-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O2KFsKtGNsuQ3gtVIR8yEZghdnRZUwxKAj97ZNmBpOzmKIlSaDICmp+iSIHvI/Hx qY4gWYkreYkIolyQP7D1zQ== 0001144204-05-031511.txt : 20051012 0001144204-05-031511.hdr.sgml : 20051012 20051012154337 ACCESSION NUMBER: 0001144204-05-031511 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20051012 DATE AS OF CHANGE: 20051012 GROUP MEMBERS: CO.FI.PA SPA GROUP MEMBERS: ENRICO BOGAZZI GROUP MEMBERS: NAVALMAR TRANSPORTES MARITIMOS LDA SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MC SHIPPING INC CENTRAL INDEX KEY: 0000847831 STANDARD INDUSTRIAL CLASSIFICATION: DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412] IRS NUMBER: 980101881 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-40322 FILM NUMBER: 051134990 BUSINESS ADDRESS: STREET 1: CLARENDON HOUSE CHURCH ST STREET 2: P O BOX HM 1022 CITY: HAMILTON BERMUDA STATE: D0 ZIP: HM CX BUSINESS PHONE: 8092957933 MAIL ADDRESS: STREET 1: 24 AVENUE DE FONTVIELLE CITY: MONACO STATE: F0 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Navalmar (UK) LTD CENTRAL INDEX KEY: 0001290116 IRS NUMBER: 000000000 STATE OF INCORPORATION: X0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 5-7 ST HELEN'S PLACE CITY: LONDON STATE: X0 ZIP: EC3A 6AU BUSINESS PHONE: 00 44 207 920 9666 MAIL ADDRESS: STREET 1: 5-7 ST HELEN'S PLACE CITY: LONDON STATE: X0 ZIP: EC3A 6AU SC 13D/A 1 v027076_sc13d.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------------------- SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (Amendment #2) MC Shipping Inc. (Name of Issuer) Common Stock, $0.01 Par Value (Title of Class of Securities) 55267Q 104 (CUSIP Number) Andrea Columbo Michael Lloyd Navalmar (UK) Limited 5-7 St. Helen's Place Beulah Hall London EC3A 6AU 3 Beulah Road United Kingdom Wimbledon +44 (0)20 7920 9666 London SW19 3SB United Kingdom +44 0208-540-8777 (Name, Address and Telephone Numbers of Person Authorized to Receive Notices and Communications on Behalf of Filing Persons) with copies to: Stuart Neuhauser, Esq. Ellenoff Grossman & Schole LLP 370 Lexington Ave, 19th Floor New York, New York 10017 (212) 370-1300 (212) 370-7889 Facsimile October 5, 2005 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. [ ]
- ---------------------------------------- -------------------------------------- -------------------------------------- CUSIP No. 55267Q 104 13D Page 9 (Common Stock) - ---------------------------------------- -------------------------------------- -------------------------------------- 1 NAMES OR REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Navalmar (UK) Limited - ---------- ----------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) - ---------- ----------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ---------- ----------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC/BK - ---------- ----------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - ---------- ----------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United Kingdom - ------------------------- -------- ----------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF None SHARES -------- ----------------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 4,580,744 EACH -------- ----------------------------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH None -------- ----------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 4,580,744 - ---------- ----------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,580,744 - ---------- ----------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES - ---------- ----------------------------------------------------------------------------------------------------------- 13 PERCENTAGE OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 52.53% - ---------- ----------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ---------- -----------------------------------------------------------------------------------------------------------
- ---------------------------------------- -------------------------------------- -------------------------------------- CUSIP No. 55267Q 104 13D Page 9 (Common Stock) - ---------------------------------------- -------------------------------------- -------------------------------------- 1 NAMES OR REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Navalmar Transportes Maritimos LDA - ---------- ----------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) - ---------- ----------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ---------- ----------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC/BK - ---------- ----------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - ---------- ----------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Portugal - ---------- ----------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF None SHARES -------- ----------------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 4,580,744 EACH -------- ----------------------------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH None -------- ----------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 4,580,744 - ---------- ----------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,580,744 - ---------- ----------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES - ---------- ----------------------------------------------------------------------------------------------------------- 13 PERCENTAGE OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 52.53% - ---------- ----------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ---------- -----------------------------------------------------------------------------------------------------------
- ---------------------------------------- -------------------------------------- -------------------------------------- CUSIP No. 55267Q 104 13D Page 10 (Common Stock) - ---------- ----------------------------------------------------------------------------------------------------------- 1 NAMES OR REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) CO.FI.PA SpA - ---------- ----------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) - ---------- ----------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ---------- ----------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC/BK - ---------- ----------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - ---------- ----------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Italy - ---------- ----------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF None SHARES -------- ----------------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 4,580,744 EACH -------- ----------------------------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH None -------- ----------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 4,580,744 - ---------- ----------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,580,744 - ---------- ----------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES - ---------- ----------------------------------------------------------------------------------------------------------- 13 PERCENTAGE OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 52.53% - ---------- ----------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON HC - ---------- -----------------------------------------------------------------------------------------------------------
- ---------------------------------------- -------------------------------------- -------------------------------------- CUSIP No. 55267Q 104 13D Page 11 (Common Stock) - ---------------------------------------- -------------------------------------- -------------------------------------- 1 NAMES OR REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Enrico Bogazzi - ---------- ----------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) - ---------- ----------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ---------- ----------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC/BK - ---------- ----------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - ---------- ----------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Italy - ---------- ----------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF None SHARES -------- ----------------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 4,580,744 EACH -------- ----------------------------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH None -------- ----------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 4,580,744 - ---------- ----------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,580,744 - ---------- ----------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES - ---------- ----------------------------------------------------------------------------------------------------------- 13 PERCENTAGE OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 52.53% - ---------- ----------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - ---------- -----------------------------------------------------------------------------------------------------------
