1. With reference to your aforesaid application, we
have sanctioned you a loan/an additional loan of Rs.............................
(Rupees
) to be utilised as
indicated in the sanction letter No
..dt
..
You should undertake to use the proceeds of the said
loan solely for the aforesaid purpose and further undertake that the
goods purchased from the proceeds of the said loan shall be used
exclusively in connection with your business. You shall notify the
Corporation of any error or mistake or changes in any particulars
contained in your loan application dated
.. which shall
be regarded as the basis of the contract.
2. The aforesaid loan shall be secured by:
(a) An equitable mortgage by deposit of title deeds over the
mortgagor's/your existing land, buildings and your fixed machinery at
provided
however that if you commit any breach of any of the terms and
conditions herein or of the Deed of hypothecation hereinafter
mentioned without prejudice to the Corporation's rights to call in the
loan then outstanding and take proceedings for the recovery thereof
you will have to execute a Legal Mortgage of the said property and the
plant and machinery hereinafter mentioned in the English form with the
usual terms and conditions including a power of sale out of Court,
Power to appoint a receiver out of Court and the special power given
under the State financial Corporations Act,1951 ( hereinafter called
the SFCs Act ).
(b) The Corporation shall have mortgage charge on the
mortgaged assets for any amount due and not paid by the mortgager over
and above the charge created for this loan and the Corporation may
recover any dues from the mortgager apart from the amounts due under
this loan transaction from out of mortgaged assets"
(c) A Hypothecation in our usual form of your existing
plant and machinery and movable property at
......................................................................
and any further plant, machinery fixtures and fittings that may be
bought by you from the aforesaid loan and installed on the said
premises or in your godown or be held by any body as Mercantile Agent
on your behalf or under your order or in the course of transit to your
premises. The property, fixed machinery, plant and movable assets are
hereinafter called the mortgaged premises."
(d) The Corporation will have negative charge on
machinery stores and machinery spare stock-in-trade and
stock-in-process both present and future. You will, however be free to
raise funds from banks against pledge or Hypothecation of raw
materials, stock- in-process) and finished and unfinished products
(e) Guarantee to furnished by the Promoters/Guarantors
of the Company.
(f) Collateral Security as may be stipulated by
IPICOL.
3. During the period on which the loan from the
Corporation is outstanding, you shall not create any further
encumbrance on the assets mortgaged/hypothecated to the Corporation
without the previous consent of the Corporation in writing.
4. You/ the Company shall pay interest @
,
subject to such variation in the rate of interest as may be decided by
the Corporation and communicated to you from time to time during the
subsistence of the loan with interest rebate of
.% for timely
payment. You shall also be liable to pay penal interest of @ 2% p. a.
in the event of default in repayment of principal on the amount of
default for the defaulted period The interest will be calculated with
quarterly rest.
In the event of default in payment of interest' on the
due dates interest at the rate of
.% p. a shall be payable on
the amount of interest due and not paid for the period of default.
Further yourself/ the Company shall agree to pay the revised rate of
interest as and when the rate of interest shall be revised up-ward by
the Corporation from time to time during the subsistence of the loan.
5. You shall pay a up front fee @
.. % on the
amount of loan sanctioned before documentation .
6. The advance shall be subject to our receiving :
(a) A satisfactory valuation report from our valuers in respect of the
Industrial lands and buildings offered in mortgage
(b) A satisfactory report of title in respect of the
properties offered in mortgage.
(c) You shall purchase machinery from the suppliers
and of the specifications to be approved by the Corporation in
writings.
(d) The disbursement of loan shall be only on your
creating a margin of security of
.% on the approved Industrial
assets.
7. The loan shall be, inter alia, on the following
terms :
(i) The loan shall be utilised for the specific purposes for which the
same has been sanctioned, and shall be disbursed by us in full or in
instalments as and when the said purposes are fulfilled and at the
entire discretion of the Corporation and may be refused if in the
opinion of the Corporation the purposes for which the full loan has
been sanctioned are not properly fulfilled or when you act or omit to
do something which creates doubt of fulfilling the purpose for which
the loan is sanctioned. No portion of the loan shall be transferred to
be kept in call, short term, fixed or any other deposits with bank
without obtaining the. previous approval of the Corporation. In this
connection, you are requested to give us at least 10 days prior notice
of your intention to withdraw any part of the loan to enable us to
make suitable arrangements in this behalf.
(ii) A minimum margin of
..percent
shall be maintained during the currency of the loan.
(iii) (a)The loan shall be repaid with a period of
years by
..quarterly instalments as per the
repayment schedule mentioned below.
REPAYMENT SCHEDULE FOR TERM LOAN OF Rs,,,,,,,,,,,,,,,,,,,,
No of instalment
Amount of instalment
Due date of repayment
(b)You shall have the option to repay in whole or in
part of any instalments of principal or interest before the respective
due dates.
