Common use of Collateral Arrangement Clause in Contracts

Collateral Arrangement. 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

Collateral Arrangement. 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 oror 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.