Exhibit "3"
DATED 2005
(1) NAVALMAR TRANSPORTES MARITIMOS LDA
(2) BANCO POPOLARE DI ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ S.C. R.L.
LONDON BRANCH
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LOAN AGREEMENT
Relating to a Loan of up to US $10,000,000
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[LOGO]
HTD
Hill ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇'▇ ▇▇▇▇▇
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Telephone: ▇▇▇▇ ▇▇▇ ▇▇▇▇
Facsimile: 0207 283 1144
THIS LOAN AGREEMENT is made the day of Two Thousand and Five
BETWEEN:-
(1) NAVALMAR TRANSPORTES MARITIMOS LDA a company incorporated under the Laws
of Madeira whose registered office is situate at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇
▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇, Funchal, Madeira (hereinafter called the "Borrower")
(2) BANCO POPOLARE DI ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ S.C.R.L. LONDON BRANCH a bank
incorporated pursuant to the laws of Italy acting through its London
Branch situate at ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
(hereinafter called the "Bank")
WHEREAS:-
The Bank has agreed to make available to the Borrower a loan facility of a
maximum principal amount of up to Ten Million United States Dollars
(US$10,000,000) upon and subject to the terms and conditions contained in this
Agreement.
NOW THEREFORE IT IS AGREED as follows:-
1. DEFINITIONS
1.01 In this Agreement:-
(A) "Agreement" means this agreement as originally executed or as it may
from time to time be supplemented and/or varied;
(B) "AMEX" means the American Stock Exchange;
(C) "Business Day" means a day on which dollar dealings are carried on
in the London Interbank Market and which is a banking business day
in New York and also a day when banks are open in London and in
Italy;
(D) "Company" means MC Shipping Inc, a company incorporated in and
subject to the laws of the Republic of Liberia, whose Principal
Executive Office is at Richmond House, 12 Par-la-ville Road,
Hamilton, Bermuda;
(E) "Conditions Precedent" means any or all of the conditions set forth
in Clause 11.01 or 11.02 hereof;
(F) "Custodian" means Hampton Securities (USA) Inc of ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇▇;
(H) "Deeds of Pledge" means any Deed of Pledge over Pledged Shares
executed by the Guarantor (or the Borrower, to the extent it is or
becomes the beneficial owner of the Pledged Shares following a
transfer of ownership approved by the Bank) in favour of the Bank
substantially in the form set out in Appendix "A" hereto whether
required pursuant to Clauses 11.01, 11.02 or 12.01(H) of this
Agreement or otherwise;
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(I) "Default Rate" means the rate described in Clause 5.03 hereof;
(J) "Dollars" and "$" means the lawful currency of the United States of
America;
(K) "Drawdown Date" means in relation to each Tranche, the Business Day
on which such Tranche of the Loan is drawn down pursuant to Clause
4;
(L) "Event of Default" means the occurrence of any of the events
referred to in Clause 13;
(M) "First Drawdown Date" means the Drawdown Date on which Tranche A is
drawn down pursuant to Clause 4;
(N) "Guarantee" means the guarantee to be executed by the Guarantor in
favour of the Bank substantially in the form set out in Appendix "B"
hereto;
(O) "Guarantor" means Navalmar (UK) Limited a company incorporated
pursuant to the laws of England and Wales whose registered office is
situate at ▇-▇ ▇▇ ▇▇▇▇▇'▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇;
(P) "Interest Payment Date(s)" means the last day of an Interest Period
provided that if an Interest Period extends beyond any Repayment
Date such Repayment Date shall also be an Interest Payment Date;
(Q) "Interest Period" means each successive period of six months
commencing in the case of the first such period on the First
Drawdown Date and thereafter on the expiry of the previous Interest
Period;
(R) "Interest Rate" means the rate per annum (as determined by the Bank)
which is one point one five per centum (1.15%) above LIBOR (as
hereinafter defined);
(S) "LIBOR" means the arithmetic mean (rounded up to the nearest one
sixteenth of a percent) of the rates at which the Bank was being
offered (by prime banks) deposits in an amount equal to the Loan
then outstanding in the London Inter-Bank Market at or about 11.00
a.m. (London time) two Business Days before the commencement of an
Interest Period for delivery on the first day of that Interest
Period and for the duration thereof.
(T) "Loan" means the loan facility of a maximum amount of Ten Million
Dollars ($10,000,000) to be drawn in a maximum of two Tranches, such
sum(s) to be drawn down pursuant to Clause 4 hereof or, where the
context so admits, the principal amount thereof from time to time
drawn down and outstanding;
(U) "Loan Period" means the period from the date of this Agreement until
the date falling on the expiry of 60 calendar months following the
First Drawdown Date or the date upon which the Outstanding
Indebtedness has been paid in full (whichever is the earlier);
(V) "Outstanding Indebtedness" means the aggregate of the Loan, accrued
interest thereon and any other monies or costs whatsoever payable to
the Bank from time to time under this Agreement and the Security
Documents and/or any monies, liabilities or obligations arising as a
result of any interest or currency swap or any other kind of
derivative transaction entered into by the Borrower with the Bank in
relation to the Loan or its funding;
(W) "Pledged Shares" means fully paid shares (each with a par value of
US$ ) in the Company in the beneficial ownership and control of the
Guarantor (or the Borrower following a transfer of beneficial
ownership approved by
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the Bank) held by the Custodian and which are subject to a Deed of
Pledge, together with such further shares in the Company as herein
provided pursuant to Clause 12.01 (h);
(X) "Potential Event of Default" means any event, which with the giving
of notice, lapse of time or any combination thereof would constitute
an Event of Default;
(Y) "Repayment Date" means a date on which an instalment of principal of
the Loan becomes due and payable by the Borrower pursuant to the
terms of Clause 6;
(Z) "Security Documents" means this Agreement, the Guarantee, the Deeds
of Pledge and, where the context permits, any other securities,
guarantees or undertakings whatsoever which the Bank requires or the
Borrower has agreed to procure and/or which may be executed at any
time in respect of the Loan;
(AA) "Security Party" means any party to the Security Documents other
than the Bank;
(BB) "Subsidiary" has the meaning ascribed to it under the Companies ▇▇▇
▇▇▇▇;
(CC) "Tranche" and "Tranches" means either Tranche A or Tranche B and
together both of them, all as the case may be;
(DD) "Tranche A" means an amount of the Loan up to but not exceeding Five
Million Dollars (US$5,000,000) to be advanced by the Bank to the
Borrower on the First Drawdown Date pursuant to Clause 4;
(EE) "Tranche B" means an amount of the Loan being up to but not
exceeding the difference between the amount drawn by the Borrower as
Tranche A and Ten Million Dollars (US$10,000,000) to be advanced by
the Bank to the Borrower pursuant to Clause 4;
1.02 Where the context so admits words importing the singular number only shall
include the plural and words importing persons shall include firms and
corporations and vice versa. Clause headings are inserted for convenience
or reference only and shall be ignored in construing this Agreement.
