Category Archive Banking / Finance

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Loan Agreement with Security

A document that provides a lender a security interest in a specified asset or property that is pledged as collateral. In the event that the borrower defaults, the pledged collateral can be seized and sold. A security agreement mitigates the default risk the lender faces.

The object of loan agreement is that it determines the terms and condition between the lender and borrower. The agreement is binding on both the parties and can be enforceable by law.

  DRAFT OF  LOAN AGREEMENT WITH SECURITY


 THIS AGREEMENT is made at ________on this ____ day of _______, 200__

BETWEEN

___________LTD, a Company incorporated under the Companies Act, 1956 or Companies Act ,2013 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 shall mean and include its heirs, successors and assigns of the One Part

AND

      i.        M/S ABC LIMITED, a Company incorporated under the Companies Act, 1956 or Companies Act ,2013 having its Registered Office at ____________________ (hereinafter referred to as “The Borrower”) which terms or expression shall unless excluded by or repugnant to the subject or context hereof shall mean and include its heirs, successors and assigns of the SECOND PART and

     ii.        M/S CDE LIMITED, a Company incorporated under the Companies Act, 1956 or Companies Act ,2013 having its Registered Office at __________________ (hereinafter referred to as “The Lender”) which terms or expression shall unless excluded by or repugnant to the subject or context hereof shall mean and include its heirs, successors and assigns of the THIRD PART.

WHEREAS

A. The Borrower is one of the entities in the group of Companies, ABC LIMITED, a Company incorporated under the provisions of the Companies Act, 1956 or Companies Act, 2013 having its Registered Office at ___________________________ hereinafter referred to as “The Borrower” has a paid up capital of Rs. ______ lacs as on _________ (date).

B. The Borrowers has approached “The Lender” for grant of 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 and conditions and covenants as follows.

D. The Lender has agreed to secure the timely repayment of the loan along with interest by creating in favour of the Lender Pledge with 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 an advance 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 an 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 a penal interest @ _% per annum over and above the interest mentioned hereinabove.

3.  As a security towards timely repayment of loan along with interest, the Lender has agreed to pledge in favour of the Lender, fully paid up equity shares, standing in the name of Lender as stated in the Annexure annexed hereto and treated as an integral part of the agreement in the equity capital of ABC Limited, a company incorporated under the provisions of the Companies Act, 1956 or Companies Act, 2013 having its Registered Office at _____________________________. The Equity shares of Equity International Ltd are listed at _______ Stock Exchange and the current market price of shares is agreed to be Rs. ____/- per share.

4. In case the Lender sends the 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 expressly agreed by and between the parties hereto that in case of downward revision in the market price of the equity shares of ABC LTD, the Borrower/ Lender shall on its own, pledge in favour of the Lender such other shares of ABC LTD so as to ensure ______ % margin between the amount of loan along with interest and the securities.

6. 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 off, at the cost and expenses of the borrower, all or some of the equity shares of ABC 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.

7. The Borrower agrees that any accretion 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.

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

9. The Borrower/ Lender 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.

10.The Borrower/ Lender have agreed to constitute nominate and appoint the Lenders as its true and lawful attorney to do all such deeds and things in respect of the said ______(No. of Shares) Equity Shares of ABC LTD as may be pledged/hypothecated by the Borrower to the Lender.

11. It is agreed that the liability of the Lender is jointly and severally 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 terms stated above on the date and place mentioned hereinabove.

THE BORROWER

THE PLEDGER

THE LENDER

Disclaimer: The information contained in the sample document is general legal information and should not be construed as legal advice to be applied to any specific factual situation. Any use of the Site or document format DOES NOT create or constitute a solicitor-client relationship between LawRato or any employee of or other person associated with LawRato and a user of the Site. The information or use of documents on the Site is not a substitute for the advice of a lawyer.


Bydeb

Loan Agreement

A loan agreement is a contract between a borrower and a lender which regulates the mutual promises made by each party.It is a formal document that evidences a loan. There are many types of loan agreements, including “facilities agreements,” “revolvers,” “term loans,” “working capital loans.”

The object of loan agreement is that it determines the terms and condition between the lender and borrower. The agreement is binding on both the parties and  is enforceable by law 

  DRAFT OF LOAN AGREEMENT

LOAN AGREEMENT BETWEEN
________________________

AND ______________________

THIS AGREEMENT made and entered into at _______ this ____ day of_______, ______ BETWEEN __________________ hereinafter called “the Lender” AND ________________________ hereinafter called “the Borrower” and reference to the parties hereto shall mean and include their respective heirs, executors, administrators and assigns;

WHEREAS the Borrower is in need of funds and hence has approached the Lender to grant her an interest-free loan of Rs.________/- (Rupees ____________________ only) for a period of ____ years;

AND WHEREAS the Lender has agreed to grant a loan to the Borrower, free of interest, as the Lender and the Borrower have known each other since several years;

AND WHEREAS the parties hereto are desirous of recording the terms and conditions of this loan in writing;

NOW THIS AGREEMENT WITNESSETH and it is hereby agreed by and between the parties hereto as under:-

1.     The Borrower hereto, being in need of money, has requested the Lender to give her an interest-free loan of Rs.___________/- (Rupees _________________________ only) to enable her to purchase a residential flat, to which the Lender has agreed.

2.     The said loan is required by the Borrower for a period of ____ years, commencing from __/__/___ and terminating on __/__/_____.