Pursuant to Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, the Reporting Persons (as enumerated in Item 2) have agreed to file one statement with respect to their ownership of common stock of MC Shipping Inc. The Joint Filing Agreement among the Reporting Persons is attached as Exhibit 1 hereto. This joint Schedule 13D/A of the Reporting Persons is hereinafter referred to as the "Statement." Item 1. Security and Issuer The Statement relates to the common stock, par value $0.01 per share, of MC Shipping Inc. (the "Common Shares"), a Liberian corporation with its principal executive offices located at 24, avenue de Fontvieille, 98000 Monaco. Item 2. Identity and Background Item 2 (a) - (c) and (f) below is hereby amended and restated by (each a "Reporting Person" and, collectively, the "Reporting Persons") as follows: Navalmar (UK) Limited, with its principal offices at Beulah Hall, 3 Beulah Road, London SW19 3SB (+44 (0) 208-540-4065), is a UK company which owns and operates a fleet of vessels and offers various liner services worldwide. Navalmar Transportes Maritimos LDA, with its principal offices at Rua Dos Murcas 15, Sala G, 2nd Andar, 9000 Funchal (Madeira) Portugal (+3 51 291 238565), is a Portuguese company which owns and operates a fleet of vessels. CO.FI.PA SpA, (formerly known as Bogazzi Fimpar SpA), with its principal offices at Via Cadorna 49/A, 54036, Marina di Carrara, Italy (+390 585-631665), is an Italian holding company that beneficially owns approximately 74% of Navalmar (UK) Limited and approximately 74% of Navalmar Transportes Maritimos LDA. Enrico Bogazzi, an Italian citizen with his principal office at Via Cadorna 49/A, 54036, Marina di Carrara, Italy (+390 585-631665), is the majority shareholder and a director of CO.FI.PA SpA. Enrico Bogazzi is also a director of B Navi SpA, a ship management company, and Vittorio Bogazzi & Figli SpA, a ship agency company. The directors and executive officers of the Reporting Persons are set forth on Schedule I attached hereto. Schedule I sets forth the following information with respect to each such person: (i) name, (ii) business address; (iii) present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment was conducted and (iv) citizenship. (d) - (e) During the last five years, neither the Reporting Persons nor, to the best of the knowledge of the Reporting Persons, any person named in Schedule I attached hereto has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to any civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining them from future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws. 6 Item 3. Source and Amount of Funds or Other Consideration Item 3 is amended and restated as follows: As described under Item 4 below, V. Investments Limited and Navalmar (UK) Limited entered into a sales agreement (the "Sales Agreement") with Vlasov Investment Corporation (the "Seller"), an indirect wholly owned subsidiary of Securitas Holding Corporation, a Liberian corporation, to purchase in aggregate 4,168,000 Common Shares in consideration of US$2.76 per Common Share, totaling US$11,503,680 (the "Purchase Price"). Of these 4,168,000 Common Shares, 1,946,456 were purchased by V. Investments Limited for US$5,372,215.56 and 2,221,544 were purchased for US$6,131,464.44 by Navalmar (UK) Limited. At completion on 13 May 2004, Navalmar (UK) Limited funded its entire portion of the Purchase Price with cash provided by a loan from its shareholders. V. Investments Limited funded its portion of the Purchase Price with cash provided by its shareholders in two separate payments to the Seller. V. Investments Limited made an initial payment to the Seller of US$2,500,000 in cash (the "First Payment") at the time of the closing of this transaction on 13 May 2004. This First Payment was funded by loans made to V. Holdings Limited, of which V. Investments Limited is a wholly owned subsidiary, from the shareholders of V. Holdings Limited, which include Greysea Limited and Close Securities Limited. V. Investments Limited was obligated under the terms of the Sales Agreement to pay the balance of the consideration due, which comprised US$2,872,215.56, (the "Second Payment") no later than 15 May 2005, with an additional 5% interest due on such balance. As of the date of this filing, the Second Payment was paid in full. As described under Item 4 below, Navalmar Transportes Maritimos has agreed to purchase 1,780,000 shares of MC Shipping from V. Investments Limited for an aggregate purchase price of US$16,020,000. On October 5, 2005, Navalmar Transportes Maritimos funded the purchase price with a combination of owned liquid assets and a partial contribution of borrowed funds in the amount of US$5,000,000 to be repaid in equal installments over five years at LIBOR plus. Item 4. Purpose of the Transaction Item 4 is amended and restated as follows: On May 4, 2004, Navalmar (UK) Limited and V. Investments Limited (the "Purchasers") finalized the Sales Agreement to purchase the 4,168,000 Common Shares owned by Vlasov Investment Corporation, an indirect wholly owned subsidiary of Securitas Holding Corporation, a Liberian corporation. The Purchasers agreed to pay Vlasov Investment Corporation US$2.76 per Common Share, which totaled US$11,503,680. Under the terms of the Sales Agreement, half of the Purchase Price was payable no later than May 15, 2004, with the balance of the Purchase Price payable no later than May 15, 2005. As described in Item 3 above, Navalmar (UK) Limited paid the entire amount of consideration due the Seller for the 2,221,544 Common Shares it purchased from the Seller on May 13, 2004, the date of closing of the transaction. V. Investments Limited paid the First Payment to the Seller on May 13, 2004, the date of closing of the transaction. As of the date of this filing, the Second Payment was paid in full. On August 16, 2005, Navalmar Transportes Maritimos LDA, a sister company to Navalmar (UK) Limited, entered into a transaction for the purchase of 1,780,000 shares of MC Shipping from V. Investments Limited at a price of US$9 per share. Under the Heads of Terms, Navalmar Transportes 7 Maritimos LDA agreed to pay a total amount of US$16,020,000 to V. Investments Limited. The sale was consummated on October 5, 2005. Under the terms of the agreement, if Navalmar Transportes Maritimos LDA resells any of the shares within twelve months after the date of completion of the transaction, it will split in half the proceeds in excess of US$9 per share between itself and V. Investments Limited. The purpose of this transaction is to acquire a majority stake in the ship owning company and to assist in this capacity in its development. Navalmar Transportes Maritimos LDA is affiliated with a group of major ship-owning companies with extensive and successful experience in ship-owning and operations with over 20 years experience in the industry. Taken together the group believes they have a strong position in and understanding of the shipping industry. The parties have no current plans to alter the composition of the MC Shipping board of directors. Item 5. Interest in Securities of the Issuer Item 5 is amended and restated as follows: (a) - (b), Navalmar (UK) Limited, Navalmar Transportes Maritimos LDA, CO.FI.PA SpA, and Enrico Bogazzi may be deemed to have shared beneficial ownership of 4,580,744 Common Shares, which represents approximately 52.53% of the common stock outstanding (based on 8,913,658 Common Shares outstanding). (c). Not applicable. (d). Not applicable. (e). Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer Except as described herein, neither Reporting Person nor, to the best of the Reporting Persons' knowledge, any of the persons named in Schedule I hereto has any contracts, arrangements, understandings or relationships (legal or otherwise) with any persons with respect to any securities of MC Shipping Inc., including, but not limited to, transfers or voting of any securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees or profits, division of profits or loss, or the giving or withholding of proxies. 1. Heads of Terms between V. Investments Limited, and Navalmar Transportes Maritimos LDA. 2. Loan Agreement by and between Banco Popular and Navalmar Transportes Maritimos LDA (filed herewith) 3. Facility Agreement by and between Banco Popular Italiana Societa Cooeperativa, London Branch and Navalmar Transportes Maritimos LDA(filed herewith) See Items 3 and 4. Item 7. Material to be filed as Exhibits 1. Joint Filing Agreement dated October 5, 2005 by and among Navalmar (UK) Limited, Navalmar Transportes Maritimos LDA, CO.FI.PA SpA, and Enrico Bogazzi. (filed herewith) 8 2. Heads of Terms between V. Investments Limited and Navalmar Transportes Maritimos LDA dated August 16, 2005 (Incorporated by reference to Schedule 13D/A filed on August 19, 2005, File No. 0001144204-05-026366) 3. Loan Agreement by and between Banco Popular and Navalmar Transportes Maritimos LDA (filed herewith) 4. Facility Agreement by and between Banco Popular Italiana Societa Cooeperativa, London Branch and Navalmar Transportes Maritimos LDA(filed herewith) 9 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Navalmar (UK) Limited Dated: October 5, 2005 By: /s/ Andrea Colombo ----------------------------------- Name: Andrea Colombo Title: Director Navalmar Transportes Maritimos LDA Dated: October 5, 2005 By: /s/ Andrea Colombo ----------------------------------- Name: Andrea Colombo Title: Director CO.FI.PA SpA Dated: October 5, 2005 By: /s/ Enrico Bogazzi ----------------------------------- Name: Enrico Bogazzi Title: Director Dated: October 5, 2005 By: /s/ Enrico Bogazzi ----------------------------------- Name: Enrico Bogazzi 10 EXHIBIT INDEX 1. Joint Filing Agreement dated October 5, 2005 by and among Navalmar (UK) Limited, Navalmar Transportes Maritimos LDA, CO.FI.PA SpA, and Enrico Bogazzi. (filed herewith) 2. Heads of Terms between V. Investments Limited and Navalmar Transportes Maritmos LDA dated August 16, 2005. (Incorporated by reference to Schedule 13D/A filed on August 19, 2005, File No. 0001144204-05-026366) 3. Loan Agreement by and between Banco Popular and Navalmar Transportes Maritimos LDA (filed herewith) 4. Facility Agreement by and between Banco Popular Italiana Societa Cooeperativa, London Branch and Navalmar Transportes Maritimos LDA(filed herewith) 11 SCHEDULE I The name of each director and executive officer of Navalmar (UK) Limited is set forth below. Directors of Navalmar (UK) Limited are indicated by an asterisk.