References to Clauses and Appendices are to clauses of and appendices to
this Agreement save as may be otherwise expressly provided. Month means
calendar month.
References to each of the parties hereto shall be deemed to be references
to or to include, as appropriate, their respective successors and
permitted assigns.
2. THE BANK'S COMMITMENT
2.01 In reliance upon each of the representations and warranties set forth in
Clause 10 and subject always to the terms, covenants and conditions herein
contained being complied with, the Bank will make the Loan available for
drawdown to the Borrower in not more than two Tranches, from the date
hereof until (and including) 15th December 2005.
2.02 Neither the Loan nor any part thereof shall be available for drawing after
15th December 2005 and in the event that the Loan has not been drawn down
in full on or before such date the Bank shall thereafter cease to be under
any further obligation to advance the then undrawn portion of the Loan
hereunder but the Borrower shall nonetheless be liable to the Bank for the
payment of or for procuring the payment of the fees and costs referred to
in Clauses 7 and 16.
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2.03 The Borrower shall be entitled at any time from the date of this Agreement
until 15th December 2005 by ten (10) Business Days prior written notice to
the Bank to cancel any undrawn portion of the Loan without penalty. Such
notice shall be irrevocable in respect of any amount of the undrawn
portions of the Loan so cancelled which amounts shall not thereafter be
available for reborrowing.
3. USE OF PROCEEDS
3.01 The purpose of the Loan is to provide the Borrower with finance for its
general corporate purposes. The Loan shall not be used by the Borrower for
any other purpose.
4. DRAWDOWN
4.01 Subject to the provisions of Clauses 2 and 4.02 the Loan shall only be
available for drawing in two Tranches (Tranche A in an amount up to
US$5,000,000 and Tranche B in an amount up to the difference between the
sum drawn under Tranche A and US$10,000,000) and provided that the
Borrower shall have given the Bank not less than three (3) Business Days'
notice (or such lesser period of notice as the Bank accepts in writing) of
each intended drawdown. Each such notice shall be in the form set out in
Appendix "C", shall be irrevocable and shall specify the date, being a
Business Day, on which the Borrower wishes the relevant Tranche of the
Loan to be made available and the amount to be drawn down. Such notice
having been given, the relevant Tranche of the Loan shall be drawn subject
as aforesaid on the date and in the amount requested.
4.02 Drawdown of the each Tranche of the Loan and disbursement of its proceeds
by the Bank is subject to the fulfillment to the Bank's satisfaction of
all the Conditions Precedent and no Event of Default or Potential Event of
Default having occurred. If any such condition has not been fulfilled or
any such event has occurred the relevant Tranche of the Loan shall not be
available for drawing. Notwithstanding the aforesaid, the Bank may, in its
absolute discretion and by notice in writing to the Borrower, waive
compliance with any Condition Precedent or the occurrence of an Event of
Default or Potential Event of Default prior to disbursement of either
Tranche of the Loan provided always that the Borrower hereby covenants in
those circumstances to comply with such condition or, as the case may be,
to remedy such default within any period specified in such notice or
subsequently notified in writing to the Borrower and failure to do so
shall be deemed to constitute the occurrence of an Event of Default.
5. INTEREST AND PAYMENTS
5.01 Save as otherwise provided herein the Borrower shall pay to the Bank
interest at the Interest Rate on the outstanding principal amount of the
Loan or any relevant part thereof on each Interest Payment Date.
5.02 Interest on the Loan or any part thereof shall accrue from day to day and
shall be calculated on the basis of a year of three hundred and sixty
days.
5.03 In the event of default by the Borrower in the payment on the due date of
any sum (including interest thereon) payable pursuant to the terms of this
Agreement, the Borrower will pay to the Bank interest thereon from the
date of such default up to the date of actual payment (after as well as
before judgment) at a rate of 3% per centum per annum above the rate per
annum conclusively (save for manifest error) certified by the Bank as the
rate at which the Bank is or would be able, in accordance with its normal
practices, to acquire dollar deposits in the ▇▇▇▇▇▇
▇
▇▇▇▇▇▇▇▇▇ Market in an amount and currency equivalent to or comparable
with the amount of the unpaid sum for such periods (of one day or longer)
as the Bank in its discretion shall determine. Such interest shall be
payable on demand and shall be compounded so long as it remains unpaid for
such period as the Bank shall in its absolute discretion determine.
5.04 Interest accruing under Clause 5.03 shall accrue on a daily basis and a
three hundred and sixty day year from and including the first day to the
last day of each period for which a rate of interest is determined as
aforesaid and shall be due and payable by the Borrower at the end of each
such period. So long as the default continues, the rate referred to in
Clause 5.03 shall be calculated on a similar basis at the end of each
period selected by the Bank.
