Pledge Agreement for extension of Credit Facilities

 

THIS PLEDGE AGREEMENT, dated as of _______ 20_______, is by and between

__________________________________Co. (the “Pledgor”), and

______________________________________ (the “Secured Party”).

RECITALS

1. Pledgor has requested extensions of credit from the Secured Party pursuant to the terms of that certain Loan Agreement dated as of even date herewith (the Loan Agreement as it may be amended, modified, supplemented, increased or restated from time to time being referred to herein as the “Loan Agreement”) between Pledgor and the Secured Party.
2. As a condition to extensions of credit to the Pledgor, the Secured Party requires that Pledgor enter into this Agreement.
3. Pledgor has determined that the execution, delivery and performance of this Agreement is in Pledgor’s best business and pecuniary interest.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, it is agreed as follows :

1. Definitions:- If used herein, the following terms shall have the meanings set forth in this Section:

“Collateral” shall mean all property in which a security interest is granted hereunder.

“Loan Agreement” shall have the meaning provided in the recitals hereto.

“Obligations” shall mean all loans (including the Loan(s)), ad- vances, debts, liabilities, obligations, covenants and duties owing by the Pledgor to the Secured Party of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, whether arising under the Loan Agreement, the other Loan Documents or under any other agreement or by operation of law, whether or not for the payment of money, whether arising by reason of an extension of credit, opening, guaranteeing or confirming of a letter of credit, guarantee, indemnification or in any other manner, whether joint, several or joint and several, direct or indirect (including those acquired by assignment or purchases), absolute or contingent, due or to become due, and however acquired. The term includes, but is not limited to, all principal, interest, fees, charges, expenses, reasonable attorneys’ fees, and any other sum chargeable to the Pledgor under the Loan Agree- ment or any other Loan Document.

“Pledged Notes” shall have the meaning provided in Clause 2. “Pledged Shares” shall have the meaning provided in Clause 2. “Pledgor” shall have the meaning set forth in the preamble hereto.

 Proceeds” shall mean whatever is received upon the sale,

exchange, collection or other disposition of Collateral or Proceeds.

“Secured Party” shall have the meaning set forth in the preamble hereto.

Other terms defined herein shall have the meanings ascribed to them herein. All capitalised terms used herein and not specifically defined herein shall have the meanings ascribed to them in the Loan Agreement.

2. Pledge:- To secure payment of the Obligations, Pledgor hereby pledges to the Secured Party and grants to the Secured Party a security interest in the following described property:

The promissory notes, bonds, debentures, and other instruments listed in Exhibit “A” hereto (herein collectively called the “Pledged Notes”) and all cash, securities, interest, principal and other property at any time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Notes together with all security therefor and guaranties thereof;

All other property hereafter delivered to the Secured Party in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all thereof, and all Proceeds of each of the foregoing.

3. Representations and Warranties:- Pledgor represents and war- rants that:

• The Pledged Shares have been duly authorised and validly issued and are fully paid and non-assessable. The outstanding principal balance of each Pledged Note is accurately stated on Exhibit “A” attached hereto. All documentary, stamp or other taxes or fees owing in connection with the issuance, transfer and/or pledge of the Collateral have been paid and will hereafter be paid by Pledgor as such become due and payable;
• Pledgor is, or at the time of any future delivery, pledge, assignment or transfer will be, the legal and beneficial owner of all of the Collateral with full right to deliver, pledge, assign and transfer the Collateral to the Secured Party as Collateral hereunder free of any pledge, mortgage, hypothecation, lien, charge, encumbrance or security interest in such shares or the proceeds thereof except for that granted hereunder;
• Upon delivery of the Collateral to the Secured Party or upon other perfection of the Secured Party’s security interest in the Collateral pursuant to applicable law, this Agreement shall create a valid first lien upon and a perfected security interest in the Collateral and the proceeds thereof, subject to no prior security interest, lien, charge or encumbrance or agreement purporting to grant a security interest in the Collateral or any part thereof.

4. Covenants:- Pledgor hereby agrees as follows:

• Except as otherwise provided in this Agreement, Pledgor shall accept the following as the Secured Party’s agent, in trust for the Secured Party, and shall deliver such forthwith (but in no event later than 21 days after Pledgor acquires any stock or trust certificates or other instrument repre- senting or evidencing any of the Collateral) to the Secured Party in the exact form received with, as applicable, such party’s endorsement when neces- sary, or appropriate stock powers duly executed in blank, to be held by the Secured Party, subject to the terms hereof, as part of the Collateral:

1. Stock and trust certificates representing the Collateral or notes, bonds, debentures, or other instruments constituting Collateral;
2. Options, warrants, or rights, whether as an addition to or in substitution or in exchange for any of the Collateral, or otherwise;
3. Principal and interest payments, dividends or distributions relating to the Collateral payable or paid in property, including securities issued by a person other than the issuer of any of the Collateral; and
4. Principalandinterestpayments,dividendsordistributionsrelating to the Collateral payable or paid in cash, except as provided in sub- sections 4(b) or (k) below. ?