8. The mortgaged premises shall be insured for their
full value as may be "determined by the Corporation at its
discretion, during the currency of the loan against fire, riot,
strike, Civil commotion and all such other risks or such of them as
may be regarded appropriate by the Corporation with such insurance
Companies, including the Life Insurance Corporation of India as shall
be intimated to you by the Corporation in the joint names of the
Corporation and your- selves and should contain the usual mortgage
clause. As regards the existing insurance policies they should be
assigned over in favour of the Corporation. All such policies will
have to be deposited with the Corporation.
9. The authorised Directors of your Company/ you
should deposit the title deeds of the said property with
or such other person authorised by the Corporation in
Bhubaneswar/Cuttack and you will execute a Deed of Hypothecation of
the machinery and movable property.
10 A) The Corporation will have all the rights and
power given under the SFC Act and if you commit any breach of the
provisions hereof, the Corporation shall have the right' to call in
the loan immediately and exercise all rights under the SFC Act or
other provisions of law and without prejudice to such right to call
you to execute a legal Mortgage in the English form of the said
property plant and machinery and the good will of your under taking
with all the usual powers and provisions including a power of sale out
of Court power to appoint a Receiver and the special power and
remedies under the SFC Act. You may also execute a Power of Attorney
authorising the Corporation to execute a legal Mortgage on your
behalf.
10. B) "Without prejudice :0 the rights stated
herein, the Corporation may recover the dues under this agreement as a
public demand under the provisions of OPDR Act,1962.
11. Please note that all fees charges and expenses
incidental to the above arrangement are payable by you and shall carry
interest at the same rate mentioned herein.
12. In case your factory shall stop working and close
down for any period more than one week ( except for the purpose of
making repairs and renovation) then you shall immediately inform the
Corporation of such closure and any default in so doing shall be
treated as breach of the terms and conditions hereof.
13. The terms and conditions of sanction as
communicated in this letter of Intent are in addition to those
communicated in the corporation's letter No
.. date.
..
14. If you fail to accept the terms and conditions as
proposed within 15 days from the date of issue of this letter. The
Corporation reserves its rights to review the matter and to cancel at
its discretion the grant of any loan to you.
15. If you fail to avail yourself of the entire loan
sanctioned to you or any part thereof, as the case may be, for any
reason whatsoever, within a period of 18 months from the date of
agreement then the undrawn amount remaining thereafter shall lapse
automatically .
16. You will not undertake any new scheme other than
the one submitted by you to the Corporation in connection with the
loan sanctioned to you and approved by the Corporation, nor shall you
undertake the expansion of the present capacity of your factory and
plant involving additional capital expenditure without the prior
approval of the Corporation, had and obtained in writing.
17. You are to requested to deposit with the
Corporation a sum of Rs
..(if not already deposited in the
meantime) with your letter of acceptance of terms which shall be
binding to you.
18. You shall agree to give such information and
execute such documents as may be deemed necessary, at your own cost,
if the Corporation desires it necessary, to obtain refinance from the
Small Industries Development Bank of India or any other Corporation or
Institution.
19. The Corpora t ion shall be at liberty to display
signboards to the effect that machinery spares and accessories are
mortgaged to the Corporation by way of security for the repayment of
the loan. 20. In case you have to execute a legal Mortgage as
aforesaid of the immovable property and fixed machinery you will have
to produce a Tax permission to enable the mortgage to be registered.
21. Your said Premises at
..
in which your business is being carried is on free hold/ lease hold or
on monthly tenancy/occupancy tenancy and you hereby agree not to do
any act or thing hereby tenancy may be impaired or which may give the
land lord right to evict you from the said premises.
22. Please note that all legal expenses/travel
expenses incurred by the Corporation relating to your project shall be
paid by your company.
23. You shall agree not to let out or give on lease
and licence whole or any portion of your land or building to anyone
without the prior written permission of the Corporation during the
currency of the loan.
24. You shall agree not to lend funds to anyone or not
to invest the same in purchase of shares of any other concern during
the currency of loan without the prior written permission of the
Corporation.
25. (i) You shall agree not to undertake any trading
activity during the currency of the loan.
(ii) You shall agree to comply with the existing laws on employment of
child labour .
26. You shall undertake not to print any literature of
political print on your own accord.
27. You shall agree not to incur hundi borrowing
during the currency of the loan without the prior written permission
of the Corporation.
28. You shall notify to the Corporation error,
misstatement or change in the particulars of your concern given in
your said loan Application within 10 days after discovery of such
error misstatement or change in such particulars given in your loan
application and you will not during currency of the loan without the
consent of the Corporation first had and obtained let on hire or lend
any items of the machinery which are subject of this security to any
concern or person whomsoever even if such person or concern shall be
engaged in making part or products required for the manufacture of
your goods.
29. You shall Keep proper books accounts of your
business and shall have them at all times posted up and permit the
Corporation or any persons apt1ointed for total purpose by us to
examine such books at all reasonable times and make copies of extracts
there form.
You shall furnish to the Corporation a cash flow statement of your
concern every month and agree to submit such other documents, account
statements, reports, papers at such time and period as are required by
the Corporation.
