Exhibit 10.8
GOODS SECURITY
AGREEMENT
THIS DEED OF HYPOTHECATION made at
Bangalore on this 21st day of May 2008 between
M/s. iGATE Global Solutions
Limited , a company
registered under the Companies Act, 1956, having its registered
office at 158-162 & 165-170, Epiphase II, Whitefield,
Bangalore – 560 066 , hereinafter referred to as
“The Borrower” (which expression shall unless it be
repugnant to the meaning or context thereof be deemed to mean and
include its successors and assigns) of the One Part
;
AND
Citibank N.A.
a corporate body having its
registered office at 399, Park Avenue, New York 10043 and a branch
office in India at Bangalore hereinafter referred to as “The
Bank” (which expression shall unless it be repugnant to the
meaning or context thereof be deemed to mean and include its
successors and assigns) of the Other Part;
WHEREAS:
The Bank at the request of The
Borrower at its discretion agreed to grant to The Borrower working
capital facilities to the extent of Rs. 28,00,00,000/- (Rupees
Twenty Eight Crores Only) on the condition, inter alia, that
The Borrower shall repay the principal amount due in respect of the
aforesaid working capital facilities aggregating Rs.
28,00,00,000/- (Rupees Twenty Eight Crores Only) on demand
together with interest, commission, cost, charges, expenses and all
other monies whatsoever payable by The Borrower to The Bank and
secure the same by way of first exclusive charge by hypothecation
of all The Borrower’s moveable assets forming part of its
current assets both present and future. Subject to other terms and
conditions contained, The Bank has granted to The Borrower the said
credit facilities, particulars whereof are given in the First
Schedule therein. It is however made clear that The Bank shall be
at liberty to increase and/or decrease the limits of each such
facility at any point of time, provided however that the total
overall limits of all the facilities does not exceed the overall
limits of Rs. 28,00,00,000/- (Rupees Twenty Eight Crores
Only).
NOW IN CONSIDERATION OF THE BANK
having agreed to grant to The Borrower working capital facilities
to the extent of Rs. 28,00,00,000/- (Rupees Twenty Eight Crores
Only) and open the said facilities accounts in the name of The
Borrower, The Borrower hereby agrees with and confirms and declares
to The Bank as follows:-
1. The Borrower shall pay to The
Bank on demand being made by The Bank all dues then outstanding and
owing to The Bank under and in respect of the aforesaid fund based
facilities and non fund facilities inclusive of all interest,
commission, cost (between attorney and client) charges, expenses
and all other monies which are payable to The Bank in respect of
the said facilities unto the date of payment.
2.1 That The Borrower shall pay
interest to Bank on the principal amount of the aforesaid fund
based facilities advanced and outstanding from time to time at the
rate of
% per annum (as announced from time to time exclusive of applicable
interest tax). Such interest shall be paid with monthly rests on
the last date of each month in each year. In default of regular
payment of interest on the due dates compounded interest shall
become payable on monies due. PROVIDED that The Bank shall at any
time or from time to time be entitled to change the rate of
interest and notify such changes to The Borrower and this deed
shall be construed as if such revised rate of interest be always
mentioned herein and agreed to be paid by The Borrower and hereby
secured.
2.2 That commission on non-fund
based facilities shall be paid by The Borrower to The Bank at rates
as applicable from time to time.
2.3 That interest and other charges
shall be computed on the basis of 365 days in a year.
2
2.4 Without prejudice to generality of the
foregoing The Bank shall also be entitled to charge at its own
discretion and The Borrower shall be liable to pay and hereby
agrees to pay such enhanced rate of interest on the said facilities
accounts either on the entire outstanding or the portion thereof as
The Bank may fix for any irregularity or any breach of the terms of
sanction or hereof by The Borrower and for such period as the
irregularity or breach continue or for such time as The Bank may
decide it necessary regard being had to the nature of the
irregularity or breach provided that the charging and payment of
enhanced rate of interest shall be without prejudice to the other
rights or remedies of The Bank either hereunder or otherwise or by
law to proceed for such irregularity or breach against The
Borrower/ and/ or/ the security hereby created.
