Common use of Payment; Security Deposit Clause in Contracts

Payment; Security Deposit. Payment Security Deposit 11.1 As provisioned in the Article-2.1.1 of this Agreement, the Distribution Franchisee shall submit and maintain valid for the term of this Agreement, a security deposit to the satisfaction of DISCOM in the form of an irrevocable and unconditional Letter of Credit from any nationalized bank or Scheduled Bank for an amount equivalent to two months’ estimated amount payable to DISCOM by Distribution Franchisee based on two months average energy input at Input Points in the Franchise Area during Financial Year [Base Year] and Rates quoted by the Distribution Franchisee for first year of Franchisee term alongwith two months average collection of all other applicable charges in addition to Input charges as per Article 7 during the base year. Further, the Letter of Credit shall be provided by the bank which is appointed as Escrow Agent under the Default Escrow Agreement. The Security Deposit shall be governed in the manner described in this article. 11.2 The Letter of Credit shall be in the format prescribed by DISCOM initially valid for a period of one year from the Effective Date. 11.3 The Distribution Franchisee shall renew the Letter of Credit 01 (One) month before its expiry date and furnish the same to DISCOM, failing which DISCOM shall have the right to invoke the Letter of Credit. 11.4 Within one month of beginning of each financial year, the amount of the Letter of Credit shall be enhanced if required based on average monthly invoice in previous year considering input energy as per Annexure-3. The DF shall also procure the additional Letter of Credit within 15 days towards the requirement for increase in the tariff and the applicable Fuel Surcharge Adjustment (FSA) approved by OERC. However, under no circumstances shall the amount of Letter of credit be revised downwards. 11.5 DISCOM may recover the outstanding payment after payment due date by invoking the Letter of Credit. 11.6 Distribution Franchisee shall, within two weeks of invocation of the Letter of Credit by DISCOM, restore the same to the level prior to invocation. 11.7 DISCOM may review the amount of the Letter of Credit after one year of the contract depending on the payment record of the Distribution Franchisee.

Payment; Security Deposit. Payment Security Deposit 11.1 As provisioned in the Article-2.1.1 of this Agreement, the Distribution Franchisee shall submit and maintain valid for the term of this Agreement, a security deposit to the satisfaction of DISCOM in the form of an irrevocable and unconditional Letter of Credit from any nationalized bank or Scheduled Bank for an amount equivalent to two months’ estimated amount payable to DISCOM by Distribution Franchisee based on two months average energy input at Input Points in the Franchise Area during Financial Year [Base Year] and Rates quoted by the Distribution Franchisee for first year of Franchisee term alongwith two months average collection of all other applicable charges in addition to Input charges as per Article 7 during the base year. Further, the Letter of Credit shall be provided by the bank which is appointed as Escrow Agent under the Default Escrow Agreement. The Security Deposit shall be governed in the manner described in this article. 11.2 The Letter of Credit shall be in the format prescribed by DISCOM initially valid for a period of one year from the Effective Date. 11.3 The Distribution Franchisee shall renew the Letter of Credit 01 (One) month before its expiry date and furnish the same to DISCOM, failing which DISCOM shall have the right to invoke the Letter of Credit. 11.4 Within one month of beginning of each financial year, the amount of the Letter of Credit shall be enhanced if required based on average monthly invoice in previous year considering input energy as per Annexure-3. The DF shall also procure the additional Letter of Credit within 15 days towards the requirement for increase in the tariff and the applicable Fuel Surcharge Adjustment (FSA) approved by OERC. However, under no circumstances shall the amount of Letter of credit be revised downwards. 11.5 DISCOM may recover the outstanding payment after payment due date by invoking the Letter of Credit. 11.6 Distribution Franchisee shall, within two weeks of invocation of the Letter of Credit by DISCOM, restore the same to the level prior to invocation. 11.7 DISCOM may review the amount of the Letter of Credit after one year of the contract depending on the payment record of the Distribution Franchisee. Collateral Arrangement 11.8 As an security measure to ensure compliance of Franchisee obligations under this agreement, the Franchisee and the DISCOM on or prior to the Effective Date, shall execute separate Default Escrow Agreement (referred as “Default Escrow Agreement”) for the establishment and operation of the Default Escrow Account in favour of the DISCOM, through which the revenues of the DF shall be routed and used as per the terms of the Default Escrow Agreement. All revenue collected in the franchised area shall be deposited by DF in the Default Escrow Account within 48 hours of its receipt. Without prejudice to its other rights, DISCOM shall have the first and paramount charge over all receivables of Franchisee at all times for all the amounts becoming due from Franchisee to DISCOM under this Distribution Franchisee Agreement. Franchisee shall not create any encumbrance, charge, and lien or otherwise execute any instrument which in any way affects the first and paramount charge over the receivables in favour of DISCOM. DISCOM, however, agrees that so long as the amounts becoming due from Franchisee to DISCOM as aforesaid are paid on due dates. Franchisee shall be entitled to utilize the receivables and may deal with such receivables in such manner as Franchisee may consider appropriate and DISCOM agrees to maintain its first and paramount charge over the receivables as floating charge. The floating charge of DISCOM shall, however, crystallize into a fixed charge automatically without any further act, deed or things to be done by franchisee or DISCOM or any other person in the event of any default on the part of franchisee to pay the amounts due to DISCOM. DISCOM and franchisee shall register the above charge of DISCOM with the Registrar of Companies. However DISCOM may consider ceding its first charge on receivables in the “ESCROW account” in favour of Bank/FIs in order to facilitate the franchisee in availing letter of Credit for payment of Monthly Bills to DISCOM as referred in Article 7 as well as in raising loan for the Franchisee Area subject to the following conditions; 1. The Letter of Credit shall be Irrevocable and revolving LC to be opened in favour of DISCOM without recourse to the DF initially for a period of 1 (one) year and shall be renewed annually. 2. The LC amount shall cover the requisite amount as per the Franchisee Agreement. 3. In addition to LC, Bank Guarantee (BG) equivalent to 2 months estimated amount payable to DISCOM towards Input Energy and other applicable charges as per Article -7 shall be provided by DF. 4. Any other Loan besides the above mentioned LC & BG to be availed by DF against security of receivables shall be after due consent from DISCOM and the utilization of the loan in the Franchisee Area shall be submitted to DISCOM up to DISCOM’s satisfaction. 5. The consent of DISCOM for ceding first charge in favour of Bank / FI shall be to the extent of LC towards the payment of DISCOM monthly dues and loan to be utilized in the Franchisee Area; this consent shall be valid so long as the above continues to operate. 6. In the event the LC is not reinstated / renewed with appropriate value before expiry of the LC, the consent of DISCOM to cede first charge shall stand automatically withdrawn without any further act or deed or things to be done by either DISCOM / DF / Bank (Lender). 7. The above ceding of first charge shall be suitably incorporated in the Tripartite Default Escrow Agreement to be signed with DF and the Escrow Banker.

