TRUSTEESHIP
AGREEMENT [CD1]
ARTICLES
OF AGREEMENT made
at Mumbai this ……………day of……………. 2000 between
ABC Power Generation Company Limited,, a
Company registered under the Companies Act,
1956 (1 of 1956) and having its Registered
Off ice at.................Mumbai in the State of Maharashtra hereinafter
called 'The Company" (which expression shall include its successors and
assigns wherever the context or meaning shall so require or permit) of one,
part and XYZ Finance Company Ltd. a Company Registered under the Companies Act,
1956 (1 of 1956) having its Registered office at ........................ Mumbai
hereinafter called the "Debentures Trustees" (which expression shall
include its successors and assigns and the Trustees for the time being wherever
the context or meaning shall so require or permit) of the Other part.
ARTICLE
I
In terms of the letters dated…………….and…………….
issued by ABC Finance Company Ltd. a company registered under the Companies
Act, 1956 and having its registered office at Mumbai hereinafter referred to as
"the Subscriber" subscribe to the Debentures of the aggregate nominal
value of Rs. 47.00 Crores to be agreed to be allotted by the Company on (DME)
on private placement basis on the terms and conditions set out in the said
letters and accepted by the Company.
The Subscriber and the Company have executed
a Subscription Agreement, dated November.26…………….etting out the terms and
conditions on which the subscriber will subscribe to the issue of NCDs by the
Company.
Words and expressions appearing herein which
have been defined in the said Letter of Offer shall have the same meaning as
defined therein unless the reference or context requires otherwise. (i) Interest on debentures outstanding
The NCDs shall carry interest on the
principal amount of NCDs outstanding from time to time at the prime lending
rate ("PLR") of the Subscriber plus 3.5% per annum plus interest tax
as prevailing on the date of each Subscription. The first instalment of
interest shall accrue for the broken period from the date of subscription upto
the date immediately following 15th June and 15th December as the case may be
and subsequently be payable on every 15th June and 15th December. The interest
for the broken period shall be payable together with the last instalment of the
redemption of the said NCDs.
(ii)
The
applicable rate of interest would be fixed at the end of the disbursement
period on the basis of the weighted average of the interest rate at which the
disbursement were made. Such interest shall be payable half-yearly, each year,
on the 15th day of June and December.
(iii)
In
the event of any default in the payment of interest on the NCDs on the dates as
stated above, compound interest at half-yearly rests at the said rates will
become due and payable for the moneys due for the period of default.
(iv) Review of rate of Interest
Subscriber would have the right to reset the
rate of interest at the end of seven years from the date of first disbursement
provided that the company will have the right to redeem the NCDs if the reset
is adverse to the Company
(v) Further Interest
All interest which shall become due during
the currency of the NCDs or any part thereof and for the time being remaining
unpaid and all other moneys which have become payable by Company to
Debentureholder, in case the same be not paid on the dates on which they accrue
due, carry further interest at the maximum lending rate of the Subscriber (top
of the Interest Rate Band), as applicable on the date of default or at the
applicable rate under the Subscription agreement, whichever is higher, computed
from the respective date(s) of such interest of moneys accruing due and all
such interest and further interest which have become payable but not paid,
shall become payable upon the footing of compound interest with rests taken or
made half-yearly as hereinbefore provided.
(vi) Computation of Interest and other
charges
In all cases in which it shall be necessary
to compute the amount of interest or any other charges which shall have accrued
for even periods of six months such computation shall be made on an annual
basis. In all other cases, such computation shall be on a daily basis using a
365 days factor.
(vii) The payment of interest shall,
however, be subject to deduction of Income-Tax at source at the rates
prescribed under the Income-tax Act from time to time.
ARTICLE
II
2.1 The Debenture Trustees have confirmed
their appointment as vide their letter No ...........dated…………….
2.2 The terms of acceptance being with
remuneration comprising
(a)
Initial
Fee of Rs.30,000;
(b)
Annual
Fee of 0.05% of face value of Debentures issued and outstanding.