5.05 Notwithstanding anything else contained in this Clause, if Tranche A and
Tranche B are not drawn down on the same Business day, then interest shall
accrue on the amount drawn down as Tranche A at the Interest Rate from the
First Drawdown Date for the Interest Period applicable thereto and
interest shall accrue on the amount drawn down as Tranche B at the
Interest Rate from its Drawdown Date for a period which expires at the end
of the then current Interest Period relating to Tranche A. At the end of
such current Interest Period, an Interest Payment Date will arise for both
Tranches and thereafter the Tranches shall be consolidated for all
purposes.
6. REPAYMENT AND PREPAYMENT
6.01 Save as otherwise provided herein, the Loan shall be repaid by the
Borrower to the Bank over the Loan Period by 10 equal consecutive
instalments, the first such instalment being payable on the expiry of a
period of six months from the First Drawdown Date and all subsequent
instalments being payable at six (6) monthly intervals thereafter save
that the final instalment shall be payable no later than the final
Business Day of the Loan Period (the date for payment of each installment
being a "Repayment Date"). For the avoidance of doubt, the amount of each
instalment shall be one tenth of the total (aggregate) amount of the Loan
drawn down pursuant to both Tranche A and Tranche B, such sums being
consolidated for all purposes following the drawn down (if any) of that
part of the Loan represented by Tranche B.
6.02 Following the First Drawdown Date the Borrower may prepay on the last day
of any Interest Period relating thereto the whole or any part of the Loan,
being in any event not less than Fifty Thousand Dollars ($50,000) and
otherwise whole multiples thereof, together with accrued interest thereon
upon giving to the Bank not less than Thirty (30) days (or such shorter
period as the Bank may agree) prior written notice which once given shall
be irrevocable and shall bind the Borrower to make the prepayment
specified therein. Any prepayment of less than the whole of the Loan under
this or any other provision of this Agreement shall be applied (unless
expressly provided otherwise) in(so far as possible) equal reduction of
the repayment instalments remaining to be paid under Clause 6.01. Any
amounts prepaid pursuant to the terms of this Clause shall not be
available for re-borrowing. In addition to the amount of any prepayment
the Borrower shall pay a prepayment fee equal to point three seven five
per cent (0.375%) of the amount to be prepaid (as referred to in any
notice given by the Borrower pursuant to this Clause) which shall be
payable no later than the proposed date of prepayment referred to in such
notice together with any sum due to the Bank as a result of the operation
of Clause 19 hereof.
7. FEES
7.01 The Borrower shall pay or shall procure the payment to the Bank of a
non-refundable fee of Ten Thousand Dollars ($10,000), which shall be
payable on the First Drawdown Date.
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8. TAXES
8.01 All payments (whether of principal interest or otherwise) to be made by
the Borrower to the Bank hereunder or under the Security Documents shall
be made free and clear and without deduction of any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, restrictions or
conditions of any nature. If at any time any applicable law requires the
Borrower to make any such deduction or withholding from any such payment,
the sum due from the Borrower in respect of such payment shall be
increased to the extent necessary to ensure that, after the making of such
deduction or withholding, the Bank receives a net sum equal to the sum
which it would have received had no such deduction or withholding been
required to be made. In addition the Borrower will provide the Bank with
the relevant tax receipts.
8.02 If the Borrower pays any increased amount pursuant to Clause 8.01 and the
Bank effectively obtains a refund of tax or credit against tax by reason
of that payment and if the Bank is able (in its sole opinion, which shall
not be capable of dispute) to identify that refund or credit as being
attributable to that payment having regard to its other activities, then
the Bank shall reimburse to the Borrower such amount as it shall determine
(any such determination being conclusive) to be the proportion of that
refund or credit as will leave the Bank after that reimbursement in no
better or worse position than it would have been in if that payment had no
longer been required. The Bank shall not be obliged to arrange its tax
affairs in any particular manner or to disclose any information regarding
its tax affairs or computations to the Borrower whether for the purpose of
this Clause or otherwise.
8.03 All fees and expenses payable by the Borrower pursuant to this Agreement
and/or the Security Documents shall be paid together with Value Added Tax
or any similar tax (if applicable).
9. ILLEGALITY AND CHANGE IN CIRCUMSTANCES
9.01 If any change in applicable law or regulation or any interpretation
thereof by any governmental authority charged with the administration
thereof makes it (or makes it apparent that it is) unlawful or impossible
for the Borrower or the Bank to perform its obligations hereunder
(including the funding of the Loan) or under the Security Documents:-
(i) the Bank shall be discharged from all obligations to make, renew or
maintain the Loan; and
(ii) the Borrower shall forthwith on demand pay to the Bank the amount of
the Outstanding Indebtedness.
9.02 If by reason of:-
(i) a change in or in the interpretation of any applicable law or
regulation or;
(ii) compliance by the Bank with any request from any applicable central
bank or government or regulatory authority (whether or not having
the force of law);
the cost to the Bank of, or consequent on making or funding the Loan for
any period is increased, or if the Bank becomes liable to pay any tax,
levy, impost, duty, charge or fee imposed on or calculated by reference to
any sum received or receivable by it hereunder, or the rate at which any
such tax, levy, impost or fee is increased from the rate applicable at the
date of this Agreement or the amount of any payment made to the Bank is
reduced the
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Borrower will on request indemnify the Bank against respectively (a) such
increased cost or (b) an appropriate portion (as determined by the Bank in
its sole discretion) of such increased cost or (c) such liability or
reduction.