3.1 The Borrower do hereby
hypothecate and charge the following by way of first charge to and
in favour of The Bank facilities mentioned in the recital
hereinabove without any preference or priority to one over the
others.
All of The Borrower’s present
and future book debts, outstanding monies, receivables, claims,
bills, investments, rights to or in moveable properties and
moveable assets forming part of current assets which are now due
owing or payable or belonging to The Borrower or which may at any
time hereafter during the continuance of this security become due,
owing payable or belonging to The Borrower in the course of its
business (and all of which are hereinafter for brevity’s sake
referred to as “the said Book Debts”) TOGETHER WITH all
benefits advantages and legal incidence thereof.
The current assets hereby
hypothecated book debts are hereinafter collectively referred to as
“the Hypothecated assets”. The present value of
hypothecated assets is Rs.188.40 Crores
3.2 The said hypothecated assets
which are hereby hypothecated by The Borrower to and in favour of
The Bank by way of First charge shall be remain as security to The
Bank for the due payment by The Borrower to The Bank on
demand;
(a) Of all monies at any time
payable by The Borrower to The Bank under or in respect of the said
facilities and whether for principal, interest, service charge,
commitment charge, commission, fee, discount or for costs, charges
and expenses or other monies, payable hereunder by The Borrower to
Bank which may be incurred by The Bank.
(b) For the due payment and
discharge of all indebtedness and/or/ liability of The Borrower to
The Bank including in respect of any bills of exchanges, promissory
notes or instruments at any time drawn, made accepted or endorsed
by The Borrower solely or jointly with others which The Bank may
discount or become interested in, together with all interest,
discount, commission, fee, charges (including service charges)
costs (between attorney/advocate and client) and expenses payable
to or incurred by The Bank.
3
3.3 The Borrower shall not remove or cause or
permit to be removed any of the Hypothecated assets from any of the
premises, factories or Godowns of The Borrower or wheresoever
otherwise they may be kept or divert or cause or permit any of the
Hypothecated assets to be diverted while in transit except for the
purpose of dealing with the Hypothecated assets in the ordinary
course of The Borrower’s business.
In the event of the sale of the
Hypothecated assets and realisation of the sale proceeds, such sale
proceeds shall be forthwith credited/deposited by The Borrower to
its Account with The Bank and shall not be dealt with any other
manner whatsoever. In the case of shipment or movement of the
Hypothecated assets by the ship, railway or lorry or otherwise, The
Borrower shall hand over to The Bank for Collection the relative
documents including the relative Bills of lading, railway receipts
and lorry receipts duly endorsed in favour of The Bank to enable
The Bank to realise the proceeds thereof.
3.4 If so required by The Bank, The
Borrower shall cause to be displayed at all places whereby any of
the hypothecated assets may be kept, sign boards prominently
indicating that the Hypothecated assets are Hypothecated to The
Bank; the sign boards to be displayed in such manner and form as
may be required by The Bank.
4. The Bank shall have the absolute
right and discretion to decide whether or not to advance or allow
remaining outstanding any monies even against the security of the
said hypothecated assets. Further, The Bank shall be at liberty at
any time at its sole discretion without previous notice to The
Borrower and without assigning any reason whatsoever to cease to
make any further advances in the said facilities Accounts and to
recall at any time the monies then due or outstanding by The
Borrower to The Bank in the said Facilities Accounts.
5.1 The Bank shall not be required
to make or continue advances in the said Facilities Account(s)
otherwise than at its sole discretion.
5.2 The Borrower shall at all time
during the continuance of this security keep and maintain a margin
of security of 10% against the said book debts, in favour of The
Bank (herein after called “the said margin”) or such
other percentage against such assets as The Bank may from time to
time determine of the cost or market value (market value as found
by The Bank) whichever is lower of the said book debts or any part
thereof.
