Pre-Book your session Now!
DEBENTURE SUBSCRIPTION AGREEMENT

DEBENTURE SUBSCRIPTION AGREEMENT

 

THIS AGREEMENT  made at Mumbai on this      day of ________,  in the year Two Thousand Twelve between ______________ LIMITED a Company incorporated and registered under the Companies Act, 1956, and having its Registered Office at _________________________________________________________________________ .,(hereinafter referred to as “the Company”) which expression shall, unless it be repugnant to the subject or context thereof, mean and include its successors and assigns) of THE ONE PART;

                                                                        A N D

______________________, having its registered office at ____________________, in its capacity as a Trustee of _______________________FUND, constituted as an revocable Trust under the Indian Trusts Act, 1882 (hereinafter referred to as “FUND”, which expression shall, unless it be repugnant to the context or meaning thereof, be deemed to mean and include its successors and permitted assigns) of THE OTHER PART.

 


ARTICLE-I

 

1.1       Wherever used in this Agreement, unless the context otherwise requires, the       following  terms shall have the following meanings :-

 

                        a)         “Act” means Companies Act, 1956 (1 of  1956) and shall include any statutory modifications thereto or any re-enactment thereof.

 

            b)         “Debentures” means _____% Redeemable Non-Convertible Debentures to be issued by the Company to FUND on private placement basis.

 

           c)          “Debenture Holders”  means FUND and shall include its successors and assigns.

 

ARTICLE-II

 

AGREEMENT AND TERMS OF ISSUE OF DEBENTURES

 

2.1       AMOUNT OF DEBENTURES TO BE ISSUED

            The  Company agrees to issue to FUND and FUND agrees to subscribe to the Company’s Debentures of the face value of Rs.100/- each aggregating to Rs.__________________/-(Rupees ______________________ Crores only) (hereinafter referred to as “the Debentures”) on the terms and conditions contained in FUND’s letter dated ___________________and also on the terms and conditions contained herein.

 

2.2       NO DEFAULT CERTIFICATE

            Before subscription to the said Debentures, the Company shall furnish to FUND a certificate from its Auditors that the Company is not in default with any Financial Institutions/Banks.

 

2.3       ALLOTMENT OF DEBENTURES :

            The Debentures shall be allotted by the Company immediately on receipt of subscription monies from FUND by issue of allotment letter to FUND to that effect.

 

2.4       DEBENTURE CERTIFICATES :

            The Company shall issue Debenture Certificate/s to FUND after making necessary compliance with the provisions of Section 113 (1) of the Companies Act, 1956 read with the Companies (Issue of Share Certificates) Rules, 1960.

 

2.5       STAMP DUTY :

            Any stamp duty payable on the issue of Debebtures and / or on the Security Documents including interest and / or penalty, if any, for non-payment or short payment thereof would be borne and paid by the Company and the Company agrees and undertakes to pay the same and also the penalty for non-payment / short payment thereof as and when required to do so.

 

2.6       LEGAL CHARGES :

            The expenses on account of necessary documents shall be borne and paid by the Company.

           

2.7       UTILISATION:

            The Company shall utilise the proceeds of the Debentures for the purpose of _____________________________________________ and for no other purpose whatsoever and shall furnish the Auditors Certificate to this effect to FUND.

 

2.8       REDEMPTION PERIOD AND PRICE INCLUDING EARLY REDEMPTION:

 

(a)        The Debentures would be redeemed at par with interest accrued thereon, if any, in _________equal monthly instalments of Rs.______________________/- each commencing at the end of _______ month from the date of initial disbursement of funds by FUND towards subscription of the Debentures.

 

(b)        No request from the Company to defer the payment of interest and/or redemption of the Debentures shall be considered by FUND and hence, interest as well as the redemption amount of the Debentures shall be paid by the Company on the respective due dates positively.

 

(c)        The Company shall arrange to give post-dated cheques towards  interest dues as well as redemption instalments before availing disbursement of the Debentures.

 

2.9       PREMATURE REDEMPTION :

            Without prejudice to the rights of FUND to call for premature redemption of the debentures in the events mentioned hereafter, FUND reserves the right either to accept or to reject any request from the Company to make any premature redemption of the debentures or any part thereof.

 

2.10     INTEREST  ON DEBENTURES OUTSTANDING :

            The Company shall until the Debentures are redeemed or paid off in  full pay to FUND interest on the Debentures @ _____% (___________________ per cent) per annum on the face value of the Debenetures commencing from _________________ and thereafter payable quarterly on f______________________, _________________, ____________________ and ___________________ every year for the respective period ending on these dates and balance at the time of redemption of last instalment of Debenture from the date of subscription till redemption thereof in full PROVIDED HOWEVER THAT in the event of any default in payment of any instalment of the principal amount towards redemption of  the debentures or any part thereof and / or payment of any instalment of interest on the debentures  the Company shall pay to FUND interest at the rate of __________%  (________________________ per cent) per annum on the amount in default during the period of default i.e. from the date of such default to the date on which the instalment of interest / redemption in default is paid.PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED that all interest which shall accrue on the Debentures outstanding  or any part thereof and for the time being remaining unpaid and all other monies which shll become payable under these presents, in case the same be not paid on the dates on which they are accrued and due, shall carry compound interest at the rate of  _______%  p.a. computed from the respective dates of such interest and further interest which becomes payable under these presents but not paid shall become payable upon the footing of compound interest with rests taken or made quarterly on the respectively dates provided hereinabove.

 

2.11     DUE DATE OF PAYMENT

            If the due date in respect of any  instalment of principal,  interest and / or liquidated damages and all other monies payable under this Agreement falls on a Saturday, Sunday or on a day which is a public holiday under the Negotiable Instruments Act, the immediately preceding working day shall be the due date for such payment.

 

2.12     APPROPRIATION OF PAYMENTS

            Unless otherwise agreed to by FUND, any payments due and payable to FUND and made by the Company shall be appropriated towards such dues in the following order, viz.:-

            i)          Firstly towards costs, charges and expenses;

            ii)         Secondly towards additional / compound interest

            iii)        Thirdly, towards interest; and

            iv)        Lastly, towards the principal  amount for redemption of the Debentures or any part thereof.

 

2.13     TRANSFER :

            The Lettters of Allotment / Debenture Certificates shall be transferable by execution of necessary transfer documents and the transfers will be registered by the Company within 7 days of lodging of valid transfer documents at the Registered Office of the Company.

 

ARTICLE  - III

 

SECURITY

 

3.1       SECURITY FOR THE DEBENTURES

            The redemption of the Debentures together with interest, additional / compound interest and all other costs, charges, expenses payable hereunder shall be secured by :-

 

a)         Irrevocable personal guarantee of Shri _____________________________, Managing Director of the Company; 

 

b)         Joint and Several Demand Promissory Note to be executed by the Company and the Guarantor agreeing to pay to FUND the said sum of Rs.________________ together with interest thereon at the rate of ________________% p.a.; and

 

c) Pledge of quoated shares of the Company(in marketable/ Demat  lots), the market value of which shall not be less than Rs.____________________.  The shares being offered  shall be free from all encumbrances including non-disposal undertaking given to financial institutions and shall be in marketable lots.  The market value of Rs._________________shall be maintained during the currency of financial assistance.

 

3.2       EXECUTION OF DOCUMENTS AND CREATION OF SECURITY

            FUND shall subscribe to the Debentures on compliance with all the terms and conditions of sanction and execution of this agreement and other relevant documents such as Demand Promissory Note and Personal Guarantee and Pledge of Shares as aforesaid and depending upon the resource position of FUND.

 

            ARTICLE-IV

 

COMPANY’S WARRANTIES

 

            The Company hereby warrants and undertakes as follows :

a)         Litigation :

            The Company is not a party to any litigation of a material character and that the Company is not aware of any facts likely to give rise to such litigation or to material claims against the Company.