(c)
Reimbursement
by the Company of all the costs, charges, expenses including costs towards
travelling and out of pocket expenses incurred by the corporation while acting
as Trustees for the Debenture holders.
2.3 The Debentureholders have authorised and
approved the Debenture Trustees to act as their Trustees for the Debentures
proposed to be issued by the Company to the Debentureholders vide Company's
Letter of Offer dated and accepted by the Debentureholders.
ARTICLE
III
3.1 The Company shall not later than
…………………..2000 or within extended time as may be permitted by the Debenture
holders create such the following security in favour of the Debenture Trustees
to secure the due redemption of the principal amount of the face value of the
Debentures, payment of interest on the Debentures, additional interest by way
of liquidated damages, 'compound interest, costs, charges , remuneration of the Debenture Trustees and
all other expenses due and payable in respect of the said Debentures. The
security being: (a)a first mortgage and charge in favour of the Security
Trustee in a form satisfactory to the
Subscriber of all the Company's immovable
properties both present and future;
(b)
a
first registered mortgage and charge in favour of the Security Trustee on all
of the Company's immovable properties in Maharashtra, its intangible assets
both present and future, charge over Project Contracts, insurance proceeds and
bank accounts;and
(c)
a
first charge by way of hypothecation in favour of the Subscriber of all the
Company's movables, movables including movable machinery, machinery, spares,
tools and accessories company's stocks of raw materials, semi-finished,
finished goods, consumable stores, book debts and such other movables present
and future. The mortgage and charge referred to above shall rank pad passu with
the mortgages and charges created and/or to be created in favour of the Lenders
in respect of the financial assistance as set out herein:
3.2
If
the Debenture Trustees are of the opinion that at any time during the
subsistence of this Agreement, the security provided by the Company has become inadequate to cover the
balance of the principal amount then outstanding, then on the Debenture
Trustees advising the Company to that effect, the Company shall provide and
furnish to the Debenture Trustees to their satisfaction such additional
security as may be available with the Company and as may be acceptable to the
Debenture Trustees to cover such deficiency.
3.3
The
Company shall notify, the Debenture Trustees and the Subscriber in writing of
all its acquisitions of immovable properties relating or pertaining to the
Company's said units as and when they are made and from time to time and as soon
as practicable thereafter make out a
marketable title and create in favour of the Debenture Trustees a security on
the basis as aforesaid in such form and manner as may be acceptable to the
Debenture holders and required by the Debenture Trustees, to secure the
Debentures.
ARTICLE
IV
4.1 The Company hereby covenants with the
Debenture Trustees that the Company will at all times during the subsistence of
the Debentures:
(a)
Carry
on and conduct its business and implement the Project (as defined in the
Subscription Agreement) in proper and efficient manner and sound engineering
and financial standards and duly pay all
rents, cesses and other payments and outgoings payable out of or in respect of
the assets to be Mortgaged failing to be paid by the Company and carry out all
covenants, obligations, agreements, stipulations, conditions and terms on its
part to be performed under or carry out all mortgages, conveyances, grants, leases,
pattahs, assignments, contracts, agreements and other deeds and documents
affecting the assets to be mortgaged or any part thereof.
(b)
Keep
proper books of accounts as required by the Companies Act, 1956 and therein
make true and proper entries of all dealings and transactions of or in relation
to the assets to be mortgaged and the business of the Company and keep the said
books of account and all other books, registers and other documents, relating
to the affairs of the Company at its Registered Office or where permitted by
law at other place or places the said books of Accounts and documents of a
similar nature may be kept and the Company will ensure that all entries in the
same relating to the assets to be mortgaged and the business relating to the
unit of the Company shall at all reasonable times be open for the inspection of
the Debenture Trustees and such person or persons or corporation as they shall
from time to time in writing for that purpose appoint.