- ------------------------------ --------------------------------------------------------------- -------------------- Present Principal Occupation or Employment Business Address, and Business Telephone Number; Other Material Positions Held Name during the Past Five Years Citizenship - ------------------------------ --------------------------------------------------------------- -------------------- Enrico Bogazzi* Director, B Navi SpA Italy Director, Vittorio Bogazzi & Figli SpA Via Cadorna 49/A 54036 Marina de Carrara Italy +390 585-631-665 Enrico Bogazzi has been employed with B Navi SpA (ship management company) and Vittorio Bogazzi & Figli SpA (ship agency company) for the past five years. - ------------------------------ --------------------------------------------------------------- -------------------- Roy Ware* Director, Navalmar (UK) Limited UK Director, Marine Chartering Limited Beulah Hall 3 Beulah Road Wimbledon London SW19 3SB United Kingdom +44 0208-540-8777 Roy Ware has been employed with Navalmar (UK) Limited and Marine Chartering Limited for the past five years. - ------------------------------ --------------------------------------------------------------- -------------------- Stefano Tanganelli* Director, Navalmar (UK) Limited Italy Beulah Hall 3 Beulah Road Wimbledon London SW19 3SB United Kingdom +44 0208-540-8777 Stefano Tanganelli has been employed with Navalmar (UK) Limited for the past five years. - ------------------------------ --------------------------------------------------------------- -------------------- Michael Lloyd* Solicitor UK Michael Lloyd and Co. 5-7 St Helen's Place London EC3A 6AU +44 0207-920-9666 Lloyd and Co. 1 College Hill, London United Kingdom Michael Lloyd has been the sole practitioner at Michael Lloyd and Co. since 2002. Before such time, he was a solicitor at Lloyd and Co. - ------------------------------ --------------------------------------------------------------- -------------------- Giorgio Boesgaard* Director, Hugo Trumpy SpA Denmark 10 via San Siro 16124 Genova Italy +390 10-24941 Giorgio Boesgaard has been employed by Hugo Trumpy SpA, a ship agency company, for the past five years. - ------------------------------ --------------------------------------------------------------- -------------------- 12
- ------------------------------ --------------------------------------------------------------- -------------------- Andrea Colombo* Director, Navalmar (UK) Limited Italy Beulah Hall 3 Beulah Road Wimbledon London SW19 3SB United Kingdom +44 0208-540-8777 Andrea Colombo was been employed by Navalmar Transportes Maritimos LDA from November 1997 through 2001, and with Navalmar (UK) Limited since 2001. - ------------------------------ --------------------------------------------------------------- --------------------
13 The name of each director and executive officer of Navalmar Transportes Maritimos LDA is set forth below. Directors of Navalmar Transportes Maritimos LDA are indicated by an asterisk.
- ------------------------------ --------------------------------------------------------------- -------------------- Present Principal Occupation or Employment Business Address, and Business Telephone Number; Other Material Positions Held Name during the Past Five Years Citizenship - ------------------------------ --------------------------------------------------------------- -------------------- Enrico Bogazzi* Director, CO.FI.PA SpA Italy Director, Vittorio Bogazzi & Figli SpA Via Cadorna 49/A 54036 Marina de Carrara Italy +390 585-631-665 Enrico Bogazzi has been employed with B Navi SpA (ship management company) and Vittorio Bogazzi & Figli SpA (ship agency company) for the past five years. - ------------------------------ --------------------------------------------------------------- -------------------- Michael Lloyd* Solicitor UK Michael Lloyd and Co. 5-7 St Helen's Place London EC3A 6AU +44 0207-920-9666 Lloyd and Co. 1 College Hill, London United Kingdom Michael Lloyd has been the sole practitioner at Michael Lloyd and Co. since 2002. Before such time, he was a solicitor at Lloyd and Co. - ------------------------------ --------------------------------------------------------------- -------------------- Giorgio Boesgaard* Director, Hugo Trumpy SpA Denmark 10 via San Siro 16124 Genova Italy +390 10-24941 Giorgio Boesgaard has been employed by Hugo Trumpy SpA, a ship agency company, for the past five years. - ------------------------------ --------------------------------------------------------------- -------------------- Andrea Colombo* Director, Navalmar Transportes Maritimos LDA Italy Rua Dos Murcas 15 Sala G, 2nd Andar 9000 Funchal (Madeira) Portugal +3 51 291 238565 Andrea Colombo was been employed by Navalmar Transportes Maritimos LDA from November 1997 and with Navalmar (UK) Limited since 2001. - ------------------------------ --------------------------------------------------------------- -------------------- Maria Dina Rodrigues* Director Navalmar Transportes Maritimos LDA Portugal Rua Dos Murcas 15 Sala G, 2nd Andar 9000 Funchal (Madeira) Portugal +3 51 291 238565 Maria Dina Rodrigues was secretary of Navalmar Transportes Maritimos LDA from November 2004 to June 2005, when she became a director of the company. Prior to that, she worked from October 2003 to November 2004 as secretary for Empresa de Trabalho Temporario SA, a temporary employment company. From February 2002 to September 2003 she worked in the commercial offices of Icams - Servicos de Consultadoria Internacional, Comercial e Contabilidade, Lda, an international commercial consulting and accounting company, and from December 1999 through February 2002 she was a secretary with Florence Tricot -Trading e Marketing Lda, a trading and marketing company. - ------------------------------ --------------------------------------------------------------- --------------------
14 The name of each director and executive officer of CO.FI.PA SpA is set forth below. Directors of CO.FI.PA SpA are indicated by an asterisk.
- ------------------------------ --------------------------------------------------------------- -------------------- Present Principal Occupation or Employment Business Address, and Business Telephone Number; Other Material Positions Held Name during the Past Five Years Citizenship - ------------------------------ --------------------------------------------------------------- -------------------- Enrico Bogazzi* Director, B Navi SpA Italy Director, Vittorio Bogazzi & Figli SpA Via Cadorna 49/A 54036 Marina de Carrara Italy +390 585-631-665 Enrico Bogazzi has been employed with B Navi SpA (ship management company) and Vittorio Bogazzi & Figli SpA (ship agency company) for the past five years. - ------------------------------ --------------------------------------------------------------- -------------------- Maria Piccioli* Piazza della Chiesa nr. 2 Italy Massarosa Italy Maria Piccioli is a housewife and has had no other employment for the past five years. - ------------------------------ --------------------------------------------------------------- -------------------- Francesca Bogazzi* 2 Rue N.D. des Victoires Italy 75002 Paris France Francesca Bogazzi is a housewife and has had no other employment for the past five years. - ------------------------------ --------------------------------------------------------------- --------------------
15 EX-1 2 v027076_ex1.txt Exhibit 1 Joint Filing Agreement Navalmar (UK) Limited, Navalmar Transportes Maritimos LDA, CO.FI.PA SpA, and Enrico Bogazzi each hereby agrees, in accordance with Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, that the Statement on Schedule 13D filed herewith relating to the common stock, par value $0.01 per share, of MC Shipping Inc., is, and will be, filed jointly on behalf of each such person. Navalmar (UK) Limited Dated: October 5, 2005 By: /s/ Andrea Colombo -------------------------------- Name: Andrea Colombo Title: Director Navalmar Transportes Maritimos LDA Dated: October 5, 2005 By: /s/ Andrea Colombo -------------------------------- Name: Andrea Colombo Title: Director CO.FI.PA SpA Dated: October 5, 2005 By: /s/ Enrico Bogazzi -------------------------------- Name: Enrico Bogazzi Title: Director Dated: October 5, 2005 By: /s/ Enrico Bogazzi --------------------------------- Enrico Bogazzi EX-3 3 v027076_ex3.txt Exhibit "3" DATED 2005 (1) NAVALMAR TRANSPORTES MARITIMOS LDA (2) BANCO POPOLARE DI VERONA E NOVARA S.C. R.L. LONDON BRANCH ----------------------------------------------------- LOAN AGREEMENT Relating to a Loan of up to US $10,000,000 ----------------------------------------------------- [LOGO] HTD Hill Taylor Dickinson Irongate House Duke's Place London EC3A 7HX Telephone: 0207 283 9033 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 Rua Dos Murcas 15, Room G, 2nd Floor, 9000, Funchal, Madeira (hereinafter called the "Borrower") (2) BANCO POPOLARE DI VERONA E NOVARA S.C.R.L. LONDON BRANCH a bank incorporated pursuant to the laws of Italy acting through its London Branch situate at Bucklersbury House, Walbrook, London EC4N 8EL (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$10,000,000) upon and subject to the terms and conditions contained in this Agreement. NOW THEREFORE IT IS AGREED as follows:- 1. DEFINITIONS 1.01 In this Agreement:- (A) "Agreement" means this agreement as originally executed or as it may from time to time be supplemented and/or varied; (B) "AMEX" means the American Stock Exchange; (C) "Business Day" means a day on which dollar dealings are carried on in the London Interbank Market and which is a banking business day in New York and also a day when banks are open in London and in Italy; (D) "Company" means MC Shipping Inc, a company incorporated in and subject to the laws of the Republic of Liberia, whose Principal Executive Office is at Richmond House, 12 Par-la-ville Road, Hamilton, Bermuda; (E) "Conditions Precedent" means any or all of the conditions set forth in Clause 11.01 or 11.02 hereof; (F) "Custodian" means Hampton Securities (USA) Inc of 141 Adelaide Street West, Suite 1800, Toronto, Ontario, M5H 3L5, Canada; (H) "Deeds of Pledge" means any Deed of Pledge over Pledged Shares executed by the Guarantor (or the Borrower, to the extent it is or becomes the beneficial owner of the Pledged Shares following a transfer of ownership approved by the Bank) in favour of the Bank substantially in the form set out in Appendix "A" hereto whether required pursuant to Clauses 11.01, 11.02 or 12.01(H) of this Agreement or otherwise; 2 (I) "Default Rate" means the rate described in Clause 5.03 hereof; (J) "Dollars" and "$" 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 5-7 St Helen's Place, London EC3A 6AU; (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 3 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 Act 1985; (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. 