Pending such delivery, all of the Collateral not delivered to the Secured Party on the date hereof shall be held in trust for the Secured Party, separate and distinct from any other property of Pledgor and free of all liens and claims whatsoever other than the security interest of the Secured Party created hereunder.

• The Secured Party or its nominee, regardless of whether the Pledged Shares shall have been registered in the name of the Secured Party or its nominee or whether a Default or Event of Default has occurred and is continuing, shall have the right to exercise all rights pertaining to the Pledged Shares as if the Secured Party was the absolute owner thereof, including, without limitation, the right to receive all cash dividends payable with respect to the Pledge Shares and the right to exercise all conversion, exchange, subscription or other rights, privileges or options, pertaining to any of the Pledged Shares, and, in connection therewith, to deliver any of the Pledged Shares to any committee, depository, transfer agent, registrar or other designated agency upon such terms and conditions as it may determine, all without liability except to account for property actually received by it; but the Secured Party shall not have any duty to exercise any of the aforesaid rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing.
• Upon the occurrence of an Event of Default, the Secured Party may, after giving the prior written notice, if any, required by Clause 4(a) hereof, but without any other demand of performance or other demand or advertisement to or upon Pledgor or any other person (all of which are, to the extent permitted by law, hereby expressly waived), forthwith realize upon the Collateral or any part thereof, or interest therein, in one or more parcels at public or private sale or sales, at any exchange, broker’s board or at any of the Secured Party’s offices or elsewhere, at such prices and on such terms as the Secured Party may deem best, for cash or on credit, or for future delivery without assumption of any credit risk, with the right to the Secured Party or any purchaser to purchase upon any such sale the whole or any part of the Collateral free of any right or equity of redemption in Pledgor, which right or equity is hereby expressly waived and released. Any disposition made in accordance with the provisions of this paragraph shall be deemed to have been commercially reasonable. Pledgor agrees that if any Collateral is sold at any public or private sale, the Secured Party may elect to sell only to a buyer who will give further assurances, satisfactory in form and substance to the Secured Party, and a sale subject to such condition shall be deemed commercially reasonable. If at any time when the Secured Party shall determine to exercise its right to sell all or any part of the Collateral pursuant to this Clause 4(3), the Secured Party is hereby authorized to comply with any limitation or restriction in connection with such sale as they may be advised by counsel is necessary in order to avoid any violation of applicable law (including, without limitation, compliance with such procedures as may restrict the number of prospective bidders and purchasers and/or further restrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any governmental regulatory authority or official, and Pledgor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Secured Party be liable or accountable to Pledgor for any discount allowed by reason of the fact that such Collateral is sold in compliance with any such limitation or restriction.
• In addition to the foregoing, whenever an Event of Default shall exist hereunder, the Secured Party may, at its option, after giving Pledgor the prior written notice, if any, required by Section 4(a), hereof, but without any other demand, exercise any of the rights and remedies of a secured party as may be available under any law for the time being in force.
• Pledgor hereby covenants that, until all of the Obligations have been satisfied in full, Pledger will not, without the prior written consent of the Secured Party:

1. Sell, convey, or otherwise dispose of any of Pledgor’s interest in the Collateral or any interest therein or create, incur, or permit to exist any pledge, mortgage, lien, charge, encumbrance or any security interest whatsoever in or with respect to any of the Collateral or the proceeds thereof, other than that created hereby;
2. Consent to or approve the issuance of any additional shares of any class of capital stock of any corporations that have issued any of the Collateral or of any of such corporations’ securities convertible voluntarily by the holder thereof or automatically upon the occurrence or non-occurrence of any event or condition into, or exchangeable for, any such shares; or any warrants, options, rights, or other commitments entitling any person to purchase or otherwise acquire any such shares; or