(c)
Give
to the Debenture Trustees or to such person as aforesaid such information as
they or he or any of them shall require as to all matters relating to the
business, property and affairs of the Company's said unit and at the time of
the issue thereof to the Debenture Trustees copies of every report, balance
sheet, profit and loss account, circular or notice issued to the shareholders
and Debenture Trustees shall In the event of default be entitled, if they think
fit, from time to time nominate an accountant or agent to examine the books of
account, documents and property relating to the said unit of the Company or any
part thereof and to investigate the affairs thereof and the Company shall allow
any such accountant or agent to make such examination and investigation and
shall furnish him with all such information as he may require and shall pay all
costs, charges and expenses incidental to such examination and investigation;
(d)Keep all buildings, erections and
structures forming part of the assets to be mortgaged and all plant, machinery,
fixtures/fittings, vehicles, implements, tools utensils and other effects
thereon or therein in a good state of repair and in good working order and
condition and permit the Debenture Trustees and such persons as they shall from
time to time in writing for that purpose appoint, to enter into or upon and to
view the state and condition of all the assets to be mortgaged and pay the
travelling, hotel and other expenses of any agent whom the Debenture Trustees
may depute for the purpose of such inspection and if the Debenture Trustees
shall for any reason decide that it is necessary to employ an expert, to pay
the fees and the travelling, hotel and other expenses of such expert;
(e)Not to pull down or remove any buildings
or structures (except any temporary structure) on the lands for the time being
forming part of the assets to be mortgaged or the fixed plant and machinery or
any fittings or fixtures annexed to the same or any of them without the
previous consent in writing of the Debenture Trustees except in the ordinary
course of repair and maintenance or Improvement or replacement or otherwise in
the course of and for the purposes of
carrying on the business of the Company and will in such cases forthwith,
restore or procure to be restored such buildings, structures, plant, machinery,
fixtures or fittings as the case may be or replace the same to be replaced by
others of a similar nature and of atleast equal value;
(f)Punctually pay all rents, royalties,
taxes, cesses, rates, levies,
assessments, impositions and outgoings, governmental or municipal or
otherwise in respect of or relating or pertaining to lawfully imposed upon or
payable by the Company as and when the same shall become payable and when
required by the Debenture Trustees produce the receipts of such payment and
also punctually pay and discharge all debts and obligations to or in respect of
clerks, servants, workmen, labourers and others and all other debts and
liabilities which may by the laws of India have priority over the security hereby
created and observe, perform and comply with all covenants and obligations
which ought to be observed by the Company in respect of or any part of the
assets to be mortgaged;
(g)
Apply
for and use the best endeavours to obtain renewal of the leases under which any
of the leasehold lands forming part of the assets to be mortgaged are or may be
during the subsistence of the Debentures held as and when the same shall be
renewable in accordance with the provisions thereof and duly vest in the
Debenture Trustees all such renewed leases in such manner as .the Debenture
Trustees may direct;
(h)
(i)
Insure and keep insured in the joint names of the Debenture Trustees and of the
Company or any other person or institution having an insurable interest in the
properties of the Company such of the assets to be mortgaged as are of an
insurable nature against loss or damage by fire, flood, storm, tempest,
lightning, explosion and other acts of God and also by riot or other civil
commotion or evolution as also by acts of enemies during war or other risks of
war or emergency or such of them including marine risks or such other risks as
may be required by the Debenture Trustees/the Debenture holders from time to
time in an insurance office or offices and Company shall duly pay all premia or
other sums payable for the purpose and effect renewal of such insurance and
deliver to and leave with Debenture Trustees every such policy of insurance and
the receipt for the last premium payable thereunder;
(ii)Agree that, in the event of failure on
the part of the Company o insure the properties or to pay the insurance premia
or other ums referred to above, the Debenture Trustees may, but shall not be
obliged to, get the properties insured or pay the insurance premia and other
sums referred to above as the case may be and the Company shall forthwith on
receipt of a notice of demand from the Debenture Trustees reimburse them all
sums so paid by them together with interest thereon at the same rate as
specified in clause 1.3 hereinbefore in respect of the financial assistance
with half yearly rests from the date of payment and until such reimbursement-by
the Company the same shall be debited to the Company's Loan account and shall
stand secured under the security created in terms of Article III hereof.