9.03 The Bank will promptly inform the Borrower of its intention to claim from
it indemnification under Clause 9.02. The statement of the Bank as to any
increased costs, reduction or payment such as is mentioned in Clause 9.02
shall be conclusive save in the case of manifest error as to the amount
thereof and binding on the Borrower. Following such notification for a
period of 60 days (but not thereafter), the Borrower shall be entitled to
prepay the Loan in full (but not in part) in accordance with Clause 6.02
but without any obligation to pay any prepayment fee.
9.04 A claim made under Clause 9.02 may be made at any time whether before or
after the repayment of the Loan. Unless the Bank has not used its
reasonable endeavours to avoid any cost, reduction or payment as referred
to in Clause 9.02 it shall not be a defence to a claim by the Bank under
this Clause that any increased cost, reduction or payment therein referred
to could have been avoided by the Bank.
9.05 In the event of the Bank being entitled to claim indemnification and
prepayment under Clauses 9.01 to 9.04, the Bank agrees to discuss with the
Borrower promptly after such entitlement arises and prior to exercising
its rights under this Clause alternative solutions which may be mutually
acceptable to the Bank and the Borrower, such discussions always being
without prejudice to the Bank's rights under this Clause, but in the event
of mutual agreement not being reached within seven days of the entitlement
arising, the Bank shall be at liberty to exercise its rights.
9.06 In the event that at any time during the Loan Period by reason of any
circumstances affecting the London Interbank Market adequate and fair
means do not exist for ascertaining the Interest Rate then the following
provisions will apply:-
(i) the Bank will promptly notify the Borrower of the relevant
circumstances;
(ii) on the next Interest Payment Date following such notice the Bank
will apply a rate of interest to the Loan or relevant part thereof
for a period of one (1) month from such Interest Payment Date
(hereinafter in this Clause called the "Negotiating Period") so that
the rate of interest for the Loan will be one per centum (1%) per
annum above the rate at which the Bank is able at such time to fund
the corresponding amount of the Loan for one (1) month;
(iii) during the Negotiating Period the Borrower and the Bank shall by
negotiation attempt to agree upon a new basis for the calculation of
the Interest Rate and if so agreed a rate calculated on the said new
basis will apply from the first day following the end of the
Negotiating Period;
(iv) in the event of the Borrower and the Bank not being able within the
Negotiating Period to agree on a new basis for the calculation of
the Interest Rate, then the Loan together with all interest accrued
due thereon and all other sums payable by the Borrower hereunder
shall at the Borrower's option become repayable within one (1) month
following the end of the Negotiating Period and all obligations of
the Bank to maintain the Loan shall cease failing which the basis
for the calculation of the Interest Rate referred to in Clause
9.06(ii) shall continue to apply for the remainder of the Loan
Period. Any such prepayment shall be made without any premium or
penalty but subject to the Borrower paying to the Bank any sums due
to the Bank under Clause 19. Interest shall accrue on the Loan at
the Default Rate from the end of such period one month period until
the date of payment of all sums due to the Bank.
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10. REPRESENTATIONS AND WARRANTIES
10.01 The Borrower hereby represents and warrants to the Bank and its assigns to
the intent that each of such representations warranties and undertakings
shall continue in full force and effect so long as there is any
Outstanding Indebtedness and to the intent that each such representation
warranty and undertaking shall be true and accurate as at the date hereof
(where applicable) and as each Drawdown Date and each Repayment Date:-
(A) That it is a company duly incorporated and validly existing and in
good standing under the laws of Madeira and that its place of
business and chief executive office is in Madeira and that the
Guarantor is a Company duly incorporated and validly existing and in
good standing under the laws of England and Wales and that its place
of business and chief executive office is in England;
(B) That it has power to borrow hereunder and that it and each of the
Security Parties has power to enter into and perform the Security
Documents insofar as they relate to it (and in particular the
Guarantor has power to purchase and beneficially own the Pledged
Shares and to enter into the Guarantee and Deeds of Pledge as
security for the Outstanding Indebtedness) and each of the Security
Parties has taken all necessary corporate or other action required
to authorise the execution and delivery of this Agreement and the
Security Documents and their performance according to their
respective terms insofar as aforesaid.
(C) That it is not necessary to ensure the legality, validity,
enforceability or admissibility in evidence of this Agreement or any
of the Security Documents (apart from the Deeds of Pledge) that any
of them be filed, recorded or enrolled with any governmental
authority or agency of or in any country where the Borrower and any
Security Party carries on business or that any of them be stamped
with any stamp or similar transaction tax in any such country.
(D) That all consents, licences, approvals or authorisations of or
declarations to governmental authorities and agencies required to
make this Agreement and the Security Documents legal, valid,
enforceable or admissible in evidence have been obtained or made and
are in full force and effect.
(E) That the execution and delivery of this Agreement and the Security
Documents and their performance according to their respective terms
will not violate:-
(i) the Certificate of Incorporation and Memorandum and Articles
of Association (or other constitutional documents) of the
Borrower or any Security Party (as the case may be);
(ii) any applicable law or regulation or order or decree of any
governmental authority or agency; or
(iii) any mortgage, deed or agreement which is binding upon the
Borrower or any Security Party, or any of their respective
assets.
(F) That neither the Borrower nor any of the Security Parties is in
breach of or in default under any mortgage, deed or agreement which
is binding upon them or any of their assets.
(G) That no material litigation or administrative proceeding of or
before any court or governmental authority or agency is pending or
(to the Borrower's knowledge) threatened, the result of which would
or might be to have a material adverse effect on the Borrower or any
of the Security Parties' respective businesses,
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assets or financial conditions such as to prejudicially affect their
abilities to comply with their respective obligations under this
Loan Agreement or the relevant Security Documents (as the case may
be).
(H) That the Guarantor (or the Borrower following a transfer of
ownership approved by the Bank) is the sole unencumbered (save only
for the Deeds of Pledge contemplated hereby) beneficial owner of the
Pledged Shares, which are held by the Custodian.
