Loan Agreement with Security

LOAN AGREEMENT WITH SECURITY

THIS AGREEMENT is made at Mumbai on this ______ day of ____________, 20____,

BETWEEN

____________________ LTD., a company incorporated under the Companies Act, 1956, having its Registered Office at ____________________ (hereinafter referred to as "the Lender", which term or expression shall, unless excluded by or repugnant to the subject or context hereof, mean and include its successors and assigns) of the One Part;

AND

(i) M/s 123 LIMITED, a company incorporated under the Companies Act, 1956, having its Registered Office at ____________________ (hereinafter referred to as "the Borrower", which term or expression shall, unless excluded by or repugnant to the subject or context hereof, mean and include its successors and assigns) of the Second Part; and

(ii) M/s DEF LIMITED, a company incorporated under the Companies Act, 1956, having its Registered Office at ____________________ (hereinafter referred to as "the Pledger", which term or expression shall, unless excluded by or repugnant to the subject or context hereof, mean and include its successors and assigns) of the Third Part.

WHEREAS:

A. The Borrower is one of the entities in the group of companies, 123 LIMITED, a company incorporated under the provisions of the Companies Act, 1956, having its Registered Office at ____________________, and has a paid-up capital of Rs. ______ lacs as on ____________ (date).

B. The Borrower has approached the Lender for the grant of an inter-corporate deposit of Rs. ____________/- (Rupees ____________ only) for a period of ______ days beginning from the date of disbursal of loan, i.e. ____________.

C. The Lender has favourably considered the request of the Borrower and has agreed to lend and advance a secured interest-carrying inter-corporate deposit of Rs. ____________ (Rupees ____________ only) to the Borrower on the terms, conditions and covenants as follows.

D. The Pledger has agreed to secure the timely repayment of the loan along with interest by creating in favour of the Lender a pledge of the securities fully stated in the Annexure annexed hereto and treated as an integral part of this Agreement.

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

1. At the request of the Borrower, the Lender lends and advances to the Borrower an inter-corporate deposit of Rs. ____________ (Rupees ____________ only) for a period of ______ days beginning from the date of disbursal, i.e. ____________.

2. The said inter-corporate deposit shall carry interest @ ______% per annum, payable with ______ rests. In case of delay or default in payment, whether of the principal or of the interest or any part thereof, the Lender shall be entitled, and the Borrower shall be liable, to pay penal interest @ ______% per annum over and above the interest mentioned hereinabove.

3. As security towards the timely repayment of the loan along with interest, the Pledger has agreed to pledge in favour of the Lender fully paid-up equity shares, standing in the name of the Pledger as stated in the Annexure annexed hereto and treated as an integral part of the agreement, in the equity capital of 123 Limited, a company incorporated under the provisions of the Companies Act, 1956, having its Registered Office at ____________________. The equity shares of 123 Limited are listed at ____________ Stock Exchange, and the current market price of the shares is agreed to be Rs. ____/- per share.

4. In case the Lender sends notice to the Borrower to make good the margin in the securities (______% in this case), and the Borrower fails and/or neglects to make good the margin within the stipulated period as mentioned in the notice, the Borrower shall be deemed to have committed default of the terms of this agreement; and in that event it shall be lawful for the Lender (but not compulsory) to demand from the Borrower repayment of the loan along with the interest then outstanding, and the Borrower shall be liable to repay the loan in full along with interest thereon without any objection and/or demur.

5. It is thus agreed that the Pledger shall pledge equity shares of 123 Ltd., details whereof are given in Annexure-I enclosed hereto and treated as part of this agreement ("the securities").

6. It is expressly agreed by and between the parties hereto that in case of a downward revision in the market price of the equity shares of 123 Ltd., the Borrower/Pledger shall, on its own, pledge in favour of the Lender such other shares of 123 Ltd. so as to ensure a ______% margin between the amount of loan along with interest and the securities.

7. In case the Borrower fails and/or neglects to repay the amount of loan or the amount of interest on the due date, it shall be lawful for the Lender to sell or dispose of, at the cost and expense of the Borrower, all or some of the equity shares of 123 Ltd., either by way of private arrangement or in the open market, and to apply the net proceeds thereof towards satisfaction of the amount of loan or the interest then outstanding.

8. The Borrower agrees that any accretion to the securities pledged with the Lender by way of dividend, bonus/rights issue, etc., accruing from time to time, shall be deemed to be pledged with the Lender, and the Borrower shall, on its own, take expeditious steps to create a pledge in favour of the Lender.

9. It is agreed that the Borrower shall execute a Demand Promissory Note in favour of the Lender.

10. The Borrower/Pledger agree and undertake to execute in favour of the Lender all such documents/papers, including fresh transfer deeds, as may be required by the Lender from time to time.

11. The Borrower/Pledger have agreed to constitute, nominate and appoint the Lender as its true and lawful attorney to do all such deeds and things in respect of the said ______ (No. of Shares) equity shares of 123 Ltd. as may be pledged/hypothecated by the Borrower to the Lender.

12. It is agreed that the liability of the Pledger is joint and several along with the liabilities of the Borrower, and the same is co-extensive.

IN WITNESS WHEREOF the parties herein have signed this agreement in acceptance of all the terms stated above, on the date and at the place mentioned hereinabove.

THE BORROWER: ________________________

THE PLEDGER: ________________________

THE LENDER: ________________________