4 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 London 5 Interbank 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. 6 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 7 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. 8 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, 9 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; 10 (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. 11 (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 12 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 13 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. 14 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. 15 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. 16 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 Lorraine Rello and/or John E. Bradley of Vedder Price Kaufman & Kammholz P.C.as 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. 17 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 Bucklersbury House, Walbrook, London EC4N 8EL Telex No:8811511 Fax No. 020 7236 2033 and in the case of the Borrower to the offices of the Guarantor Fax No. 020 8540 4088 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) ACT 1999 24.01 No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 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. 18 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 VERONA E NOVARA S.C.R.L. ) LONDON BRANCH in the presence of:- ) ..................................... 19 EX-4 4 v027076_ex4.txt EXHIBIT "4" DATED SEPTEMBER 2005 (1) BANCA POPOLARE ITALIANA SOCIETA COOPERATIVA, LONDON BRANCH (2) NAVALMAR TRANSPORTES MARITIMOS LDA FACILITY AGREEMENT CONTENTS PAGE 1 EXECUTION VERSION REFERENCE CONTENTS CLAUSE 1 INTERPRETATION........................................................1 2 FACILITY..............................................................9 3 PURPOSE..............................................................10 4 CONDITIONS PRECEDENT.................................................10 5 UTILISATION..........................................................10 6 REPAYMENT AND PREPAYMENT.............................................11 7 INTEREST.............................................................13 8 TERMS................................................................14 9 MARKET DISRUPTION....................................................15 10 TAXES................................................................16 11 INCREASED COSTS......................................................18 12 MITIGATION...........................................................19 13 PAYMENTS.............................................................20 14 REPRESENTATIONS......................................................21 15 INFORMATION COVENANTS................................................24 16 GENERAL COVENANTS....................................................25 17 DEFAULT..............................................................29 18 APPLICATION OF RECEIPTS..............................................36 19 EVIDENCE AND CALCULATIONS............................................37 20 INDEMNITIES AND BREAK COSTS..........................................37 21 COSTS AND EXPENSES...................................................39 22 VARIATIONS AND WAIVERS...............................................40 23 CHANGES TO THE PARTIES...............................................41 24 DISCLOSURE OF INFORMATION............................................42 25 SET-OFF .............................................................43 26 SEVERABILITY.........................................................43 27 COUNTERPARTS.........................................................44 28 NOTICES .............................................................44 29 LANGUAGE.............................................................45 30 GOVERNING LAW........................................................46 31 JURISDICTION.........................................................46 SCHEDULES SCHEDULE 1................................................................48 CONDITIONS PRECEDENT DOCUMENTS.......................................48 SCHEDULE 2...............................................................50 SHARE PLEDGE AGREEMENT...............................................50 SCHEDULE 3...............................................................51 FORM OF REQUEST FOR UTILISATION......................................51 CONTENTS PAGE 2 THIS FACILITY AGREEMENT is dated September 2005 BETWEEN (1) Navalmar Transportes Maritimos Lda, a company established under the laws of Portugal in Madeira's Free trade Zone, tax corporate number 511.095.694, having its registered address at Rua das Murcas, number 15, second floor, room G, parish of Se, borough of Funchal, Madeira, Portugal, registered with Madeira's Free Trade Zone Companies Registry Office under number 2968 (the `Borrower'); and (2) Banca Popolare Italiana Societa Cooperativa, London Branch, a bank incorporated pursuant to the laws of Italy, with its registered office in Lodi, via Polenghi Lombardo n. 13, corporate capital equal to Euro 885,127,227.00, registered with the Register of Enterprises of Lodi under no. 3, tax code no. 00691360150, acting through its office situate at 1 Moorgate, London, EC2R 6JH, United Kingdom (the `Lender'). Whereas The Lender has agreed to make available to the Borrower, on the terms and conditions hereinafter specified, a loan facility of up to five million United States Dollars (USD5,000,000) for the purpose of financing part of the cost of the acquisition by the Borrower of Dannebrog Rederi AS. Now therefore it is agreed as follows - 1 INTERPRETATION 1.1 DEFINITIONS In this Agreement - `Agreement' means this facility agreement together with its Schedules. `AMEX' means the American Stock Exchange. PAGE 1 `Arrangement Fee' means an amount of USD12,500.00 payable on the signing of this Agreement. `Availability Period' means the period starting from the date of this Agreement and ending on 31st October 2005. `Break Costs' shall have the meaning ascribed to it in Clause 20.3(b). `Business Day' means a day (other than a Saturday or a Sunday) on which banks are open for general business in London and in New York. `Commitment' means the amount which the Lender has agreed to lend to the Borrower under Clause 2 as cancelled, reduced or disbursed pursuant to this Agreement. `Corporation' 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. `Custodian' means Citibank, New York in its capacity as a "securities intermediary". `Default' means - (a) an Event of Default; or (b) an event which would constitute (with the giving of any notice the lapse of time or the making of any determination under this Agreement) an Event of Default. `Encumbrance' means - (a) any mortgage, pledge, lien, charge (whether floating or fixed), assignment, security interest, title retention or trust arrangement and any other security agreement or arrangement; and PAGE 2 (b) the security rights of a plaintiff under an action in rem; and (c) any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set-off or combination of accounts conferred by the standard terms of business of a bank or financial institution. `Event of Default' means any of the events or circumstances described in Clause 17. `Facility Amount' means an amount equal to the lesser of - (a) USD5,000,000.00; and (b) fifty per cent (50%) of the market value (based on the daily closing price on AMEX) of the Original Pledged Shares, such valuation to be determined on the Utilisation Date. `Facility Office' means the office(s) through which the Lender will perform its obligations under this Agreement. `Final Maturity Date' means the date falling sixty (60) months after the Utilisation Date. `Financial Indebtedness' means any indebtedness, although not yet due and/or payable, for or in respect of - (a) moneys borrowed; (b) any bond, note, debenture, loan stock or other similar instrument; (c) any finance or capital lease; PAGE 3 (d) receivables sold or discounted (otherwise than on a non-recourse basis); (e) the acquisition cost of any asset to the extent payable after its acquisition or possession by the party liable where the deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset; (f) any derivative transaction protecting against or benefiting from fluctuations in any rate or price; (g) any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing; (h) any counter-indemnity obligation in respect of any guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution; or (i) any guarantee, indemnity or similar assurance against financial loss of any person in respect of any item referred to in paragraphs (a) to (h) above. `Increased Cost' means - (a) an additional or increased cost; (b) a reduction in the rate of return under this Agreement or on its overall capital; or (c) a reduction of an amount due and payable under this Agreement, which is incurred or suffered by the Lender as a result of having entered into this Agreement or funding or performing its obligations under this Agreement. `Loan' means, unless otherwise stated in this Agreement, the principal amount borrowed by the Borrower on the Utilisation Date or (as the context may require) the principal amount owing to the Lender under this Agreement at any relevant time. PAGE 4 `Margin' means 1.25 per cent per annum. `Material Adverse Effect' means a material adverse effect on - (a) the business or financial condition of the Borrower; (b) the ability of the Borrower to perform its material obligations under