Settlement Agreement

This Settlement Agreement is made and entered into at ______ this day of _____ , 2013.

BETWEEN

____________________________________________ a banking company incorporated under the laws of the Islamic Republic of Pakistan, having its branch office at _________________________________________, Karachi (hereinafter referred to as the “Bank” which expression shall, where the context so requires, include its successors and assigns) of the One Part

AND

Name (hereinafter referred to as “Customer” which expression shall, where the context so requires, include the successors in interest and the respective legal heirs and legal representatives of the directors and the guarantors) of the Second Part

(hereinafter referred to as “Directors”, “Guarantors” and “Former Group Chairman” which expression shall where the context so permits, mean and include their legal heirs, successors in interest and assigns) of the Third Part

(The Bank, the Customer, Directors, Guarantors and Former Group Chairman of the Customer are individually referred to as “Party” and collectively as “Parties” where the context so requires)

WHEREAS the Bank at the request of the Customer extended finance facilities under finance agreement(s) and was availed by the Customer since 2002 from time to time. In 2002 Customer was allowed non-fund based facilities by the Bank for issuance of letters of credit and letters of guarantee and the same were renewed through facility letter dated November 19, 2004. Customer also executed finance agreement, letter of lien, letter of set-off, hypothecation agreement, charge, mortgage, promissory note, letter of continuity and general finance agreement all dated November 24, 2004. The original title documents of the immovable property mortgaged with the Bank are retained by Silk Bank Limited as the same shares first parri passu charge over the abovementioned property with the Bank.

AND WHEREAS at the request of the Customer the Bank issued letters of credit and letters of guarantee vis-a-vis also sanction renewal of the facility to Customer vide facility letter dated August 15, 2006. However, the customer time and again defaulted on its obligations and therefore overdue amount had to be converted into Own Acceptance Purchases (OAPs) on 03-04-2007, 13-04-2007, 16-04-2007, 11-05-2007, 23-07-2007 and 02-08-2007 respectively. The outstanding amount were partially adjusted by the Bank whereas the remaining balance and other outstanding OAPs were subsequently adjusted through a Term Finance Facility granted to the Customer on December 31, 2007. In this regard, an agreement for finance, general financing and collateral agreement, letter of continuity, promissory note and hypothecation agreement were duly executed by the Customer on December 31, 2007 with the Bank. In 2010, the Customer requested for restructuring of its outstanding liabilities to adjust outstanding liability against the Term Finance Facility and also requested for renewal of letter of guarantee. The said requests were approved and materialized on November 23, 2010.

AND WHEREAS the Customer made payment of Rs. 9, 000,000 M (Nine Million Rupees only) on November 29, 2010, thereafter payment of Rs. 11, 079, 960 (Eleven Million Seventy Nine Thousand Nine Hundred & Sixty Rupees only) has been made on April 22, 2011 and payment of Rs. 9, 815, 281 (Nine Million Eight Hundred Fifteen Thousand Two Hundred & Eighty One Rupees only) on February 16, 2012 respectively to the Bank.

AND WHEREAS the Customer has paid Rs. _______ on ______ 2013 and approached the Bank to settle the entire principal amount as the same has been accepted by the Bank as full and final settlement subject to the terms of this Agreement.

NOW THEREFORE THIS SETTLEMENT AGREEMENT WITNESSES AS FOLLOWS:

Entire Outstanding Liability

(1) The Customer categorically admit their entire outstanding liability on the date of this Agreement to pay to the Bank amounting to Rs. 94, 956, 597.38 (Ninety Four Million Nine Hundred Fifty Six Thousand Five Hundred & Ninety Seven Rupees only). Out of aforesaid aggregate amount Present Outstanding Liabilities of the Customer as on 30-09-2013 are as under:

Principal Amount 55.724 Million

Mark up 38.247 Million

Total Provision 93.971 Million & 39.528 Million

Security

That the following Security shall continue to be the security in favor of the Bank against outstanding liabilities:

(1) First JPP Charge land, building and 3^rd ranking charge on plant and machinery of the factory of the Customer and 1^st Pari Passu Charge of Rs. 57.0 Million (Fifty Seven Million Rupees only) over stocks and book debts.

(2) Pledge of locally purchased raw material at factory premises

(3) Personal Guarantee of sponsor directors and Corporate Guarantee of the Customer

Repayment Schedule

(1) It is mutually agreed and understood between the Parties that the aforesaid amount (hereinafter referred to as “the entire outstanding liability”) will be repaid as follows:

(2) The Parties mutually agreed and understood that the entire outstanding liability, as mentioned above, will be repaid by the Customer to the Bank. The Customer hereby admits its aforesaid indebtedness for entire outstanding liability and will pay Principal Amount of Rs. 55.724 Million (Fifty Five Million Seven Hundred & Twenty Four Thousand Rupees only) to the Bank which will be utilized as full and final settlement against the entire outstanding liability.

(3) The Customer has already paid Rs _______ in settling the outstanding liability to the Bank.

(4) It is mutually agreed between the parties that remaining amount of Rs. 40.000 Million (Forty Million Rupees only) will be paid by the Customer to the Bank in six bi-annual installments of Rs. 6.6667 Million (Six Million Six Hundred & Sixty Six Thousand Seven Hundred Rupees only) each over the period of three (3) years. The first installment falling due on ________ (since deposited payment of final settlement to the Bank), the Second installment falling due on _____, the third installment falling due on ______, the fourth installment falling due on ______, the fifth installment falling due on _____ and sixth and last bi-annual installment falling due on ______. The Schedule of Repayment by the Customer to the Bank as given will constitute an integral part of this Agreement.