(I) That upon execution and delivery to the Bank (and in the case of the
Deeds of Pledge filing and registration with the appropriate
governmental authority of England and Wales, Madeira, Liberia and
the United States of America) this Agreement and the Security
Documents will constitute valid and binding obligations of the
Borrower and the Security Parties (as the case may be).
(J) That all information furnished by the Borrower or the Security
Parties relating to the business and affairs of the Borrower or the
Security Parties in connection with this Agreement was and remains
true and correct in all material respects and that there are no
other material facts or considerations the omission of which would
render any such information misleading.
(K) That no Event of Default or Potential Event of Default has occurred
or is continuing.
(L) That the Company is duly and properly constituted and established
pursuant to the laws of the Republic of Liberia, is in good standing
and that the shares of the Company are quoted on AMEX in accordance
in all material respects with the rules and regulations applicable
thereto.
11. CONDITIONS PRECEDENT
11.01 The Bank shall be under no obligation to make available the Loan and/or
either Tranche of the Loan (except as provided by Clause 4) until it has
received each of the following documents on or prior to each Drawdown Date
(and current as at each such Drawdown Date) in a form and manner
acceptable in all respects to the Bank's legal advisers unless and to the
extent that receipt of any such document shall have been waived in writing
by the Bank:-
(i) a certified copy of the Certificate of Incorporation and Memorandum
and Articles of Association of the Borrower;
(ii) written evidence satisfactory to the Bank of the composition of the
Officers and Directors of the Borrower at the date of the board
resolutions referred to below and also certifying the shareholders
and the number of shares held by them;
(iii) notarised and apostilled or legalised resolutions of the Directors
and the shareholders of the Borrower approving the entering into of
this Agreement and the Security Documents and the execution,
delivery and performance thereof and authorising some person or
persons by power of attorney to execute any and all documents
necessary for the Borrower to execute and deliver this Agreement and
the Security Documents to the Bank (to the extent the Borrower is a
party to the same);
(iv) originals of the powers of attorney, executed in pursuance of the
board resolutions referred to in Sub-Clause (iii) above duly
notarized and apostilled or legalised;
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(v) payment of any fees due in accordance with Clause 7 hereof;
(vi) the Security Documents, all duly executed by the Borrower or the
other Security Parties including all notices and affidavits
collateral thereto (if any) all in a form satisfactory to the Bank
and evidence that the Deeds of Pledge and any other documents which
are required to be filed or registered in England and Wales,
Madeira, Liberia, the United States of America or elsewhere will be
or are so registered;
(vii) certified copies of the constitutional documents of the Security
Parties and certified copies of the resolutions of the directors
and, if required by the Bank, shareholders of the Security Parties
authorising execution of those Security Documents to which the
Security Parties are a party and an original of any power of
attorney issued in pursuance of such resolutions;
(viii) confirmation that the Pledged Shares have been deposited with the
Custodian and held to the order of the Bank in accordance with the
terms and provisions of the Deeds of Pledge;
(ix) such legal opinions from United States, Madeiran, Liberian or other
lawyers as the Bank may elect or other evidence as the Bank may
require that all or any of the representations and warranties
contained in Clause 10.01 are true and accurate at the date hereof.
(x) confirmation from the Borrower that they will act as agents for
service of process in England of the Borrower.
11.02 It shall be a further condition precedent to the Bank's obligation to make
the Loan and/or either Tranche thereof available to the Borrower that the
market value of the Pledged Shares (as determined by the price quoted on
AMEX) on each Drawdown Date is equal to or exceeds an amount equivalent to
two hundred percent (200%) of the Outstanding Indebtedness following such
drawdown (it being acknowledged by the Borrower that satisfaction of this
condition will require the execution of a Deed of Pledge as a condition
precedent to the drawdown of Tranche A and the execution of a further Deed
of Pledge as a condition precedent to the drawdown of Tranche B).Unless
and until on each Drawdown Date this condition precedent is satisfied the
Bank shall have no obligation to advance any part of the Loan or either
Tranche thereof
12. COVENANTS OF THE BORROWER
12.01 So long as any part of the Outstanding Indebtedness remains undischarged
the Borrower covenants and undertakes with the Bank:-
(A) To perform and observe the covenants and obligations imposed upon it
under the Security Documents (so far as it is a party to the same).
(B) To use the proceeds of the Loan for the purposes referred to in
Clause 3.01;
(C) Within three (3) Business Days after it acquires knowledge of the
occurrence of a Potential Event of Default, to give notice to the
Bank thereof and specify the steps it intends to take to remedy such
situation.
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(D) To duly pay and discharge all taxes, assessments and governmental
charges upon it or against its property prior to the date on which
penalties are attached thereto, unless and to the extent only that
the same shall be contested in good faith and by appropriate legal
proceedings.
(E) To ensure the Pledged Shares are deposited with the Custodian and to
enter into any documentation reasonably required by the Bank in
respect thereof and to reimburse the Bank for all the fees of the
Custodian incurred by the Bank (and to indemnify the Bank against
any costs, fees or expenses incurred or suffered by the Bank in
respect thereof).
(F) That it will not without the prior written consent of the Bank:-
(i) (upon obtaining any ownership interest whatsoever therein)
sell the Pledged Shares or create, incur, assume or allow to
exist any mortgage, charge, pledge, , option, right to buy,
lien or other encumbrance on the same or any other income
arising therefrom or any part of its property or assets;
(ii) borrow any further monies other than as contemplated in this
Agreement;
(iii) make any distributions of any kind or pay any dividends to the
Shareholders; and
(iv) permit any direct or indirect change to the ownership (whether
legal or beneficial) and control of the Borrower from that
advised to the Bank at the date hereof.