this Agreement; or (c) the validity or enforceability of this Agreement. `Pledgor' means Navalmar (UK) Limited, a company registered in England and Wales with company number 02537210 and having its registered office at 5-7 St. Helens Place, London EC3A 6AU, United Kingdom. `Party' means a party to this Agreement. `Pledged Shares' shall have the meaning given to such term in the Share Pledge Agreement; `Original Pledged Shares' shall have the meaning given to such term in the Share Pledge Agreement; `Rate Fixing Day' means the second Business Day before the first day of a Term or such other day as the Lender reasonably determines is generally treated as the rate fixing day by market practice in the relevant interbank market. `Repayment Date' means each of the dates falling at six monthly intervals after the Utilisation Date up to and including the Final Maturity Date. `Repayment Instalment' means each instalment for repayment of the Loan. `Request' means the request for the Loan, substantially in the form of Schedule 3 (Form of Request). PAGE 5 `Security Party' means the Borrower and the Pledgor. `Share Pledge Agreement' means the pledge of shares to be granted by the Pledgor in favour of the Lender in the form of Schedule 2 to this Agreement whereby the Pledgor will pledge all of its right, title and interest in the Pledged Shares to the Lender as security for the Borrower's obligations under this Agreement. `Subsidiary' means any company or entity directly or indirectly controlled by a person, and for this purpose "control" means either the ownership of more than 50% of the voting share capital (or equivalent rights of ownership) of such company or the power to direct its policies and management, whether by contract or otherwise. `Tax' means all present and future taxes, levies, imposts, duties, fees or other charges or withholdings of a similar nature (including any related penalty or interest). `Tax Deduction' means a deduction or withholding for or on account of Tax from a payment under this Agreement. `Tax Payment' means a payment made by the Borrower to the Lender in any way related to a Tax Deduction or under any indemnity given by the Borrower in respect of Tax under this Agreement. `Term' means each period for the calculation of interest in respect of the Loan ascertained in accordance with Clause 8. `Unused Commitment' means the Commitment less the Loan. `USD' and `US$' and `Dollars' means the lawful currency for the time being of the United States of America `USD-LIBOR' means, in relation to a particular period, the rate for deposits of Dollars for a period equivalent to such period at or about 11 a.m. on the second Business Day before the first day of such period displayed on Telerate page 3750 (British Bankers' Association Interest Settlement Rates ) (or such other page as may PAGE 6 replace such page 3750 on such system or on any other system of the information vendor for the time being designated by the British Bankers' Association to calculate the BBA Interest Settlement Rate (as defined in the British Bankers' Association's Recommended Terms and Conditions ("BBAIRS" terms dated August, 1985)), provided that if on such date no such rate is so displayed, USD-LIBOR for such period shall be an average British Bankers Association Settlement Rate for USD agreed between the Lender and the Borrower or, failing such agreement, as the Lender may select. `Utilisation' means the utilisation of the Facility in accordance with Clause 5 of this Agreement. `Utilisation Date' means the date of the Utilisation, during the Availability Period, being the date on which the Loan is to be made. 1.2 CONSTRUCTION (a) In this Agreement, unless the contrary intention appears, a reference to - (i) an `amendment' includes a supplement, novation, restatement or re-enactment and `amended' will be construed accordingly; `assets' includes present and future properties, revenues and rights of every description; an `authorisation' includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration or notarisation; `disposal' means a sale, transfer, grant, lease or other disposal, whether voluntary or involuntary, and `dispose' will be construed accordingly; `indebtedness' includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money; PAGE 7 `interest' shall be construed as interest due with respect to any amount disbursed to the Borrower pursuant to the terms of and at the rate indicated herein; a `law' shall be construed as any law (including common or customary law), statute, constitution, decree, judgment, treaty, regulation, directive, by-law, order or any other legislative measure of any government, supranational body, local government, statutory or regulatory body or court; a `person' includes any individual, company, corporation, unincorporated association or body (including a partnership, trust, joint venture or consortium), government, state, agency, organisation or other entity whether or not having separate legal personality; a `regulation' includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but, if not having the force of law, being of a type with which any person to which it applies is accustomed to comply) of any governmental, inter-governmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; (ii) a Default being outstanding means that it has not been remedied or waived in accordance with this Agreement; (iii) a provision of law is a reference to that provision as extended, applied, amended or re-enacted and includes any subordinate legislation; (iv) a Clause, a Sub-clause or a Schedule is a reference to a clause or sub-clause of, or a schedule to, this Agreement; (v) a person includes its successors in title, permitted assigns and permitted transferees. PAGE 8 (b) Unless the contrary intention appears, a reference to a month or months is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month or the calendar month in which it is to end, except that: (i) if the numerically corresponding day is not a Business Day, the period will end on the next Business Day in that month (if there is one) or the preceding Business Day (if there is not); (ii) if there is no numerically corresponding day in that month, that period will end on the last Business Day in that month; and (iii) notwithstanding sub-paragraph (i) above, a period which commences on the last Business Day of a month will end on the last Business Day in the next month or the calendar month in which it is to end, as appropriate. (c) Unless the contrary intention appears - (i) a reference to a Party will not include that Party if it has ceased to be a Party under this Agreement; (ii) any obligation of the Borrower under this Agreement which is not a payment obligation remains in force for so long as any payment obligation of the Borrower is or may be outstanding under this Agreement. (d) The headings in this Agreement do not affect its interpretation. 2 FACILITY The Lender, relying on the representations and warranties in Clause 14, agrees to lend to the Borrower upon and subject to the terms of this Agreement a maximum principal sum equal to the Facility Amount. PAGE 9 3 PURPOSE The Borrower undertakes with the Lender to use the Loan only for the purpose stated in the preamble to this Agreement. 4 CONDITIONS PRECEDENT The Lender's obligation to advance the Facility Amount under Clause 2 of this Agreement is subject to the following conditions precedent - (a) that, on or before the Utilisation Date, the Lender has received the documents and evidence listed in Schedule 1 in form and substance satisfactory to the Lender; and (b) that, on or before the Utilisation Date, the Arrangement Fee shall have been received in full by the Lender; and (c) the representations and warranties and undertakings made or to be made by the Borrower under this Agreement continue to be true, complete, correct and accurate with respect to the circumstances existing as at the date of the Request and the Utilisation Date; and (d) no Default is outstanding or would result from the making of the Loan. 5 UTILISATION 5.1 GIVING OF THE REQUEST (a) Subject to the terms and conditions of this Agreement, the Loan shall be advanced in one amount following receipt by the Lender of a duly completed Request. (b) Unless the Lender otherwise agrees, the latest time for receipt by the Lender of a duly completed Request is 3pm London time three Business Days before the Utilisation Date. PAGE 10 (c) A Request, once given, shall be irrevocable. 5.2 COMPLETION OF REQUEST The Request will be regarded as having been duly completed if - (a) the Utilisation Date is a Business Day falling within the Availability Period; and (b) the amount requested is not more than the Commitment. 6 REPAYMENT AND PREPAYMENT 6.1 REPAYMENT The Borrower shall repay the Loan by ten (10) consecutive six-monthly instalments of USD500,000 on each Repayment Date. If the Commitment is not drawn in full, the amount of each Repayment Instalment shall be reduced proportionally. 6.2 MANDATORY PREPAYMENT (a) The Lender shall notify the Borrower promptly if it becomes aware that it is unlawful in any jurisdiction for the Lender to perform any of its obligations under this Agreement or to maintain the Loan. (b) After notification under paragraph (a) above, the Borrower shall prepay the Loan together with accrued interest and all other amounts due and owing under this Agreement on the date specified in paragraph (c) below. (c) The date for prepayment of the Loan will be the fifteenth Business Day following receipt by the Borrower of notice from the Lender under Clause 6.2(a). PAGE 11 6.3 VOLUNTARY PREPAYMENT (a) Subject always to Clause 6.5 and Clause 6.6, the Borrower may, by giving not less than five Business Days' prior written notice to the Lender, prepay the Loan on the last day of its current Term in whole but not in part. (b) Any prepayment made according to paragraph (a) above shall be applied first in payment of expenses and additional amounts due by the Borrower under this Agreement or the Security Documents, second in payment of accrued interest due and payable and third in repayment of the principal amount of the Loan. 6.4 AUTOMATIC CANCELLATION Any Unused Commitment will be automatically cancelled upon expiry of the Availability Period. 