(5) The Parties mutually agreed that on payment of entire settlement amount and six bi-annual payment of the installments of Rs. 40.000 Million (Forty Million Rupees only) by the Customer to the Bank in the period of three years calculating from the date of payment of Rs. 55.724 Million (Fifty Five Million Seven Hundred & Twenty Four Thousand Rupees only), the Bank will release all property documents, personal guarantees to the Customer along with a clearance letter and/or NOC (if required), the mortgage charge will be cleared from the mortgaged property through redemption deed. The immovable property described below will be released by the Bank upon and after full and final settlement by the Customer; description of the above mentioned is as under:

“The immovable property called Factory Indus Steel Pipes Limited, located at Plot No. A-18, measuring 14.45 acres, SITE Area, Kotri mortgaged in favour of the Bank”.

(6) It is categorically agreed between the Parties that time will be the essence of this Agreement. The tenor of repayment of entire outstanding liability as described above will not exceed its limit.

Event Of Default

(1) Subject to the completion of the actions contemplated in above clauses hereof and the receipt by the Bank pertaining to settlement amounts mentioned above, the Bank shall waive of the entire suspended mark up amounting to Rs 38.247 Million (Thirty Eight Million Two Hundred & Forty Seven Thousand Rupees only) and all the future mark up accrued with effect from [_____] upto the date of the actual settlement (i.e when all actions contemplated by clause 3 are complete) uptill final adjustment of the outstanding installment.

(2) In case Customer fails to fulfill any term, condition, stipulation or covenant contained in this Agreement which in the sole opinion of the Bank is violative of the understanding between the Parties, a determination shall made by the Bank that an Event of Default has occurred.

(3) In case default is committed in the payment of one or more installments as per the Repayment Schedule, the Bank may take legal recourse to restrain the Customer from alienating their property mentioned in clause 3 sub-clause (5) hereof, hypothecated assets and stocks as well as other immovable and moveable assets of the Customer and Guarantors until the repayment of installments as per the terms and conditions of this Agreement. The Bank may take such action as it deems appropriate for recovery of the same.

Consent/Compromise Decree

(1) It is mutually agreed between both the Parties that after the execution of this Agreement, the Bank will within a reasonable time file a recovery suit before the Court of competent jurisdiction. Copy of this Agreement shall be submitted before the court praying that the recovery suit may be decreed by way of consent/compromise decree for Rs. 94, 956, 597.38/- (Ninety Four Million Nine Hundred Fifty Six Thousand Five Hundred & Ninety Seven Rupees only) in terms of the Settlement Agreement.

(2) If any of the actions contemplated by this Agreement in clauses do not take place and/or the Customer fails to perform their respective obligations mentioned herein, then the Bank may exercise its full and unfettered right to withdraw all waivers and/or remissions and will execute the Compromise/Consent Decree for recovery of the full amount along with cost of funds and charges and late payment penalties, etc. against the Customer.

(3) This Agreement constitutes the entire understanding between the parties. It supersedes any and all written or oral agreements/understandings (if any) between the Parties. No express, implied, direct or indirect, representation, promises or undertaking other than those expressly stated herein have been given by the Bank. No change, alteration or modification of this Agreement will be valid unless made in writing and signed by all the Parties. Further, the decree passed in terms thereof shall also be modified accordingly (if necessary) through a joint application signed by the Parties thereto.

Other Terms and Conditions:

(1) All costs, duties, taxes, fees and expenses including legal documentation and valuation fees and charges incurred by the Bank for the purpose of entering into this Agreement and giving effect to the terms hereof will be for the Customer’s account and be reimbursed to the Bank by the Customer.

(2) All charges relating to the transfer of the above property in favour of the Customer will be borne by the Bank, however, all charges, expenses, fees, taxes and duties relating to the perfection of title to the property and clearance of all dues against the property will be borne by the Customer.

(3) The Customer will provide and execute all documents supporting the settlement envisaged by this Agreement. The Customer is under an obligation to provide the resolutions of its respective directors authorizing the execution of the Agreement and the actions contemplated herein. The Customer will execute and furnish to the Bank such documents as and when required by the Bank to give effect to this Agreement.

(4) The Facilities and this Agreement will be governed at all times by the Prudential Regulations of the State Bank of Pakistan as applicable from time to time.

(5) The terms and conditions mentioned hereinabove will be considered as an integral part of this Agreement and will be legally enforceable as mutually agreed between the Bank and the Customer.

IN WITNESS WHEREOF the Parties above named have executed this Agreement on the date first above written.

WITNESSES:

For and on behalf of ASKARI BANK LTD

through through

Name ________________ Name ____________________

Father’s name __________ Father’s Name _________

Designation _____________ Designation ________________

Address: ______________ Address ___________________

CNIC _____________________ C.N.I.C. No. __________

Signature: Signature:

For and on behalf of Indus Steel Pipes Ltd

through

Name ________________

Father’s name __________

Designation _____________

Address: ______________

CNIC _____________________

Signature:

Mr. Shahzad Ali Jatoi, s/o Mr. Sikandar Ali Jatoi (Director and Guarantor of the “Customer”) r/o 51/A, Khayaban-e-Shujaat Phase V, DHA, Karachi

CNIC _____________________