30. You shall have your accounts audited in the manner
provided by the Companies Act, 1956 and shall submit the audited
accounts to the Corporation with 6 months from the date of closing of
such accounts.
31. During the currency of these presents the
shareholding of such of your shareholders, at present shall not be
varied without the previous consent of the Corporation first obtained.
During the currency of the loan the claim of the Corporation shall
have precedence over the claims of the Directors by way of
remuneration interest commission, etc.
Your Company shall not change the Board of Directors without prior
written approval of the Corporation", except by rotation as
provided in the Companies Act. You are also agree not to change the
Managing Director without approval of the Corporation.
32. If the market value of the mortgaged premises or
any part thereof depreciated in the opinion of the valuers or
assessors appointed in the manner hereinafter mentioned by such
percentage of its present value as the Corporation may from time to
time decide and further security to the satisfaction of the
Corporation be not given to the Corporation then and in such case you
shall within a period of three months from written notice to that
effect being given by the Corporation reduce the loan to an amount
which shall bear the same proportion to the then reduced market value
of the mortgaged premises as the loan hereby secured bears to the
present value of the mortgaged premises PROVIDED that for the purpose
of this sub-clause the Corporation shall have the right at any time to
engage competent valuers of assessors and the valuation made in
respect of the mortgaged premises shall be final and conclusively
binding upon you
33. As soon as your Company shall have resolved to
issue any un-issued share Capital or to create any new shares you
shall immediately give notice to the Corporation of your intention to
issue or create any such share capital as aforesaid and the proposed
amount thereof and will not until the expiration of twenty clear days
from the time when such notice shall have been sent to the Corporation
issue any notice to the members of your company in respect of any
issue or create any such existing or new shares respectively as
aforesaid and if the Corporation shall so acquire every notice
prospectus application for a allotment letter sent out by your Company
in pursuance of any such resolution shall direct the members or
applicants for allotment of more shares to pay the money payable in
respect of the said existing of new shares to the Corporation or as it
shall direct and if no such requisition be made by the Corporation the
applicants or allot tees shall be directed to pay money into some Bank
to the joint account of your Company and the Corporation or in such
manner as the Corporation may direct and the Corporation shall be
entitled to require all such moneys received by your Company to be
applied either wholly or partly in or towards the payment or
satisfaction of the said principal sum interest and other moneys due
to the Corporation but in default of the Corporation requiring the
said moneys to be so applied as aforesaid within one month of their
being paid your Company may without the consent of the Corporation
apply the whole of the balance thereof over and above what shall be
required by the Corporation to be otherwise applied to the general
purpose of your Company as you shall think fit.
34. If Your Company shall commit any default in
payment of any of the instalments of interest and Principal hereby
provided on the due dates thereof or in connection with the provisions
in the said mortgage then your Company shall not without the previous
consent of the Corporation first had and obtained distribute as
dividend during the final year in which such default occurs any sum or
sums exceeding 6(six) percent of paid of capital of your Company as on
t he last date of the period in respect of which the dividend is
distributed after deducting from such capital all reserve and ignoring
all payments made or moneys set aside on account of Income Tax subject
to the provisions of the Income Tax Act.
35. The Corporation shall have the right and option to
call in loan and take all appropriate proceedings for recovery thereof
in the following events.
-
If default shall be committed by your for a period
exceeding one month in the payment of any instalment of the said
Principal sum , or
-
If interest amounting to at least Rs.500/- (Rupees
five hundred) shall be in arrear and unpaid for one month after
becoming due: or
-
If default shall be committed by you in the
observance or performance of any of the covenant conditions or
provisions of these present: or
-
If the mortgaged premises or any part thereof and
taken up by Government or any public body entitled to do so for a
public purpose : or
-
If execution or distress is levied against the
whole or any part of the mortgaged premises, or
-
If a Receiver is appointed of the mortgage
premises or any part thereof, or
-
If you shall enter into any arrangement of
composition with your creditors or commit any act or default which
.shall render it liable to be taken into liquidation or if your
Company shall go or be taken into liquidation, or
-
If you shall cease or threaten to cease to carryon
your business, or
-
If any circumstances shall occur which shall
prejudice or impair or imperil or depreciate or is likely to
prejudice or impair or imperil or depreciate the security of the
Corporation, or
-
If any circumstances or even shall occur which
would or is in the opinion of the Corporation likely to
prejudicially or adversely affect in any manner, Your capacity to
repay the loan to the Corporation.
36. We shall thank you to forward us ;
1. Your acceptance of the above terms in writing.
2. Your Cheque for Rs.
. (if not paid in the
meantime) towards deposit as mentioned above.
37. This letter will be repository of the terms and
conditions on which the loan has to be granted and you should sign the
confirmation at foot here of and return the letter to us. A duplicate
is sent herewith for your record.
38. Please note that subject to our receiving the
above, we shall be glad to proceed further in the matter.
39. We trust you will offer us full co-operation by an
early compliance of our above requirements and we on our part assure
you of our best services for an expeditious disbursal of the loan as
sanctioned.