Payment; Security Deposit. Payment Security Deposit 11.1 As provisioned in the Article-2.1.1 of this Agreement, the Distribution Franchisee shall submit and maintain valid for the term of this Agreement, a security deposit to the satisfaction of DISCOM in the form of an irrevocable and unconditional Letter of Credit from any nationalized bank or Scheduled Bank for an amount equivalent to two months’ estimated amount payable to DISCOM by Distribution Franchisee based on two months average energy input at Input Points in the Franchise Area during Financial Year [Base Year] and Rates quoted by the Distribution Franchisee for first year of Franchisee term alongwith two months average collection of all other applicable charges in addition to Input charges as per Article 7 during the base year. Further, the Letter of Credit shall be provided by the bank which is appointed as Escrow Agent under the Default Escrow Agreement. The Security Deposit shall be governed in the manner described in this article. 11.2 The Letter of Credit shall be in the format prescribed by DISCOM initially valid for a period of one year from the Effective Date. 11.3 The Distribution Franchisee shall renew the Letter of Credit 01 (One) month before its expiry date and furnish the same to DISCOM, failing which DISCOM shall have the right to invoke the Letter of Credit. 11.4 Within one month of beginning of each financial year, the amount of the Letter of Credit shall be enhanced if required based on average monthly invoice in previous year considering input energy as per Annexure-3. The DF shall also procure the additional Letter of Credit within 15 days towards the requirement for increase in the tariff and the applicable Fuel Surcharge Adjustment (FSA) approved by OERC. However, under no circumstances shall the amount of Letter of credit be revised downwards. 11.5 DISCOM may recover the outstanding payment after payment due date by invoking the Letter of Credit. 11.6 Distribution Franchisee shall, within two weeks of invocation of the Letter of Credit by DISCOM, restore the same to the level prior to invocation. 11.7 DISCOM may review the amount of the Letter of Credit after one year of the contract depending on the payment record of the Distribution Franchisee. Collateral Arrangement 11.8 As an security measure to ensure compliance of Franchisee obligations under this agreement, the Franchisee and the DISCOM on or prior to the Effective Date, shall execute separate Default Escrow Agreement (referred as “Default Escrow Agreement”) for the establishment and operation of the Default Escrow Account in favour of the DISCOM, through which the revenues of the DF shall be routed and used as per the terms of the Default Escrow Agreement. All revenue collected in the franchised area shall be deposited by DF in the Default Escrow Account within 48 hours of its receipt. Without prejudice to its other rights, DISCOM shall have the first and paramount charge over all receivables of Franchisee at all times for all the amounts becoming due from Franchisee to DISCOM under this Distribution Franchisee Agreement. Franchisee shall not create any encumbrance, charge, and lien or otherwise execute any instrument which in any way affects the first and paramount charge over the receivables in favour of DISCOM. DISCOM, however, agrees that so long as the amounts becoming due from Franchisee to DISCOM as aforesaid are paid on due dates. Franchisee shall be entitled to utilize the receivables and may deal with such receivables in such manner as Franchisee may consider appropriate and DISCOM agrees to maintain its first and paramount charge over the receivables as floating charge. The floating charge of DISCOM shall, however, crystallize into a fixed charge automatically without any further act, deed or things to be done by franchisee or DISCOM or any other person in the event of any default on the part of franchisee to pay the amounts due to DISCOM. DISCOM and franchisee shall register the above charge of DISCOM with the Registrar of Companies.