6.5 INVOLUNTARY PREPAYMENT AND CANCELLATION (a) If the Borrower is, or will be, required to pay to the Lender a Tax Payment or an Increased Cost, the Borrower may, while the requirement continues, give notice of prepayment to the Lender. (b) After notification under paragraph (a) above, the Borrower must prepay the Loan on the date specified in paragraph (c) below. (c) The date for prepayment of the Loan will be (i) the last day of the current Term; or (ii) if earlier, the date specified by the Borrower in its notification. 6.6 MISCELLANEOUS PROVISIONS (a) Any notice of prepayment under this Agreement is irrevocable and must specify the relevant date of repayment. PAGE 12 (b) All prepayments under this Agreement must be made together with accrued interest on the amount prepaid and (save in the case of any prepayment made in accordance with Clause 6.2, 6.5 or 9.2) any Break Costs together with any Tax Payment or Increased Cost. No premium or penalty is payable in respect of any prepayment except for Break Costs. (c) No prepayment shall be permitted except in accordance with the express terms of this Agreement. 7 INTEREST 7.1 CALCULATION OF INTEREST The Borrower shall pay interest on the Loan in respect of each Term at the percentage rate per annum equal to the aggregate of - (i) USD-LIBOR; and (ii) the Margin. 7.2 PAYMENT OF INTEREST The Borrower shall pay to the Lender the accrued interest on the Loan at the end of each Term. 7.3 INTEREST ON OVERDUE AMOUNTS (a) If the Borrower fails to pay any amount payable by it under this Agreement on its due date for payment, the Borrower shall pay interest on such sum from the due date up to the date of actual payment at the rate determined by the Lender pursuant to Clause 7.3 (b). (b) The Borrower shall pay interest on any overdue amount at a rate equal to the aggregate of (a) two per cent (2%) per annum, (b) USD-LIBOR for such period and (c) the Margin. For this purpose, the Lender may select successive Terms of any duration of up to six months. (c) Interest (if unpaid) on an overdue amount will be compounded with that overdue amount at the end of each of its Terms but will remain immediately due and payable. PAGE 13 7.4 NOTIFICATION OF RATES OF INTEREST The Lender must promptly notify the Borrower of the determination of a rate of interest under this Agreement. 7.5 PAYMENT OF ARRANGEMENT FEE The Borrower shall pay to the Lender the Arrangement Fee upon signing of this Agreement. 8 TERMS 8.1 DURATION OF TERMS For the purpose of determining the relevant interest, the Loan shall have successive Terms. Each Term shall have a duration of six months. 8.2 DETERMINATION OF TERMS (a) The first Term shall commence on the Utilisation Date and each subsequent Term shall commence on the day following the last day of the previous Term. (b) If a Term would otherwise overrun the Final Maturity Date, it shall be shortened such that it ends on the Final Maturity Date. PAGE 14 9 MARKET DISRUPTION 9.1 MARKET DISRUPTION If the Lender determines that (i) adequate and fair means do not exist for ascertaining USD-LIBOR or (ii) the cost to the Lender of obtaining matching deposits in the relevant interbank market is in excess of USD-LIBOR for the relevant Term due to market disruption, it must promptly notify the Borrower. 9.2 ALTERNATIVE BASIS (a) If, after receipt of any notification under this Clause, the Lender or the Borrower so requires, the Borrower and the Lender shall enter into negotiations for a period of not more than ten Business Days (`Negotiation Period') with a view to agreeing an alternative basis for determining the rate of interest and/or funding of the Loan. (b) Any alternative basis agreed will be binding on each Party in accordance with the terms agreed. (c) If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, the rate of interest on a Loan for the relevant Term will be the aggregate of - (i) the Margin; and (ii) the rate notified by the Lender to the Borrower as soon as practicable, and in any event before interest is due to be paid in respect of that Term, to be that which expressed as a percentage rate per annum represents the cost to the Lender of funding a Loan from whatever source it may reasonably select and the Borrower shall be entitled to prepay the Loan without premium or penalty at any time thereafter. PAGE 15 9.3 SUSPENSION OF UTILISATION If the Lender's notice under Clause 9.1 is received prior to the Utilisation, the Lender's obligation to make the Loan available to the Borrower shall be suspended while the circumstances referred to in the Lender's notice continue. 10 TAXES 10.1 GENERAL In this Clause Tax Credit means a credit against any Tax or any relief or remission for Tax (or its repayment). 10.2 TAX GROSS-UP (a) The Borrower shall make all payments to be made by it under this Agreement without any Tax Deduction, unless a Tax Deduction is required by law. (b) If the Borrower or the Lender is aware that the Borrower must make a Tax Deduction (or that there is a change in the rate or the basis of a Tax Deduction), it must notify the other Party promptly. (c) If a Tax Deduction is required by law to be made by the Borrower, the amount of the payment due from the Borrower will be increased to an amount which (after making the Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required. (d) If the Borrower is required to make a Tax Deduction, it must make the proper Tax Deduction and must make any payment required in connection with that Tax Deduction within the time allowed by law. (e) Within thirty days of making either a Tax Deduction or a payment required in connection with a Tax Deduction, the Borrower must deliver to the Lender evidence satisfactory to the Lender (acting reasonably) that the Tax Deduction has been made or (as applicable) the appropriate payment has been paid to the relevant taxing authority. PAGE 16 10.3 TAX INDEMNITY (a) Except as provided below, the Borrower shall indemnify the Lender against any loss or liability which the Lender determines will be or has been suffered (directly or indirectly) by it for or on account of Tax in relation to a payment received or receivable (or any payment deemed to be received or receivable) under this Agreement. (b) Paragraph (a) above does not apply to any Tax assessed on the Lender under the laws of the jurisdiction in which - (i) the Lender is incorporated or, if different, the jurisdiction (or jurisdictions) in which the Lender is treated as resident for tax purposes; or (ii) the Lender's Facility Office is located in respect of amounts received or receivable in that jurisdiction, if that Tax is imposed on or calculated by reference to the net income received or receivable by the Lender. However, any payment deemed to be received or receivable, including any amount treated as income but not actually received by the Lender, such as a Tax Deduction, will not be treated as net income received or receivable for this purpose. For the avoidance of doubt, if any such Tax is assessed on the Lender and constitutes a Tax Deduction, the provisions of Clause 10.2 (Tax gross-up) shall apply. (c) If the Lender makes, or intends to make, a claim under paragraph (a) above, it must promptly notify the Borrower of the event which will give, or has given, rise to the claim. PAGE 17 10.4 TAX CREDIT If the Borrower makes a Tax Payment and the Lender (acting reasonably) determines that - (a) a Tax Credit is attributable to that Tax Payment; and (b) it has used and retained that Tax Credit, the Lender must pay an amount to the Borrower which the Lender determines (acting reasonably) will leave it (after that payment) in the same after-tax position as it would have been if the Tax Payment had not been made by the Borrower. 11 INCREASED COSTS 11.1 INCREASED COSTS Except as provided below in this Clause, the Borrower shall pay to the Lender the amount of any Increased Cost incurred by the Lender as a result of - (a) the introduction of , or any change in, or any change in the interpretation or application of, any law, regulation, practice or concession; or (b) compliance with any other directive, requirement, request or guidance (whether or not having force at law) from or requirement of any central bank or other monetary or other authority with which the Lenders customarily comply relating to the maintenance of capital (including, for the avoidance of doubt, the Basle II Accord and all regulatory amendments arising from the implementation of the Basle II Accord) made or implemented after the date of this Agreement. 11.2 EXCEPTIONS The Borrower need not make any payment for an Increased Cost to the extent that the Increased Cost is - PAGE 18 (a) compensated for under another Clause or would have been but for an exception to that Clause; (b) a Tax on the overall net income of the Lender or any of its Subsidiaries; or (c) attributable to the Lender wilfully failing to comply with any law or regulation. 11.3 CLAIMS The Lender shall notify the Borrower promptly of the circumstances giving rise to, and the amount of, the claim for any Increased Cost. 12 MITIGATION 12.1 MITIGATION (a) The Lender shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which result or would result in - (i) any Tax Payment or Increased Cost being payable to the Lender; (ii) the Lender being able to exercise any right of prepayment and/or cancellation under this Agreement by reason of any illegality; or (iii) the Lender incurring any cost of complying with any regulatory or Italian or European Central Bank regulations or policies, including the minimum reserve requirements of the European Central Bank; including transferring its rights and obligations under this Agreement to a Subsidiary or changing its Facility Office. (b) The Borrower shall indemnify the Lender, upon demand and waiving any challenge or defence, for all costs and expenses properly and reasonably incurred by it as a result of any step taken by it under this Clause 12.1. PAGE 19 (c) The Lender is not obliged to take any step under this Clause 12 if, in its opinion (acting reasonably), to do so might be prejudicial to it. 12.2 CONDUCT OF BUSINESS BY THE LENDER No term of this Agreement will - (a) interfere with the right of the Lender to arrange its affairs (Tax or otherwise) in whatever manner it thinks fit; (b) oblige the Lender to investigate or claim any credit, relief, remission or repayment available to it in respect of Tax or the extent, order and manner of any claim; or (c) oblige the Lender to disclose any information relating to its affairs (Tax or otherwise) or any computation in respect of Tax. 13 PAYMENTS 13.1 PLACE All payments under this Agreement shall be made to the relevant Party to its account at its office or bank, as stated herein, or as it may notify to the other Party for this purpose. 