• Settle, compromise, release, discharge or discount any obligation evidenced by any Pledged Note or any other rights or interests (including, without limitation, guarantees or security interests) that Pledgor may have by law or agreement with respect to such Pledged Note or exercise any conversion or exchange privilege permitted by the terms of any such Pledged Note. ?
• Pledgor warrants and will, at Pledgor’s own expense, defend the Secured Party’s right, title, special property and security interest in and to the Collateral against the claims of any person, firm, corporation or other entity.
• Beyond the exercise of reasonable care to assure the safe custody of the Collateral while held hereunder, the Secured Party shall not have any duty or liability to preserve rights pertaining thereto and shall be relieved of all responsibility for the Collateral upon surrendering it or tendering surrender of it to Pledgor.
• Pledgor, by entering into this Agreement and negotiating the terms hereof, hereby waives any rights Pledgor may have to demand any notices other than those provided for herein and any right to a hearing as a condition precedent to the Secured Party’s exercise of its rights hereunder.
• If any notification of intended disposition of any of the Collateral or of the Secured Party’s exercise of any other right or remedy is required by law, such notification shall be deemed reasonably and properly given if given in accordance with Section 9 hereof at least ten (10) days before such disposition or exercise.
• No delay or failure by the Secured Party or any other Secured Party in the exercise of any right or remedy shall constitute a waiver thereof, and no single or partial exercise by the Secured Party of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy.
• Except as otherwise provided in this sub-section, Pledgor shall continue to collect, at its own expense, all amounts due or to become due to Pledgor under the Pledged Notes. In connection with such collections, Pledgor may take (and, at the Secured Party’s direction, shall take) such action as Pledgor or the Secured Party may deem necessary or advisable to enforce collection of the Pledged Notes; provided, however, that the Secured Party shall have the right, at any time to notify the obligor on any Pledged Note of the assignment of such Pledged Note to the Secured Party and to direct such obligor to make payment of all amounts due or to become due to Pledgor thereunder directly to the Secured Party and, upon such notification and at the expense of Pledgor, to enforce collection of any such Pledged Note or other Collateral, and to adjust, settle or compromise the amount or payment thereof in the same manner and to the same extent as Pledgor might have done, but unless and until the Secured Party does so or gjves Pledgor other instructions, Pledgor shall make all collections for the Secured Party. Pledgor shall immediately deliver to the Secured Party all full and partial payments on any Pledged Note received by Pledgor in their original form, except for endorsements where necessary, to be held as cash collateral or applied to the payment of the Obligations in accordance with Clause 5. Until such payments are so delivered to the Secured Party, such payments shall be held in trust by Pledgor for and as the Secured Party’s property, and shall not be commingled with any funds of Pledgor.
• Pledgor agrees to take any action which the Secured Party may reasonably request in order to obtain and enjoy the full rights and benefits granted to the Secured Party by this Agreement.

5. Application of proceeds :- At the Secured Party’s election, the Secured Party may hold all Proceeds of Collateral received by the Secured Party as cash collateral or may apply such Proceeds to the payment of the Obligations in such order as the Secured Party may elect.
6. Termination :- Upon payment or prepayment of all Obligations after the termination of any Commitment under the Loan Agreement, this Agreement shall be terminated. Upon such termination, the Secured Party shall deliver to Pledgor the original of all stock certificates, forms of stock certificate assignments, notes and any other Collateral received by it pursuant to the terms hereof.
7. Power-of-Attorney :- Pledgor hereby irrevocably appoints the Se- cured Party, or any other person whom the Secured Party may from time to time designate as Pledgor’s attorney-in-fact, with full authority in the place and stead of Pledgor and in the name of Pledgor or otherwise, from and after the occurrence and continuance of an Event of Default, to take any action and to execute any instrument that the Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including without limitation, to assign, pledge, convey or otherwise transfer title in or dispose of any of the Collateral to any third person after the occurrence of an Event of Default and obtain any regulatory approvals in connection therewith. Pledgor ratifies and approves all acts of the attorney taken within the scope of the authority granted. Neither the Secured Party nor the attorney will be liable for any acts of commission or omission or for any error in judgment or mistake of fact or law, except that nothing in this sentence shall relieve or discharge any such person from liability for its gross negligence or wilful misconduct. This power, being coupled with an interest, is irrevocable so long as any Obligation remains unpaid.
8. Costs and expenses :- Pledgor hereby agrees to reimburse the Secured Party, on demand, for all reasonable and necessary costs and expenses incurred by the Secured Party in connection with the enforcement of this Agreement (including costs and expenses incurred by any sub-agent employed by the Secured Party) and agrees to indemnify and hold harmless the Secured Party and/or any such sub-agent from and against any and all liability incurred by the Secured Party (or such sub-agent) hereunder or in connection herewith, unless such liability shall be due to wilful miscon- duct or gross negligence on the part of such person.
9. Notices :- All communications and notices hereunder shall be given in accordance with the notice provisions of the Loan Agreement.
10. Binding Agreement; Assignment :-This Agreement, and the terms, covenants and conditions hereof, shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns, except Pledgor shall not be permitted to assign this Agreement or any interest herein or in the Collateral, or any part thereof, or otherwise grant any option with respect to the Collateral, or any part thereof.
11. Miscellaneous provisions:- Neither this Agreement nor any provision hereof may be amended, modified, waived, discharged or terminated nor may any of the Collateral be released or the pledge or the security interest created hereby extended, except by an instrument in writing duly signed by or on behalf of the Secured Party. The section headings used herein are for convenience of reference only and shall not define or limit the provisions of this Agreement. The recitals hereto are incorporated herein by reference.
12. Governing Law:- The laws of India shall govern this Agreement, without giving effect to any choice or conflict of law provision or rule that would cause the application of laws of any jurisdiction other than India. Wherever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

IN WITNESS WHEREOF the parties hereto have executed this Agreement on the day and the year first abovewritten.

SIGNED SEALED AND DELIVERED by the parties at _____________

In the presence of:

WITNESSES: