are or would be correct and the bank has advanced and agreed to advance money under the above account on such representation.
13. In case any of such statements, returns or representations are found to contain any mistake ( of which fact the Bank shall be the sole judge) the Bank shall be entitled to revoke this agreement and dispose of the said goods, without any notice to the Borrowers.
14. The Bank shall be entitled to inspect the Borrower’s books or documents for the purpose of verification of the quantity, quality and valuation of or dealing with the securities, pledged by the Borrowers with the Bank and the Borrowers do hereby declare and agree that for the purpose of such verification of the statements, returns or representations, furnished by the Borrowers the Bank shall be at liberty at any time in its discretion to get the goods weighed, counted and/or appraised by any authorised officer of the Bank or any other person duly appointed for the purpose, at the expenses of the Borrowers and the Borrowers agreed to accept as conclusive proof of the result of such verification as certified by the said officer or agents of the Bank.
15. If upon such verification the goods pledged are found to be inferior in quality or value that are given or shown by the Borrowers in their statements or returns, the Borrower undertake to make such deficiency and reimburse the Bank any of loss, damage or expense incurred by the Bank on that account.
16. That if the Borrowers fail or become unable to repay to the Bank on demand the balance then due to the Bank or in the event of the Borrowers become or being adjudicated bankrupt or insolvent or executing any Deed of Arrangement or Compromise with creditor or in the event of any execution being left or enforced upon or against any of the properties of the Borrowers where the said property shall or shall not be subject to the security or in the event of any person, firm or company taking steps towards applying for or obtaining an order for the appointment of a Receiver of the Borrowers’ property or any part thereof or if any person, firm or company shall apply for or obtain an order for the winding up of the Borrowers or if any such order is made or any steps to be taken by any person, firm or company, it shall be lawful for the bank forthwith or at any time thereafter and/or without any notice to the Borrowers (without prejudice to the Bank’s rights of suit against the Borrowers) either by public auction or private contract absolutely to sell or otherwise dispose of all or any of the said goods either together with or in lots or separately and to apply the net proceeds of such sale in or towards the liquidation of balance then due to the Bank.
17. That the Borrowers shall at all times indemnify and keep indemnified the bank against all suits, proceedings, costs, charges, claims and demands whatsoever that may at any time arise or be brought or made by any person against the bank in respect of anything and any matter lawfully done or cause by the Bank in connection with the said goods and in pursuance of the rights and powers of the Bank under these presents.
18. That during the continuance of the agreement the Borrowers shall be responsible for all losses, damages, depreciations or deteriorations resulting from the said goods or any part thereof having been acquired or requisitioned by the Government under any act or statute and/or as a result of the civil disturbances, uprisings, insurrection and occupation by the military or by a foreign Government. The Bank shall in no way be responsible for loss or damage to the said goods or any part thereof in the circumstances mentioned above nor shall it be its responsibility to make any application or to take any legal proceedings or to do anything else to get reimbursement from the authorities concerned for the value of the goods so acquired or requisitioned or for compensation for any loss or damage to the said goods, for which the entire responsibility shall vest in the Borrowers.
19. That the Bank shall be entitled without prior reference to and approval of the Borrowers to adjust, settle, compromise or refer to arbitration any dispute with the Insurance Company or Companies arising under or in connection with failure or failures of insurance and such adjustment, settlement, compromise or award made on such reference shall be binding on the Borrowers and the Borrowers shall neither raise any objection nor be entitled to dispute the liability incurred or the sums expected or received by the Bank upon such settlement, promise or award or that remaining due after proper crediting of its adjustment in the said sums so received upon adjustment, settlement, compromise or award.
20. That if the next sum realised by such adjustment, settlement, promise or award or by sale of the said goods on happening of any of the incidents as enumerated in paragraph 18 hereinabove, be insufficient to cover the balance then due to the Bank, the Bank shall be at liberty to apply any other monies in the hands of the Bank standing to the credit of or belonging to the Borrowers towards payment of the balance for the time being to the Bank and in the event there not being any such monies or moneys as aforesaid in the hands of the Bank and in the event of such money being still insufficient for the discharge in full of such balance, then and in such event the Borrowers promise and agree forthwith on production to them of an account to be prepared and signed by the officer of the Bank or any other person duly authorised for the purpose, to pay any further balance which may appear to be due from the Borrowers thereon.
21. That in the event of there being surplus available of the net proceeds of such sale after payment in full of the balance due to the Bank in the cash credit account it shall be lawful for the bank to retain and apply the said surplus money together with any other money or moneys belonging to the Borrowers for the time being in the hands of the Bank in or under whatever account as far as the same shall extend against in or towards payment or liquidation of any or all other money which shall be or may become due from the Borrowers to the bank by way of Loans, Discounted Bills, Letters of Credit, Guarantees, Charges or of any other debt or liability including Bills, Notes, Credits and other obligations current though not then due or payable or other demands legal or equitable which the Bank may have against the Borrowers or which the law would in any case admit and whether the Borrowers shall become or be adjudicated bankrupt or insolvent or be in liquidation or otherwise and interest thereon from the date on which any or all advance or advances in respect thereof shall have been made at the rate or respective rates at which the same shall have been so advanced.