(G) (i) to supply the Bank within one hundred and eighty (180) days of
the end of each of its fiscal or financial years with a copy
of its annual financial statements (including, without
limitation, balance sheet and profit and loss account) for the
relevant year; and
(ii) to supply the Bank from time to time with all such information
regarding its business, assets and regarding the Pledged
Shares as the Bank may reasonably request.
(H) References to the "market value of the Pledged Shares" in this
Clause shall be to the market value as determined by the price of
the Pledged Shares quoted on AMEX. If on either Drawdown Date the
market valuation of the Pledged Shares is less than two hundred
percent (200%) of the Outstanding Indebtedness, or if at any time
thereafter the market value of the Pledged Shares is less than one
hundred and fifty percent (150%) of the Outstanding Indebtedness (in
each case the "Security Cover Ratio") then the following terms shall
apply. In the event that at any time the market value of the Pledged
Shares falls below the requisite Security Cover Ratio for a
consecutive period of two Business Days, the Borrower shall within a
further two Business Days of receipt from the Bank of a notice to
such effect, provide the Bank with additional security in to make up
the shortfall by one or a combination of the following:
(1) depositing with the Bank into a collateral interest-bearing
deposit account (which shall be charged to the Bank) a sum
sufficient to meet such shortfall; or
(2) depositing further shares in the Company with the Custodian
and pledging the same to the Bank (or procuring to the Bank's
satisfaction that the same are made subject to a
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Deed of Pledge) the value of which will be such as to ensure
that the relevant Security Cover Ratio is satisfied (and
whereupon such additional shares shall be deemed for all
purposes to be "Pledged Shares").
13. EVENTS OF DEFAULT
13.01 If any of the following events occur, that is to say:-
(A) If the Borrower or any of the Security Parties does not pay any sum
of money payable under this Agreement or the Security Documents
within five (5) Business Days of the date on which the same falls
due.
(B) If any Event of Default specified in a Deed of Pledge occurs.
(C) If the Borrower has falied to remedy any breach of Clause 12.01(H)
within 10 Business Days of any notice served by the Bank pursuant
thereto;
(D) If the Borrower or any of the Security Parties defaults in the due
performance and observance of any of the terms, covenants and
conditions on its part contained in this Agreement or the Security
Documents (other than relating to payments governed by sub-clause
(A) or (C) above which shall result in immediate default) and such
default is not capable of being remedied or is capable of being
remedied and is not remedied within a period of twenty-one (21) days
after the Bank has given to the Borrower or such other Security
Party a written notice of such default.
(E) If any representation or warranty made by the Borrower or any of the
Security Parties in this Agreement or the Security Documents or any
notice, certificate or statement delivered or made pursuant hereto
or thereto proves to have been incorrect, inaccurate or misleading
in any material respect.
(F) If the Borrower or any Security Party shall be unable to pay or
shall admit its inability to pay its lawful debts as they mature or
if the Borrower or any Security Party shall convene a meeting of or
propose to enter into any arrangement with its creditors generally.
(G) If a distress or other execution is levied or sued out upon or
against all or any material part of the property of the Borrower or
any Security Party and is not discharged within five (5) Business
Days.
(H) If a receiver or similar officer is appointed of the whole or any
material part of the undertaking or assets of the Borrower or any
Security Party.
(I) If the Borrower or any Security Party suspends or threatens to
suspend its operations or transfers or disposes of all or (without
the prior written consent of the Bank) a substantial part of its
assets.
(J) If a petition is filed (other than a petition which in the
reasonable opinion of the Bank is frivolous or vexatious and which
is withdrawn or stayed within 14 days) or an order or judgment is
made or given by any Court of competent jurisdiction or an effective
resolution is passed for the bankruptcy, liquidation, winding-up or
re-organisation of the Borrower or any Security Party (otherwise
than for reconstruction while solvent on terms previously approved
by the Bank) or for the appointment of a receiver, administrator,
administrative receiver, trustee, trustee in bankruptcy, conservator
or liquidator of the
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Borrower or any Security Party or of all or a substantial part of
its undertaking or assets or anything analogous to any of the
foregoing events occurs in any applicable jurisdiction relating to
the Borrower or any of the Security Parties.
(K) If any Governmental consent required by law for the validity,
enforceability or performance in accordance with its terms of this
Agreement or the Security Documents is withdrawn or ceases to be in
full force and effect for any reason.
(L) If the Borrower ceases to be a corporation registered in Madeira and
in good standing or any of the Security Parties cease to be
corporations registered and in good standing in the countries in
which they are incorporated.
(M) If there is a material adverse change in the financial situation of
the Borrower or any Security Party or any company which is owned by
any Security Party because of, inter alia, the Borrower, the
Security Party or any such company having to repay prematurely any
loan or monies borrowed by it or them or any security given by it or
them becoming enforceable.
(N) If the Borrower or any Security Party or any other company owned by
them defaults under any other loan facility advanced to them at the
date hereof or which at any time in the future is advanced them
including but without limitation any facility advanced by the Bank.
(O) If the Pledged Shares cease to be held by the Custodian subject to
the directions of the Bank.
(P) If for any reason the dealing in shares of the Company in accordance
with the rules and procedures of AMEX is suspended or withdrawn
including, without limitation (i) for reasons of the proposed
liquidation of the Company for the purposes of solvent
reconstruction or amalgamation or an offer is made to take over the
whole of the issued share capital of the Company or the Company is
to merge with a third party and in such circumstances the Borrower
is not able to procure, within 30 days, that any company acquiring
the Company offers to acquire the Pledged Shares for a sum no less
than the Outstanding Indebtedness and which such sum is utilized to
prepay the Loan, or issues substitute shares of equal or greater
value to the Pledged shares and having rights no less than attaching
to the Pledged Shares, which such substitute shares will be pledged
to the Bank in a form acceptable to the Bank, (ii) because voluntary
suspension is sought by the Company and if dealings are not restored
within 3 months from the date of suspension or withdrawal of
permission or (iii) immediately, as a result of proceedings being
commenced for the winding up of the Company (save as provided in (i)
above) or as result of a receiver, administrator or administrative
receiver (or any equivalent appointment in any other jurisdiction)
being appointed to the Company.