 

b)         Infringement of Local Laws :

            No suit is pending in any  court of law in respect of the company's properties offered as security to FUND nor has the Company been served with any notice for infringing the provisions of any Act or with any other process under any law for the time being in force.    

 

c)         Due payment of public and other demands

            The Company has paid all statutory dues such as Income Tax, Corporation Tax  and all other taxes and revenues and any other taxes and levies payable to the Government of India or to the Government of any State or to any local or other authority and that at present no arrears of such taxes, revenues and dues are due and outstanding.

           

d)         Financial position

            The Company has furnished to FUND its latest audited balance sheet and  financial position of the Company is  correctly disclosed by the said balance sheet and since that date the financial position of the Company has not been affected by losses or other material changes.  The Company’s results of future financial years shall be provided as soon as they are declared.

 

e)         Compliance of provisions of Companies Act in relation to borrowings :

            The Company declares and confirms that its borrowings conform to the provisions of Section 293 (1) (d) of the Companies Act, 1956 as applicable and other revelant provisions of the Companies Act, 1956.

 

f)          Delivery of Board Resolution authorising execution of documents :

            The Company has passed and delivered a certified copy of the Resolution of its Board of Directors authorising the execution of this Agreement, Demand Promissory Note and such other documents as may be required in respect of the Debentures and confirms that the said Resolutions continue to be in force.

 

g)         Conflict with Memorandum and Articles of Association :

            Nothing in this Deed conflicts with the Memorandum and Articles of Association of the Company.

 

ARTICLE-V

CONDITIONS PRECEDENT TO DISBURSEMENT OF THE FINANCIAL

ASSISTANCE

5.1       The obligation of FUND to subscribe to the Debentures under these presents shall be subject to the observance of and performance by the Company of all its obligations and undertakings to be observed and performed under this Agreement and subject to the the following further conditions :-

a)         Non-existence of event of default :

            The Company shall satisfy FUND that no event of default as defined in Article-VIII  hereof and no event which, with the lapse of time or notice, as specified in the said Article-VIII  would become an event of default , has happened and is continuing.

 

 

b)         Consents and approvals :

            The Company shall satisfy FUND that all consents , approvals etc. as are necessary for the issue of Debentures have been obtained from the appropriate authorities and the same are effective and in force.

 

c)         Right to seek modification  :

            The Company hereby agrees to review the terms and conditions relating to any monetary benefits (on pro-rata basis wherever applicable) available to FUND in respect of the Debentures in case the Central Government or the Competent Authority announces in future any modification/ amendment/revision in the guidelines for the purpose of issue of Debentures by Public Limited Companies.

    

d)         Debenture redemption reserve  :

            The Company shall create Debenture Redemption Reserve (DRR) out of its profits before distribution of any dividend and transfer to it suitable amounts during the currency of  the Debentures.

 

ARTICLE-VI

 

COVENANTS AND TERMS OF APPLICATION DURING THE CURRENCY OF THIS AGREEMENT

 

6.1       Particular affirmative convenants :

            Unless FUND shall otherwise agree, the Company shall ;

a)         Adverse Changes in Profits and Production :        

            Promptly inform FUND of the happening of any labour strikes, lock-outs, shut-downs, fires or other similar happenings etc.that are likely to have an adverse effect on Company’s financial position or business and of any material changes in the rate of production or sales of the Company with an explanation of the reasons therefor.

 

 

b)         Maintenance of property   :

Legal Process Outsourcing This Document

User Comments

Send
Buy Document
₹ 3000/-

Buy Now


×

C2RMTo Know More

Something Awesome Is In The Work

0

DAYS

0

HOURS

0

MINUTES

0

SECONDS

Sign-up and we will notify you of our launch.
We’ll also give some discount for your effort :)

* We won’t use your email for spam, just to notify you of our launch.