(i)Forthwith give notice In writing to the
Debenture Trustees of commencement of any proceedings directly affecting the
assets to be mortgaged;
(ii)not pay out of its net earnings or
profits any dividend to any shareholders for any year or other period or any
interest or principal or any part of interest or principal which may be secured
or payable to any subsequent encumbrances or any interest or the sums which may
have been paid to- the Company by any shareholders under the Article's of
Association of the Company unless and until the Company shall have first paid
the instalment of principal and interest then clue and payable on the
Debentures or has made provision satisfactory to the Debenture Trustees for
asking such payments and will not, during the subsistence of the Debentures,
unless and until the Company shall have first paid all instalments of
principal, make gratuitous payment under piny of the provisions of the
Memorandum or Articles of Association of, the Company nor accept any surrender
of shares from or by any shareholder to the prejudice of the Debenture holders;
(k)not sell or dispose off the assets to be
mortgaged, lien or charge by way of hypothecation, pledge or otherwise
howsoever or other encumbrances of any kind whatsoever to the intent and
purpose that the assets to be mortgaged and all parts thereof shall remain and
continue to remain free from any further encumbrances whatsoever during the
subsistence of the Debentures PROVIDED FURTHER and to the extent that, the., Debenture Trustees may agree
generally or specifically in regard to any of the above matters as authorised
by the Debenture holders;
(l)Keep the Debenture Trustees in close
touch with the progress construction of
the project and subsequently, and to this end, the Company agrees that
(i)
The
Debenture Trustees or such person or persons not exceeding three as the
Debenture Trustees shall from time to time in writing appoint may inspect the
assets purchased for the Company's project and the sites, works, etc., relating
to the project and may also inspect the plant installations, equipment, etc.,
during its operation. The cost of such inspection and, the out-ofpocket expenses
incurred during such inspection by the Debenture Trustees or by such person or
persons not exceeding three as the Debenture Trustees shall from time. to time
in writing for the purpose appointed will be paid by the Company;
(ii)
The
Company shall maintain records showing the
expenditure of the moneys relating to. the project, the progress and
cost of the project and its operations and financial conditions of the Company.
Such records shall be open to
examination by the Debenture Trustees or such person or persons not exceeding
three as, the Debenture Trustees shall from time to time in writing for that
purpose appoint;
(iii)
The
Company shall inform the Debenture Trustees promptly of the happening of any
event likely to have a substantial effect
on the Company's profits or business if for instance there are delays in
or during the construction of the project or if after the project has been,
completed, the monthly production or sales are quite different from the
projections furnished by the Company, the Company shall inform the Debenture
Trustees accordingly with an explanation or reasons therefor;
(iv)
The
Company shall give intimation to the Debenture Trustees of all arrangements
made or to be made with the banks or Financial Institutions or other persons
for borrowings from them. If so required by the Debenture Trustees, the Company
,shall furnish to them copies of all documents in respect of such arrangements;
(v)
The
Company shall also supply such other data and information about the project as
the Debenture Trustees may require subject always to the Company's obligations
to third parties as to secrecy provided further that the right of inspection
and examination will ordinarily be restricted to two inspections and two
examinations in a year;
(m)
Make
out,.a marketable title to, the assets to be mortgaged to the satisfaction of
the Debenture Trustees;
(n)
To
Keep separate accounts and separate bank accounts for the project and no
diversion of funds from the project to other projects for under the control of
the Company shall be allowed without prior consent of the Debenture Trustees;
(o)
Keep
the Debenture Trustees informed of any change that may occur in the composition
of its Board of Directors, and
(p)During the subsistence of the Debenture
duly pay the rent reserved under the leases and shall duly and punctually make
all payments and observe and perform all the terms, covenants and conditions
therein contained to be paid, observed and performed by the Company thereunder,
and shall not do or permit to be done any act, deed or thing- whereby the
leases shall be invalidated or become void or liable for forfeiture in any
manner whatsoever or so as to affect or prejudice the security created in
favour of the Debenture Trustees under these presents and shall forthwith
inform the Debenture Trustees of any notice of breach, of default or of the
happening of any events which might affect prejudicially the security in favour
of the Debenture Trustees and further thaf the Company shall take effective
steps to renew the leases in accordance with the provisions for renewals
contained therein and shall duly comply with the requirements of the leases.
thereunder in that behalf.