13.2 FUNDS Payments to the Lender under this Agreement shall be made for value on the due date at such times and in such funds as the Lender, acting reasonably, may specify to the Borrower as being customary at the time for the settlement of transactions in that currency in the place for payment. 13.3 CURRENCY (a) The currency of each amount payable under this Agreement is determined under this Clause. PAGE 20 (b) Amounts payable in respect of costs and expenses are payable in the currency in which they are incurred. (c) Each other amount payable under this Agreement is payable in USD. 13.4 NO SET-OFF OR COUNTERCLAIM All payments made by the Borrower under this Agreement shall be calculated and made without set-off or counterclaim. 13.5 BUSINESS DAYS If a payment under this Agreement is due on a day which is not a Business Day, the due date for that payment will instead be the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not) or on whatever day the Lender determines is market practice. 14 REPRESENTATIONS 14.1 REPRESENTATIONS The Borrower makes the representations and warranties set out in this Clause 14 to the Lender which representations and warranties are true, complete, correct and accurate at the date hereof and on the Utilisation Date. 14.2 STATUS The Borrower is a company, duly established and validly existing under the laws of Portugal. 14.3 POWERS AND AUTHORITY The Borrower has the power to enter into and perform, and has taken all necessary action to authorise the entry into and performance of, this Agreement and the transactions contemplated by this Agreement. PAGE 21 14.4 AUTHORISATIONS All action, conditions and authorisations required in connection with the entry into, performance, validity and enforceability of, and the transactions contemplated by, this Agreement have been obtained or effected (as appropriate) and are in full force and effect. 14.5 LEGAL VALIDITY This Agreement constitutes the Borrower's legal, valid and binding obligations enforceable in accordance with its terms. 14.6 NON-CONFLICT The entry into and performance by the Borrower of, and the transactions contemplated by, this Agreement do not conflict with - (a) any law or regulation applicable to it; (b) any constitutional documents of the Borrower; or (c) any contractual or other obligation or restriction which is binding upon the Borrower, or any of its assets. 14.7 NO DEFAULT No Default is outstanding or will result from the execution of, or the performance of any transaction contemplated by, this Agreement. 14.8 LITIGATION AND INSOLVENCY PROCEEDINGS (a) No litigation, arbitration or administrative proceedings are current or, to its knowledge, pending, which, if adversely determined, are likely to have a Material Adverse Effect on the Borrower. PAGE 22 (b) None of the circumstances referred to in Clause 17.12 (Insolvency proceedings) are pending, or to the best of its knowledge, threatened against the Borrower. 14.9 INFORMATION (a) All information supplied by the Borrower to the Lender in connection with this Agreement is true and accurate in all material respects as at its date or (if appropriate) as at the date (if any) at which it is stated to be given; and (b) The Borrower has not omitted to supply any information which, if disclosed, might make the information supplied untrue or misleading in any material respect. 14.10 PARI PASSU RANKING The Borrower's payment obligations under this Agreement rank at least pari passu with all its other present and future unsecured payment obligations, except for obligations mandatorily preferred by law applying to Portuguese companies generally and except for obligations that are expressed to be junior to the payment obligations under this Agreement. 14.11 TAXES ON PAYMENTS As at the date of this Agreement, all amounts payable by it under this Agreement may be made without any Tax Deduction. 14.12 CHOICE OF LAW The choice of the laws of England to govern and construe this Agreement shall be binding upon the Borrower. 14.13 NO REGISTRATIONS Save for such registrations and filings as are referred to in the Share Pledge Agreement, it is not necessary for the legality, validity, enforceability or admissibility in PAGE 23 evidence of this Agreement or the Share Pledge Agreement that either or any document relating thereto be registered, filed, recorded or enrolled with any court or authority or other person in any relevant jurisdiction or that any stamp, registration or similar Taxes be paid on or in relation to this Agreement or the Share Pledge Agreement; and 14.14 ENCUMBRANCES There are no existing Encumbrances on the whole or any part of the present assets of the Borrower save as have been disclosed in writing to the Lender prior to the date of this Agreement. 14.15 CONDITION PRECEDENT DOCUMENTATION All documentation provided by or on behalf of the Borrower or the Pledgor pursuant to Clause 4 of this Agreement is complete and accurate. 14.16 TIMES FOR MAKING REPRESENTATIONS (a) The representations and warranties set out in this Clause 14 are made by the Borrower on the date of this Agreement. (b) Unless a representation or warranty is expressed to be given at a specific date, each representation and warranty shall be deemed repeated by the Borrower on the date of the Request and on the first day of each Term. (c) When a representation and warranty is repeated, it is applied with reference to the circumstances existing at the time of repetition. 15 INFORMATION COVENANTS 15.1 INFORMATION - MISCELLANEOUS The Borrower shall supply to the Lender - PAGE 24 (a) promptly upon becoming aware of them, details of any litigation, arbitration or administrative proceedings which are current, threatened or pending and which is likely, if adversely determined, to have a Material Adverse Effect; and (b) promptly on request, such further information, to the extent available to the Borrower, regarding its financial condition and operation as the Lender may reasonably request. (c) within 180 days of the end of a financial year, an auditors' report on the accounts of the Borrower for the financial year then ended (including, without limitation, profit and loss accounts). 15.2 NOTIFICATION OF DEFAULT (a) The Borrower shall notify the Lender of any Event of Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence. (b) Promptly on request by the Lender, the Borrower shall supply to the Lender a certificate, signed by a director of the Borrower on behalf of the Borrower, certifying that, to the best of its knowledge, no Event of Default is outstanding or, if a Default is outstanding, specifying the Event of Default and the steps, if any, being taken to remedy it. 16 GENERAL COVENANTS 16.1 GENERAL The Borrower undertakes with the Lender to comply with the following provisions of this Clause 16. 16.2 AUTHORISATIONS The Borrower shall promptly obtain, maintain, renew and comply with the terms of any licences, consents and approvals or authorisations required under any law or PAGE 25 regulation to enable it to perform its obligations under, or for the validity or enforceability of, this Agreement and the Borrower will comply with the terms of all such licences, consents, approvals or authorisations. 16.3 COMPLIANCE WITH LAWS The Borrower shall comply in all respects with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under this Agreement. 16.4 PARI PASSU RANKING The Borrower must ensure that its payment obligations under this Agreement rank at least pari passu with all its other present and future unsecured payment obligations, except for obligations mandatorily preferred by law applying to companies generally and except for obligations that are expressed to be junior to the payment obligations under this Agreement. 16.5 MAINTENANCE OF STATUS The Borrower will maintain its separate corporate existence and will remain validly existing and in good standing under the laws of Portugal. 16.6 FURTHER ASSURANCES The Borrower shall execute and do all such assurances, acts and things as the Lender may require for - (a) perfecting or protecting the security hereby created (or intended to be created); (b) preserving or protecting any of the rights of the Lender under this Agreement or the Share Pledge Agreement; PAGE 26 (c) ensuring that the security constituted by this Agreement and the Share Pledge Agreement and the covenants and obligations of the Borrower under this Agreement shall ensure to the benefit of any assignee of the Lender; (d) facilitating the appropriation or realisation of any security granted to the Lender pursuant to this Agreement or the Share Pledge Agreement or any part thereof; or (e) the exercise of any power, authority or discretion vested in the Lender under this Agreement, in any such case, forthwith upon demand by the Lender and at the expense of the Borrower. 16.7 PLEDGED SHARES The Borrower will ensure that Pledgor is, and during the Security Period will remain, the legal and beneficial owner of the Pledged Shares subject only to the Security Interest created by the Share Pledge Agreement and that (subject as aforesaid) the Pledgor will not:- (a) create or suffer the creation of any Security Interest on or in respect of the whole or any part of the Pledged Shares in favour of any person other than the Lender; or (b) sell, assign, transfer or otherwise dispose of the whole or any part of the Pledged Shares; or in any such case, without the prior consent in writing of the Lender. Notwithstanding this Clause 16.7, it is agreed that the Pledgor may transfer the Pledged Shares to the Borrower provided always that no Event of Default shall have occurred and be continuing and that the Pledgor shall have received (and as a condition of such transfer) (i) a pledge of shares from the Borrower (effective as from such transfer) and (ii) an addendum to this Agreement, each in form and substance satisfactory to the PAGE 27 Lender, together with such documents and evidence as the Lender may reasonably require in connection therewith (including, but not limited to, corporate authorities and legal opinions) and that any additional costs and expenses reasonably and properly incurred by the Lender in connection therewith (including legal fees and out-of-pocket expenses) shall be for the account of the Borrower. 