5.3 The Bank shall be entitled to
and shall be at liberty to change from time to time the margins and
The Borrower shall be bound by such change.
6. The Borrower will at all times
maintain a sufficient quantity of the said book debts to provide
the necessary margin of security as specified herein and as may be
required by The Bank from time to time and
4
will forthwith whenever necessary provide
further book debts approved by The Bank to restore such margins or
reduce the amount for the time being due to The Bank by cash
payment so as to restore/maintain the said margins.
7.1 The Borrower shall whenever so
required by any of The Bank furnish to The Bank full particulars of
all the hypothecated assets of The Borrower and shall allow The
Bank or its authorised agent(s) to take inspection thereof and of
all records, books and vouchers pertaining thereto and will produce
such evidence as The Bank may require as to the cost and value of
any of the said hypothecated assets.
7.2 The Borrower shall value the
hypothecated assets at the appropriate rates whether fixed by The
Bank or not and shall not overvalue the same. The Bank shall be at
liberty from time to time and at any time to have any of the said
hypothecated assets inspected and valued by an appraiser or valour
appointed by The Bank which value shall be conclusive and binding
on The Borrower both in and out of court.
7.3 The Bank shall be entitled to
adjust, settle and compromise in any manner whatsoever including by
reference to arbitration at The Borrower’s cost any dispute
arising under or in connection with any such policy of insurance
and such adjustment, settlement, compromise and any award made or
decision given in any such arbitration or otherwise shall be valid
and binding on The Borrower and The Bank shall also be entitled to
receive all monies payable under any such insurance or under any
claim made thereunder and to issue a valid receipt therefor and
that The Borrower will not raise any question that a larger sum
might or ought to have been received or be entitled to raise any
dispute on the balance in any of the said Facilities Accounts after
such credit.
7.4 The Borrower shall pay all
rents, taxes, payments and outgoing in respect of any immovable
property in or on which the said hypothecated assets or any part
thereof may for the time being be lying and shall keep such
property insured against loss or damage by fire and shall also
insure the same against such other risks as The Bank shall require
and shall produce the policies of insurance to The Bank whenever
required by it.
7.5 “The Borrower covenants
and undertakes that so long as the amounts due under this Agreement
shall remain outstanding, and until the full and final payment of
all money owing hereunder, it will, unless The Bank waives
compliance in writing:
(a) maintain its corporate existence
and obtain, comply with the terms of and do all that is necessary
to maintain in full force and effect all authorisation, approvals,
license and consents required to enable it to lawfully carry on its
business;
5
(b) obtain, comply with the terms of and do all
that is necessary to maintain in full force and effect all
authorisation, approvals, license and consents if any required to
enable it to enter into and perform its obligation under this
Agreement and to ensure the legality, validity, enforceability or
admissibility in evidence of this Agreement;
(c) Inform The Bank of any material
litigation, arbitration or other proceedings, which affect The
Borrower, forthwith upon such proceedings being instituted or
threatened;
(d) Promptly inform The Bank of any
occurrence of which it becomes aware which might adversely affect
The Borrower or affect its ability to perform its obligations under
this Agreement;
(e) promptly inform The Bank of the
occurrence of any Event of Default and of the steps being taken to
remedy the same and will, from time to time, if so requested by The
Bank, confirm to The Bank in writing that save as otherwise stated
in such confirmation, no default has occurred and is
continuing;
(f) deliver to The Bank in form and
details satisfactory to The Bank in such number of copies as The
Bank may request
(i) audited accounts within such
reasonable time from the close of the financial year as may be
permitted by The Bank;
(ii) such other statement or
statements or information pertaining to the operations or business
of The Borrower as Citibank N.A. may require in the context of the
said credit facility; and
(iii) all notices or other documents
issued by The Borrower to its creditors.