3.     The Borrower hereby agrees and undertakes to return the loan of Rs.___________/- (Rupees ____________________only), in instalments, within the aforesaid period of ____ years and gives her personal guarantee for the same.

4.     The terms and conditions of this Agreement are arrived at by the mutual consent of the parties hereto.

IN WITNESS WHEREOF the parties hereto have hereunto set and subscribed their respective hands the day and year first hereinabove written.

SIGNED AND DELIVERED by the Within-

named Lender in the presence 

SIGNED AND DELIVERED by the Within-

named Borrower in the presence of

Disclaimer: The information contained in the sample document is general legal information and should not be construed as legal advice to be applied to any specific factual situation. Any use of the Site or document format DOES NOT create or constitute a solicitor-client relationship between LawRato or any employee of or other person associated with LawRato and a user of the Site. The information or use of documents on the Site is not a substitute for the advice of a lawyer.

Bydeb

Deed of Hypothecation HP

Deed of Hypothecation” means a particular joint deed of hypothecation executed by the Borrower in favour of the particular Consortium of Lenders for the purpose of securing the Assets for the Facility and includes the Standard Terms as applied thereto, and all schedules and amendments to such Deed of Hypothecation.
 
The main purpose of hypothecation is to mitigate the creditors’s credit risk.If the debtor cannot pay, the creditor possesses the collateral and therefore can claim its ownership or sell it and thus compensate the lacking cash inflows.

  DRAFT OF DEED OF HYPOTHECATION


THIS DEED OF HYPOTHECATION executed at ________ on this the ___________ day of _________ between

Mr.________________, son of_____________, aged about ___________ years, residing at _____________________, hereinafter called the CREDITOR (which expression shall, unless it is repugnant to the context mean and include his legal representatives, executors, administrators, and assigns)

And

Mr.________________, son of_____________, aged about ___________ years, residing at _____________________, hereinafter called the BORROWER (which expression shall, unless it is repugnant to the context mean and include his legal representatives, executors, administrators and assigns);

WHEREAS

The BORROWER has placed an order for the purchase of, a ___________, namely________________, {valued at Rs.____________ (Rupees ____________), (Details of the same are set out in the schedule ‘A’ hereunder) (hereinafter referred to as the asset), with the ________________, namely ________________, having its office at __________, and has remitted an amount of Rs.______________(Rupees _____________only}, with the said _________________ as advance towards the sale consideration.

The BORROWER has approached the CREDITOR for a loan of Rs.______________, (Rupees _____________only), for the payment of the balance price of the schedule ‘A’ mentioned asset. The CREDITOR and BORROWER have agreed that the CREDITOR shall finance the purchase of the schedule ‘A’ mentioned asset, on the condition that the BORROWER hypothecates the schedule mentioned asset with the CREDITOR as security for the due repayment of the said loan. The parties have agreed to reduce their agreement to writing

NOW THEREFORE IN CONSIDERATION OF THE MUTUAL OBLIGATIONS AND UNDERTAKINGS CONTAINED HEREIN THIS AGREEMENT WITNESSETH AS FOLLOWS:

Payment by the CREDITOR

The CREDITOR shall pay to the said manufacturer, on behalf of the BORROWER, a sum of Rs. ____________/-, (Rupees _______), towards the balance price of the said asset and shall retain possession of the original invoice of the said asset till the debt is fully discharged by the BORROWER.

HYPOTHECATION

The BORROWER hereby hypothecates and creates a charge on the asset more fully described in the schedule ‘A’ hereunder to and in favour of the CREDITOR as security for the repayment of the loan with interest.

Obligations of the BORROWER

The BORROWER hereby undertakes to repay the loan amount within a period of ______ months commencing from________ along with interest. The BORROWER shall pay interest at the rate of ______________ on the principal per month, at Rs._____________/-, (Rupees ____________only). The Interest and principal are payable in monthly instalments as per schedule-B hereto.

Rights of the CREDITOR

If the BORROWER defaults in payment of the amount as per schedule-B hereto then such defaulted instalment will carry interest as if the defaulted instalment is the principal, until it is paid. If the BORROWER fails to pay any ______ instalments then the CREDITOR shall be entitled to claim the principal and interest amount due, and the same shall become payable forthwith, on the CREDITOR calling upon the BORROWER to make payment of such defaulted principal amount.

The BORROWER shall not remove or take the said asset, outside the State without prior intimation to the CREDITOR.

The BORROWER agrees and undertakes to insure the asset against all hazards, and shall produce the relevant receipts, and other documents, whenever called upon by the CREDITOR so to do.

Any dispute arising under this Deed or any matter incidental thereto, shall be submitted to arbitration as per the provisions of the Arbitration and Conciliation Act 1996 and the venue of the arbitration shall be at ………

IN WITNESS WHEREOF the parties hereto affixed their signatures on the day month and year mentioned hereinabove

SCHEDULE ‘A’

(Describe the Asset)

SCHEDULE-B

(Describe the payment schedule)

CREDITOR

BORROWER

WITNESSES

1.

2.

Disclaimer: The information contained in the sample document is general legal information and should not be construed as legal advice to be applied to any specific factual situation. Any use of the Site or document format DOES NOT create or constitute a solicitor-client relationship between LawRato or any employee of or other person associated with LawRato and a user of the Site. The information or use of documents on the Site is not a substitute for the advice of a lawyer.