4.2 During the subsistence of the Debentures,
the Company shall not without the prior permission of the Trustees/Debenture
holders obtained in writing, which consent will not be unreasonably withheld:
(a)Undertake any new project or expansion of
the project;
(b)Invest the funds by way of deposits,
loans, subscription to share capital other than by way of right shares or
otherwise of any other concerns
(including its subsidiary or associate companies) except Authorised Investments
(as defined in the Subscription Agreement) provided howsoever that this
provision shall not be construed to restrict or limit the right of the Company
to deposit temporarily such funds as may
be necessary with parties who may insist on such deposits as a condition of the
transaction by them of normal business with the Company or with the Company's
bankers in normal course or make temporary loans or advances to staff,
contractors, or suppliers in the ordinary course of its business;
(c)Raise any further loans and/or debentures
provided however that the Company may
(i)
Obtain
from the banks, bank's overdraft or other facilities against
hypothecation of the Bankers Goods; and
(ii) Accept any unsecured time deposits;
(d)Radically change its accounting system;
(e)Change its Memorandum and Articles of
Association;
(f)Appoint in future any Managing
Director(s)/Whole-time Director;
(g)Effect any scheme for amalgamation,
merger or reconstruction during the
period of the
Debentures or any part thereof remain outstanding;
(h)Utilise any portion of the Debentures for
purposes other than those for which the same are issued;
(i)Other than in accordance with the
Financing Plan attached to the Subscription Agreement, create any charge or
lien or other interest or in any assets to be mortgaged in favour of the
machinery suppliers or bankers or contractors or others on account of deferred payments and/or guarantees arranged
therefor save as may be agreed by the Debenture Trustees;
4.3 That the Company shall duly observe and
perform all the terms, conditions, covenants and stipulations in respect of the
Debentures, and shall not commit any breach or default thereof.
4.4 The Company shall as soon as practicable
issue Debenture certificates in such, form and in such numbers as may be
required by the Debenture holders in respect of the Debentures allotted after
obtaining the requisite certificate of registration of charge from the
Registrar of Companies in respect of mortgage and charge when created by the
Company in favour of the Debenture Trustees as provided in Article III hereof.
4.5 The Debenture Trustees agree that they
shall, within a period of twelve months after the creation of security by the
Company as specified in Trust Deed in a Article III execute and cause to be
registered a Debenture form and manner acceptable to the Debenture
Trustees terms of Article III hereof
4.6The Creditor Agreement by which the
securities already created and those
Debenture Trustees further agree to enter into an Inter to be created as
mentioned in Article III hereof are made to rank in the manner specified
therein.
4.7 The Company shall pay all such stamp
duty (including any additional stamp. duty) other duties, cesses, taxes,
charges and penalties if and when the Company may be required to pay in respect
f the securities to be created in favour of the Debenture Trustees according to
the laws for the time being In force in each of the states in which its
properties are situated, and in the event of the Company failing to pay such
stamp duty, other duties, cesses, taxes and penalties as aforesaid, which
failure In the opinion of the Debenture Trustees is likely to prejudice the
interest of the Debenture holders, the Debenture Trustees will be at liberty
(but shall not be bound) to pay the same either by way of contribution or an
advance or loan made for the purpose ,of protection and preservation of the
assets to be mortgaged to the Debenture
Trustees or for enforcement of the Security by the Debenture Trustees and the
Company shall repay the same to the Debenture Trustees and/or the Debenture
holders on demand with Interest thereon at the same rate as specified in clause
1.3 of this agreement.
ARTICLE
V
5. The Debenture Trustees may, from time to
time, or at any time waive off such terms. and conditions as to them shall seem
expedient, any breach by the Company of any of the covenants and provisions in
these presents contained without prejudice to the rights of the Debenture
Trustees in respect of any subsequent breach thereof.
ARTICLE
VI
6. The Debentures shall be deemed forthwith
to have become due and payable and the security therefor shall become
enforceable upon occurrence of an Event of Default under the Subscription
Agreement.
