Escrow Agreement

Escrow Agreement

THIS ESCROW AGREEMENT is made at Karachi on this ______ day of ________, 2013 by and between

________________________, a public limited company incorporated under the laws of the Islamic Republic of Pakistan and having its registered office at ____________ (hereinafter referred to as the “Customer”).

________________________, a banking company incorporated under the laws of Islamic Republic of Pakistan and having its head office at ____________________ (hereinafter referred to as the “Bank”); and

Mr. _________  (Sponsor No. 1) __________________ (Sponsor No. 2) (together referred to as the “Sponsors”)

WHEREAS:

  1. The Customer is desirous of raising a long term finance to the extent of Rs.

________ (Rupees __________ only) in order to finance the project undertaken by the Customer to install dyeing facility at _________________, Karachi (the Project).

  1. At the request and based on the representations of the Customer, Bank has agreed to provide finances to the Customer on the basis of mark up in price and in accordance with the terms and conditions of the Syndicate Finance Agreement dated ________ (the Syndicate Agreement).
  2. According to and pursuant to the Facility Letter dated _________ (the facility Letter) duly accepted by the Customer and the Sponsors, the Customer and the Sponsors have agreed to open an escrow account in the name of ___________ to be maintained with Bank bearing Special Saving Deposit Account No. ____ (the Escrow Agreement).
  3. The Customer and Sponsors, shall in consideration of the finance facilities to be provided under the Syndicate Agreement and subject to the terms hereof deposit the amounts in the Escrow Account in order to provide additional security to the Bank.

NOW THIS AGREEMENT WITNESSETH and is hereby agreed and desired as under:

  1. That the Sponsor hereby unconditionally and irrevocable declare and confirm that the Sponsors shall deposit equity/amounts in the Escrow Agreement in the manner stipulated in the Schedule A attached hereto.
  2. That the Customer and the Sponsors agree and undertake that the Escrow Agreement shall be operated by the authorized representatives of the Customer/Sponsors with Bank and also represent and undertake that Mr. _____ and __________ are (jointly) authorized on behalf of the Customer/Sponsors (the Authorised Representatives) for the operation of the Escrow Account jointly with the authorized officer of the Bank for the implementation of the Project.
  3. Notwithstanding anything contained hereof, the Customer and the Sponsors represent and undertake that apart from the Authorized Representatives, the Sponsors are also authorized and empowered to singly operate and issue instructions in respect of the Escrow Account, which account shall be operated jointly with the authorized officer of the Bank. Bank shall reply on the instructions issued by any of the Sponsors relating to the operation of the Escrow Account which is to be operated along with the authorized officer of Bank. In case Bank suffers any loss or damage on the basis of such representation then Bank shall be entitled to adjust/set off the money lying in the Escrow Account to the amount of damage or loss incurred by Bank. The demand/statement by Bank of the loss or damage shall be conclusive proof of evidence.
  4. The Customer and the Sponsors shall represent that they are fully authorized and empowered to enter into this agreement and that the same is not contrary to the applicable law or any agreement, document or contract to which they are or any one of them is a party.
  5. That for the purposes of this Agreement Letter of Credit shall mean any letter of credit established by the Customer in pursuance of the Syndicate Agreement.
  6. That in case due to fluctuations in the exchange rate the amounts payable under the Letter of Credit exceeds the sum of Rs. ____________ (Rupees ________ only) then the Sponsors through their own resource/equity shall in addition to the sums mentioned in Schedule A, also deposit (i) immediately a further sum equal to 18% of any sums payable under the Letter of Credit exceeding Rs. _______ and (ii) in six equal monthly installments starting one month after the establishment of Letter of Credit the remaining sum equivalent to __% of the amount payable under the Letter of Credit exceeding Rs. _________ (Rupees __________ only).
  7. Notwithstanding anything contained hereof it is agreed between the parties that in case the total cost of the Project exceeds the amount of rs. 802, 000,000/- (Rupees eight hundred and two million only) (the sum of Rs. 82, 000, 000/- shall be for the purpose this Clause be called the Project cost) then the amount exceeding the Project Cost shall be arranged and funded by the Customer from its own resources. The Syndicate is no case shall be responsible for arranging any funds to meet over the run. In addition the difference between the Project Cost and the finance facilities extended under the Syndicate Agreement shall also be funded and arranged by the Customer/Sponsors, if so required by Bank.
  8. That in case the Customer is unable to achieve the financial close by the time of the retirement of Letters of Credit documents, the Sponsors shall inject such further equity in the Project as may be required to meet the short fall in the financial close.
  9. That the Letter of Credit documents shall include the shipping documents negotiated under and in accordance with the applicable Letter of Credit and such other documents as may be required by Bank from time to time.

 

  1. That the instructions relating to the joint operation of the Escrow Account shall remain in force and binding and shall not be revoked or withdrawn save under the joint signatures of the Sponsors and the Customers.
  2. That upon the failure of any terms and conditions of this Agreement, Bank shall be entitled to terminate this Agreement without giving any notice thereof and shall also be entitled to terminate all or any of the other agreements or documents between the Customer and the Bank.

 

  1. That in case of such termination the Customer shall not claim any amount whatsoever from Bank as consequential or direct damage or loss.

IN WITNESS WHEREOF this Agreement has been executed on the date and year mentioned above.

______________

The Customer   

______________

The Bank                                         

______________                                                                                _________

Sponsor No. 1                                                                                    Sponsor No. 2

 

_____________

Sponsor No. 3

Witnesses:

1.___________

Name

CNIC

  1. __________

Name

CNIC

SCHEDULE A

Detail of Equity to be deposited by the Sponsors

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