(Q) If any other event occurs or circumstances arise which in the
reasonable opinion of the Bank is likely to materially adversely
affect either the ability of the Borrower or any Security Party to
perform all or any of its obligations pursuant to the Security
Documents or the security created by the Security Documents:
THEN the same shall constitute an "Event of Default" and the Bank shall be
discharged from all obligations to make or maintain the Loan and the Bank
may by written notice to the Borrower declare the Outstanding Indebtedness
to be immediately payable whereupon the same shall become so due and
payable and shall be applied in the manner set out in Clauses 14.01(i) to
(v) hereof.
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14. ACCOUNTS AND PAYMENT
14.01 From and after the occurrence of an Event of Default, all monies received
by or on behalf of the Bank under and pursuant to one or more of the
Security Documents or otherwise howsoever in connection with the
Outstanding Indebtedness may be applied, in the following manner in such
order as the Bank considers appropriate:-
(i) in or towards satisfaction of all sums due hereunder and under the
Security Documents other than principal of or interest on the Loan;
(ii) in or towards satisfaction of interest accrued on the Loan;
(iii) in or towards satisfaction of the Loan (whether or not then due and
payable);
(iv) in retention by the Bank of such sum as it considers appropriate by
way of security for the Outstanding Indebtedness; and
(v) the remainder, if any, in payment to the Borrower or such other
person as may for the time being be entitled thereto.
14.02 The Bank will maintain a loan account showing the amount of the Loan and
interest accrued thereon from time to time and other charges and expenses
and all payments in respect thereof made by the Borrower from time to time
pursuant to the terms of this Agreement. The loan account shall, in the
absence of manifest error, be conclusive as to the amount from time to
time due from the Borrower to the Bank in respect of the principal of,
interest on and other charges in respect of the Loan.
14.03 If any sum payable under this Agreement or the Security Documents shall
become due on a day which is not a Business Day, the due date in respect
thereof shall be extended to the next succeeding Business Day, unless such
Business Day falls in the next calendar month, in which event such due
date shall be the immediately preceding Business Day.
14.04 Subject as provided in this Agreement all payments of principal or
interest or other sums which may fall to be made under this Agreement
shall be made to the Bank at its offices referred to in Clause 23 not
later than 11.00 hours London time on the due date in Dollars for the
credit of the loan account or accounts referred to in Clause 14.02 above
and numbered 3427024.
15. SET-OFF
15.01 The Borrower hereby authorises the Bank:-
(A) To apply any credit balance in whatever currency denominated
standing upon any of its accounts with any branch of the Bank in or
towards satisfaction of any sum (whether of principal interest or
otherwise) at any time due to the Bank from it hereunder or under
the Security Documents.
(B) In its name or in the name of the Bank to do all such acts and
execute all such documents as may be required to effect any such
application.
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16. COSTS
16.01 The Borrower will pay all the costs fees and expenses of the Bank,
including but not limited to the reasonable and proper legal costs and
disbursements of the Bank's Lawyers, reasonably and properly incurred in
connection with the negotiation, preparation, execution, registration,
filing and stamping (if any) of this Agreement and the Security Documents
and of the carrying out of all the transactions hereby or thereby
contemplated whether such transactions are completed or not and also the
fees and disbursements of the Bank's Lawyers, accountants, surveyors, or
other experts for any advice or services which the Bank may deem it
necessary or expedient to obtain in connection with the carrying out of
this Agreement or the Security Documents and the maintenance or
enforcement of the security thereby given, shall pay all stamp and other
duties and taxes (if any) to which this Agreement or the Security
Documents may be subject and indemnify the Bank for and against all costs,
expenses and liabilities with respect to or resulting from any delay in
paying or omission to pay any such duties or taxes.
17. MONEY ON ACCOUNT
17.01 If for the purposes of obtaining judgment in any Court it is necessary to
convert a sum due hereunder in Dollars into another currency (hereinafter
called "the Second Currency") the rate of exchange which shall be applied
shall be that at which in accordance with normal banking procedures the
Bank could purchase Dollars with the Second Currency on the Business Day
preceding that on which the judgment is given.
17.02 The obligation of the Borrower in respect of any such sum due from it to
the Bank hereunder shall, notwithstanding any judgment in such other
currency or the rate of exchange actually applied in giving such judgment,
be discharged only to the extent that on the Business Day following
receipt by the Bank of any sum adjudged to be due hereunder in the Second
Currency the Bank may in accordance with normal banking procedures
purchase Dollars with the amount of the Second Currency so received and if
the Dollars so purchased shall fall short of the sum originally due to the
Bank in Dollars, the Borrower agrees as a separate obligation and
notwithstanding any such judgment to indemnify the Bank against such
shortfall.
18. BENEFIT OF AGREEMENT
18.01 This Agreement shall be binding upon the Borrower and its successors and
assigns and shall inure to the benefit of the Bank and its successors and
assigns, but the Borrower may not assign or transfer any of its rights,
benefits or obligations hereunder or under the Security Documents, save
with the prior written consent of the Bank.
18.02 The Bank may at any time without the Borrower's prior consent assign,
transfer or sub-participate all or any part of its rights, benefits and
obligations hereunder or under the Security Documents to any one or more
banks or other lending institutions (each of which is hereinafter called
"an Assignee"). For this purpose the Bank may disclose to a potential
Assignee such information about the Borrower and the Borrower's business,
assets and financial condition as the Bank shall consider appropriate. The
Bank shall notify the Borrower of such disclosure and the identity of the
potential Assignee to the extent the Bank is not bound by any obligation
of confidentiality.