22. The interest at the rate of _______ over RBI rate with a minimum of ___ % per annum with quarterly rests shall be calculated and charged on the daily balance in the Bank’s favour due upon the said Cash Credit Loan Account until the same is fully liquidated and shall be paid by the Borrowers as and when demanded by the Bank. PROVIDED that the liability to pay interest on the balance of the Cash Credit Account shall not cease notwithstanding:
i. that the said goods have been destroyed or damaged by fire, burglary, riot or civil commotion and that in consequence of such destruction or damage either the Borrowers or the Bank have become entitled to receive payment from any insurance company or companies in respect of such loss or damage, or
ii. that the said good or any part thereof has or have been acquired or requisitioned by the Government under any order or statute.
23. That the Bank shall always have the rights to stop making any further advances in the account at any time without any previous notice and without assigning any reason thereof even though the account is not drawn to the full extent of the limit provided for by this agreement, AND on demand by the Bank the Borrowers shall pay to the Bank the balance then due to the Bank on the said Cash Credit Account together with all interests, charges and expenses as being accrued or become due and payable by the Borrowers to the Bank.
24. That in the event of the accommodation granted shall not be availed of to the minimum extent of Rs ______ (Rupees_____ ) interest shall be charged to and become payable by the said Borrowers at the rate and in the manner aforesaid on the minimum sum of Rs _______ during the continuance of the said Cash Credit Account whether the same is in debit or not.
25. That the Borrowers hereby agree and undertake to comply with all the provisions of the various control, licensing and procurement orders already promulgated or that may be promulgated hereinafter by the Government and shall see that the Bank’s interests are not in any way affected or prejudiced by violating or infringing the provisions thereof.
26. That the Borrowers agree to accept as conclusive proof of the correctness of any sum claimed to be due from them to the Bank under this agreement a statement of account made out from the books of the bank and signed by the manager or other duly authorised officer of the bank without the production of any voucher, document or paper whatsoever.
27. That the Borrowers hereby declare that all the goods which may be pledged with the bank from time to time shall be absolute property of the Borrowers and at their sole disposal free from any prior charge or encumbrance and that the borrowers shall not have knowingly suffered or being party or privy to anything whereby they are in any way prevented from dealing with the goods in manner aforesaid.
28. That this agreement is to operate as security for the balance from time to time due to the Bank and also for the ultimate balance to become due on the said Cash Credit Account and the said account is not to be considered to be closed for the purpose of this security and the security is not to be considered exhausted by reason of the said Cash Credit Account being brought to credit at any time or from time to time or of its being drawn upon to the full extent of the said sum of Rs _____.
29. That the Borrowers shall be entitled to and make half yearly charges on any account to cover incidental expenses in connection therewith and the amount of such charge shall be determined by the manager of the bank in his absolute discretion and the same shall depend upon the operation and turnover of the account.
30. That this agreement is not to prejudice the right of remedies of the bank against the Borrowers irrespective and independent of the agreement in respect of any other advance made or to be made by the Bank to the Borrowers.
31. That the security hereby given shall not be prejudiced by any collateral or other security including any personal guarantee for any money hereby secured or by any release, exchange or variation of any such security.
32. That any demand hereunder may effectually be made by notice to the Borrowers by an officer of the Bank either served personally on the Borrower or left or sent by post to the Borrowers at the Borrower’s usual or last known address.
SCHEDULE OF SECURITIES ABOVE REFERRED TO:
IN WITNESS WHEREOF, etc.
PLEDGE OF SHARE OF STOCK
BE IT KNOWN for value received, the undersigned _____________ (Pledgor) of ____________ hereby deposits, delivers to and pledges with _______ (Pledgee) of __________ as collateral security to secure the payment of the following described debt owning to Pledgor: The share of stock, described as __________ shares of stock of _______ (Corporation) represented as Stock Certificates No. ________ It is further agreed:
1. Pledgee may assign or transfer said debt and the collateral pledged hereunder to any third party.
2. In the event a stock dividend or further issue of stock in the Corporation is issued to the Pledgor, the Pledgor shall pledge said shares as additional collateral for the debt.
3. That during the term of this pledge agreement, and so long as it is not in default, the Pledgor shall have full rights to vote said shares and be entitled to all dividends income, except that stock dividends shall also be pledged.
4. That during the pendency of this agreement, the Pledgor shall not issue any proxy or assignment of rights to the pledged shares.
5. The Pledgor warrants and represents it has good title to the shares being pledged, they are free from liens and encumbrances or prior pledge, and the Pledgor has full authority to transfer said shares as collateral security.
6. Upon default of payment of the debt, or breach of this pledge agreement, the Pledgee or holder shall have full rights to foreclose on the pledged shares, and said rights being cumulative with any other rights the Pledgee or holder may have against the Pledgor.
7. The Pledgor understands that upon foreclosure the pledged shares may be sold at public auction or public sale. The Pledgor shall be provided reasonable notice of any said intended sale and the Pledgor shall have full rights to redeem said shares at any time prior to said sale upon payment of the balance due hereunder, and accrued costs of collection. In the event the shares shall be sold for less than the amount then owing, the Pledgor shall be liable for any deficiency.
8. Upon payment of the obligation for which the shares are pledged, the shares shall be returned to the Pledgor and this pledge agreement shall be terminated.
9. This pledge agreement shall be binding upon and inure to the benefit of the parties, their successors, assigns and personal representatives.
10. Upon default the Pledgor shall pay all reasonable attorneys’ fees and cost of collections. Signed this _________ day of _____ 20____.