ARTICLE
VI I
7. The Debenture Trustees shall exercise
such rights and powers as are usually exercised by Trustees in this respect
under the Indian Trusts Act, 1882 and the Transfer of Property Act, 1882 and in
particular the following:
(a)
The
Debenture Trustees may in relation to these presents act on the opinion or
advice of or any information obtained
from any solicitors, counsel, advocates, valuer, surveyor, broker, auctioneer, accountant or other
expert whether obtained by the Company or by
the Debenture Trustees or otherwise and shall not be responsible for any
loss occasioned by so acting;
(b)
The
Debenture Trustees shall be at Liberty to accept a certificate signed by a
Director of the Company as to any fact
or matter prima facie within the knowledge of the Company as sufficient evidence thereof;
(c)
The
Debenture Trustees may accept without inspection, Inquiry, or requisition such
title as the Company may have to the
mortgaged assets or assets to be mortgaged and shall not be bound or concerned to examine or
inquire into or be liable for any defect in or
any insufficiency of the title of the mortgaged assets or the assets to
be mortgaged or any part thereof or
anything relating thereto
(d)
The
Debenture Trustees shall not be bound to take any steps to ascertain whether
any event has happened upon the
happening of which the security may become
enforceable;
(e)
The
Debenture Trustees shall not, be responsible for acting upon any
resolution purporting to have been
passed at any meeting of the Debenture holders even through it may subsequently be found that there was some
defect in the constitution of the meeting
or the passing of the Resolution or that for any reason the Resolution was
not valid or binding upon the Debenture
holders;
(f)
Without
prejudice to the right to indemnify by law given to the Debenture Trustees
the Debenture Trustees shall be entitled
to be indemnified out of the mortgaged premises In respect of all liabilities and expenses
incurred by them in the execution or purported
execution of the authorities or discretions vested in them including
liabilities and expenses consequent upon
any mistake, oversight, error of judgment, forgetfulness or want of prudence on the part of the Debenture
Trustees or any such appointee and
against all actions, proceedings, costs, claims and demands in respect
of any matter or thing. done or ommitted
In anywise relating to the mortgaged assets and "the Debenture Trustees may retain and pay out of any moneys
in their hand upon the trusts of these
presents the amount of any such liabilities and expenses necessary to
effect such Indemnity and also the
remuneration of the Debenture Trustees as herein provided and the Debenture Trustees shall have a lien on
the mortgaged assets for all moneys
payable to them. under this clause or otherwise howsoever arising out of
and in connection with these presents or
the issue of the Debentures;
(g)
The
Debenture trustees shall not incur any responsibility in respect of realisation
of the proceeds of the mortgaged assets
or be under any obligation to see the application thereof;
(h)
The
Debenture Trustees shall not be liable for any default, omission, delay in performing or exercising any of the powers or
trusts herein expressed or contained or
any of them or in enforcing the covenants
herein contained or any of them
ARTICLE
VIII
8. Upon proof given to the reasonable
satisfaction of the Debenture or Trustees that all the Debentures for the time
being issued pursuant to the said Deed have been paid off or satisfied and upon
payment of all, charges and expenses incurred by the Debenture Trustees in
relation to these presents (including the remuneration of the Trustees and all-
interest thereon) the.Debenture Trustees shall at the request and cost of the
Company, release or reassign to the Company as the Company may direct the
mortgaged assets free and discharged from the security to be created as
stipulated in Article III hereof.
ARTICLE
IX
9. This agreement shall be effective on and
from the date first herein above written and shall be in force till all monies
in respect of the Debentures have been fully paid off.
IN
WITNESS WHEREOF the
Company and Debenture Trustees have caused this Agreement to be executed on the
day, month and year first above written.
The Common seal of the within named ABC
POWER GENERAT ION COMPANY LIMITED have
been hereunto affixed pursuant to a resolution of Its Board of Directors passed
on the day of, 2000 and in the presence of………………Director of the Company and of the
Company who have signed the same in token thereof.
Signed and delivered by within named the XYZ
FINANCE COMPANY Ltd., by the hand of Sri
................. an authorised official of
the Debenture Trustees.
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