18.03 If the Bank assigns any of its rights, benefits and obligations hereunder
all references in this Agreement (other than in this Clause) to the Bank
shall be construed as a reference to the Bank and its Assignee or
Assignees to the extent of their respective interests.
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19. INDEMNITY
19.01 The Borrower hereby indemnifies and agrees to indemnify the Bank and to
hold the Bank harmless against any and all costs, expenses or liabilities
as certified by the Bank which the Bank may reasonably sustain or incur
directly or indirectly as a consequence of or in connection with or
arising out of:-
(a) the drawdown of the Loan or any part thereof not occurring for any
reason after a notice has been received in accordance with Clause 4
hereof;
(b) a prepayment of the Loan or part thereof under the terms of this
Agreement being made other than on a Interest Payment Date;
(c) the Loan becoming due and payable pursuant to Clause 13 on a date
other than the last Business Day of an Interest Period relating
thereto or other relevant period;
(d) any default in repayment of the Loan (or any part thereof) or in
payment of interest accrued thereon or any other amount payable
pursuant to the terms of one or more of the Security Documents;
such expenses, costs or liabilities to include, but not to be limited to
(i) any costs incurred by the Bank in carrying funds which were to have
been borrowed by the Borrower (ii) any interest payable by the Bank to
lenders of the funds borrowed by the Bank in order to carry the funds
referred to in (i) above, (iii) any premium or costs which the Bank is
required to pay to the lender of any funds borrowed by the Bank occasioned
by the premature repayment for such funds.
20. FURTHER ASSURANCE
20.01 The Borrower hereby agrees that at any time and from time to time, upon
the written request of the Bank, the Borrower will promptly and duly
execute and deliver and/or procure the execution and delivery of any and
all such further legal documents as may be deemed desirable by the Bank
for the purpose of obtaining for the Bank the full benefits of this
Agreement and/or the other Security Documents and of the rights and powers
herein and therein granted.
20.02 The Borrower and the Bank hereby appoint ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and/or ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ of ▇▇▇▇▇▇ Price ▇▇▇▇▇▇▇ & Kammholz ▇.▇.▇▇ attorneys in fact on
behalf of the Borrower for the purposes of any filing statement in
accordance with the Uniform Customs Code as may be deemed by the Bank
necessary or desirable in the circumstances.
21. PROVISIONS PROHIBITED BY LAW
21.01 Any provision contained herein and/or in the other Security Documents
prohibited by or unlawful or unenforceable under any applicable law shall,
to the extent required by such law, be ineffective without modifying the
remaining provisions of this Agreement or the other Security Documents, as
the case may be. Where however the provisions of any such applicable law
may be waived, they are hereby waived by the parties hereto to the full
extent permitted by such law with the intent that this Agreement or the
other Security Documents (as the case may be) shall be valid, binding and
enforceable in accordance with their respective terms.
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22. RIGHTS OF THE BANK
22.01 Time is the essence of this Agreement and of the other Security Documents
but no failure or delay on the part of the Bank in exercising any right,
power or privilege hereunder or under the other Security Documents and no
course of dealing between the Borrower and the Bank shall operate as a
waiver thereof, nor shall any single or partial exercise of any right,
power or privilege hereunder or under the other Security Documents
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein and in the
other Security Documents expressly provided are cumulative and not
exclusive of any rights or remedies which any or all of the parties hereto
would otherwise have. This Agreement and the other Security Documents may
only be amended by an agreement in writing.
23. NOTICES
23.01 Any notice, approval, consent, demand, or request to be given or made
hereunder shall be in writing but may be given by letter or telex or
facsimile transmission and shall be sent in the case of the Bank to its
London Branch offices at ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Telex No:▇▇▇▇▇▇▇ Fax No. ▇▇▇ ▇▇▇▇ ▇▇▇▇ and in the case of the Borrower to
the offices of the Guarantor Fax No. ▇▇▇ ▇▇▇▇ ▇▇▇▇ or at such other
address as may from time to time be notified to the Bank or the Borrower
pursuant to this Clause.
23.02 Any such notice, approval, demand or request shall be deemed to have been
received in the case of a telex or facsimile transmissions at the time of
dispatch thereof and in the case of a letter forty eight (48) hours after
posting of the same by pre-paid first class post.
24. CONTRACTS (RIGHTS OF THIRD PARTIES) ▇▇▇ ▇▇▇▇
24.01 No term of this Agreement is enforceable under the Contracts (Rights of
Third Parties) ▇▇▇ ▇▇▇▇ by a person who is not a party to this Agreement.
25. GOVERNING LAW
25.01 This Agreement shall be governed by and construed in accordance with
English Law.
26. JURISDICTION
26.01 The Borrower agrees that any legal action or proceeding arising out of
this Agreement or the Security Documents may be brought in the High Court
of Justice in England and submits itself to the jurisdiction of that Court
and agrees that any writ, notice of proceedings or other legal process
shall be sufficiently served upon it if sent to the offices of the
Guarantor which the Borrower hereby irrevocably appoints as its agent for
the purpose of accepting service on its behalf in that jurisdiction. The
submission by the Borrower to such jurisdiction shall not (and shall not
be construed so as to) limit the right of the Bank to commence any
proceedings relating to this Agreement or the Security Documents in
whatsoever jurisdiction shall to it seem fit.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement the day and
year first before written.
SIGNED by )
for and on behalf of NAVALMAR )
(UK) LIMITED in )
the presence of:- )
.....................................
SIGNED by and )
for and on behalf of BANCO POPOLARE )
DI ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ S.C.R.L. )
LONDON BRANCH in the presence of:- )
.....................................
19