7.6 The Borrower covenants and
undertakes that so long as the amounts due under this Agreement
shall remain outstanding and until the full and final payment of
all money owing hereunder, it shall not without the prior notice of
atleast 15 working days to The Bank:
(a) declare or pay dividends in
respect of any financial year if any event of default has
occurred;
(b) effect any amalgamation, merger
or consolidation:
(c) effect any material change in
the shareholding of The Borrower
7.7 (a) The Borrower covenants
with The Bank that The Borrower shall appraise The Bank of the
occurrence or likely occurrence of any event which is likely to
affect the capacity of The Borrower to repay the said loan or
interest thereon or likely to affect the security for the said
credit facilities or the obligations of The Borrower to The Bank in
respect of the said credit facilities.
(b) Without prejudice to the
generality of the provisions contained in the preceding
sub-clauses, The Borrower hereby agrees with, and undertakes to The
Bank that The Borrower shall forthwith inform The Bank on the
occurrence or likely occurrence of, inter alia, any of the
following events, namely:
(i) institution of any legal
proceedings against The Borrower by any persons making a claim for
money against The Borrower, or enforcing against The Borrower, any
guarantee given by The Borrower.
(ii) any damage to the Hypothecated
assets for any reason whatsoever;
(iii) any distress or other proceed
of court being taken against the Hypothecated Goods;
6
(iv) the occurrence of any event which is likely
to affect The Borrower’s business, including industrial
action, steps taken by authorities for recovery of statutory, dues,
etc.
(v) of any change taking place in
the ownership or control of The Borrower whereby the effective
beneficial ownership or control of The Borrower will
change;
(vi) with respect to any material
change in the management of the business of the
Borrower.”
8.1 That The Borrower shall make
best endeavour to obtain payment of all the said book debts as and
when the same shall become payable and pay all such sums when
received into the said Facilities Accounts with The Bank. Further,
The Borrower shall not except in the ordinary course of business,
receive, release or compound any of the said book debts without the
consent in writing of The Bank and will not do anything whereby the
recovery thereof may be delayed, impeded, prejudiced, prevented or
become time barred.
8.2 The Borrower shall keep proper
books of accounts of its business and carefully keep and preserve
all the documents, papers and vouchers in connection with or
relating to or which prove or are likely to prove the said book
debts or any part thereof and will at all times, when required
produce such books, documents, papers and vouchers for the
inspection of The Bank or its officer(s) and agent(s) and allow
them or it or him access thereto and to make copies of or extract
from the same.
9.1 It shall be lawful for The Bank
or its agent(s), nominees, officer(s) or employees(s) forthwith or
at any time during the continuance of this security and without any
notice to The Borrower to enter into or upon the place or premises
where or wherein any of the said hypothecated assets and books of
accounts, papers, documents and vouchers and other records relating
thereto may be situated or kept stored (and for the purpose of such
entry, if necessary, to do so as attorney or attorneys of The
Borrower and in the name of The Borrower and to do all acts, deeds
and things deemed necessary by The Bank and to inspect value,
insure, superintend disposal and/or take particulars of all or any
part of the said hypothecated assets and check any statement,
accounts, reports and information and also if The Borrower shall
fail to repay on demand any Monies, which ought to be paid by The
Borrower hereunder or shall commit any breach of any agreement or
covenant or representation or warranty on its part herein contained
or under any circumstances which in the sole judgement of The Bank
is prejudicial to or imperil the security created hereunder or if
any distress or execution is levied or enforced against any
property or assets whatsoever of The Borrower or if a person shall
take any steps towards applying for or obtaining an order for the
appointment of the receiver of any property or assets whatsoever of
The Borrower or if such receiver is appointed or if any person
shall apply or obtain an order for the winding up of The Borrower
or if any such order is made or if any step is taken by any person
towards passing any resolution to wind up The Borrower or if any
such resolution shall be passed or if The Borrower shall suspend or
cease to carry on business or to conduct its business to the
satisfaction of The Bank or any of them, if The Borrower misuses
the said credit facilities or any part thereof for any purpose
ot