16.8 NEGATIVE PLEDGE The Borrower will not, without the prior written consent of the Lender, create or permit to subsist any encumbrance on the whole or any part of the respective present or future assets of the Borrower. 16.9 MAINTENANCE OF SECURITY The Borrower will ensure that on the Utilisation Date and at any and all times thereafter, the market value (based on the daily closing price on the American Stock Exchange) of (i) the Original Pledged Shares and (ii) any Future Pledged Shares held by the Custodian and pledged in favour of the Lender in accordance with this clause 16.9 together with any cash collateral deposited with the Lender in accordance with this clause 16.9, is equal to or more than two hundred percent (200%) of the Loan (`Security Cover Ratio') and that if at any time the market value (based on the daily closing price on AMEX) of (i) the Original Pledged Shares and (ii) any Future Pledged Shares held by the Custodian and pledged in favour of the Lender in accordance with this clause 16.9 together with any cash collateral deposited with the Lender in accordance with this clause 16.9, falls below the requisite Security Cover Ratio for a consecutive period of 2 Business Days, the Borrower shall, on the Lender's demand provide the Lender with additional security within 2 Business Days of such demand to make up such shortfall by one or a combination of the following - (i) depositing with the Lender into a collateral interest-bearing deposit account (which shall be charged to the Lender on terms and conditions satisfactory to the Lender) a sum (as certified by the Lender) sufficient to meet such shortfall; and/or PAGE 28 (ii) procuring that the Pledgor (or any other person) deposits further shares in the Corporation with the Custodian and pledging the same to the Lender on terms and conditions satisfactory to the Lender (or procuring to the Lender's satisfaction that the same are made subject to the terms of the Share Pledge Agreement or otherwise on the same terms as the Share Pledge Agreement) the value of which will be such as to ensure that the Security Cover Ratio is satisfied (and whereupon such additional shares be deemed for all purposes to be included in the "Pledged Shares"). Upon the repayment by the Borrower of each Repayment Instalment (other than the final Repayment Instalment) the Lender shall, following the written request of the Borrower to do so (and always at the cost and expense of the Borrower), release to the Pledgor such number of the Pledged Shares (as certified by the Lender) as shall ensure that the Security Cover Ratio is then maintained PROVIDED always that at that time no Default shall have occurred and be continuing. 17 DEFAULT 17.1 EVENTS OF DEFAULT Each of the events set out in this Clause is an Event of Default. 17.2 NON-PAYMENT The Borrower fails to pay on the due date any amount payable by it under this Agreement in the manner required under this Agreement, unless the non-payment - (a) is caused by technical or administrative error; and (b) is remedied within three Business Days from the due date. PAGE 29 17.3 BREACH OF SECURITY COVER RATIO The Borrower fails to ensure that the Security Cover Ratio is maintained in accordance with Clause 16.9. 17.4 BREACH OF OTHER OBLIGATIONS (a) The Borrower does not comply with any term of Clause 16 (other than Clause 16.9); or (b) the Borrower does not comply with any other term of this Agreement not already referred to in this Clause, unless the non-compliance - (i) is, in the opinion of the Lender, capable of remedy; and (ii) is remedied within twenty-one days of the earlier of the Lender giving notice of non-compliance and the Borrower becoming aware of the non-compliance. 17.5 BREACH OF SHARE PLEDGE AGREEMENT The Pledgor commits any other breach of or omits to observe any of its other obligations or undertakings expressed to be assumed by it under the Share Pledge Agreement. 17.6 INVALIDITY This Agreement or the Share Pledge Agreement shall at any time and for any reason become invalid or unenforceable, or if the validity or enforceability of this Agreement or the Share Pledge Agreement shall at any time and for any reason be contested by the Borrower, or, in the case of the Share Pledge Agreement, the Pledgor, or the Borrower (in the case of this Agreement) or the Pledgor (in the case of the Share Pledge Agreement) shall deny that it has any, or any further, liability thereunder. PAGE 30 17.7 UNLAWFULNESS It becomes impossible or unlawful at any time for the Borrower or the Pledgor to fulfil any of the covenants or obligations expressed to be assumed by it under this Agreement or the Share Pledge Agreement or for the Lender to exercise its rights or any of them vested in it under this Agreement or the Share Pledge Agreement or otherwise. 17.8 MATERIAL ADVERSE EFFECT There occurs, in the reasonable opinion of the Lender a material adverse change in the business or financial condition of the Borrower from that prevailing at the date hereof which materially affects the ability of the Borrower to perform its obligations hereunder. 17.9 MISREPRESENTATION A representation, warranty or statement made or repeated by, or by an officer of, the Borrower in this Agreement or in any document delivered by or on behalf of the Borrower under this Agreement is incorrect in any material respect when made or deemed to be repeated. 17.10 CROSS DEFAULT (a) Any Financial Indebtedness of any Security Party or the Corporation is not paid when due or, if so payable, on demand; or (b) Any Financial Indebtedness of any Security Party or the Corporation is declared to be or otherwise becomes due and payable prior to its specified maturity as a consequence of an event of default; or (c) Any commitment for any Financial Indebtedness of any Security Party or the Corporation is cancelled or suspended by a creditor of such Security Party or the Corporation (as the case may be); or PAGE 31 (d) Any creditor of any Security Party or the Corporation becomes entitled to declare any Financial Indebtedness of such Security Party or Corporation (as the case may be) due and payable prior to its specified maturity; or (e) any security interest securing any Financial Indebtedness of any creditor of any Security Party or the Corporation becomes enforceable. 17.11 INSOLVENCY Any of the following occurs in respect of any Security Party or the Corporation - (a) any Security Party or the Corporation is, or is deemed for the purposes of any law to be, unable to pay its respective debts as they fall due or becomes insolvent; (b) any Security Party or the Corporation admits its inability to pay its respective debts as they fall due; (c) any Security Party or the Corporation suspends making payments on any of its respective debts or announces an intention to do so; (d) by reason of actual or anticipated financial difficulties, any Security Party or the Corporation begins negotiations with any creditor for the rescheduling of any of its respective indebtedness; or (e) a moratorium is declared in respect of any of any Security Party's or the Corporation's indebtedness. If a moratorium occurs in respect of any Security Party or the Corporation, the ending of the moratorium will not remedy any Event of Default caused by the moratorium. 17.12 INSOLVENCY PROCEEDINGS (a) Except as provided below, any of the following occurs in respect of any Security Party or the Corporation: PAGE 32 (i) any written proposal is made with a view to a composition, assignment or similar arrangement with any of its creditors; (ii) a meeting of it is convened for the purpose of considering any resolution for (or to petition for) its winding-up, administration or dissolution or any such resolution is passed; (iii) an order for its winding-up, administration or dissolution is made; (iv) any liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer is appointed in respect of it or any of its assets; (v) its directors or other officers request the appointment of a liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer; or (vi) any other analogous step or procedure is taken in any jurisdiction. (b) Paragraph (a) does not apply to a petition for winding-up presented by a person which is promptly being contested in good faith and with due diligence and is discharged or struck out as soon as practicable. 17.13 EFFECTIVENESS OF THIS AGREEMENT (a) It is or becomes unlawful for the Borrower or the Pledgor to perform any of their respective obligations under this Agreement or the Share Pledge Agreement. (b) This Agreement or the Share Pledge Agreement is not effective or is alleged by the Borrower or, in the case of the Share Pledge Agreement, the Pledgor, to be ineffective for any reason. PAGE 33 17.14 PLEDGED SHARES IN THE CORPORATION Dealing in the Pledged Shares of the Corporation in accordance with the rules of AMEX is suspended or withdrawn including, without limitation - (i) for reasons of the proposed liquidation of the Corporation 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 Corporation or the Corporation 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 Corporation offers to acquire the Pledged Shares for a sum no less than the Loan and which is utilised to prepay the Loan in accordance with Clause 6, or issues substitute shares of equal or greater value to the Pledged Shares and having rights no less than those attaching to the Pledged Shares, which such substitute shares will be pledged to the Lender in a form acceptable to the Lender; or (ii) because of voluntary suspension or withdrawal of permission; or (iii) immediately, as a result of proceedings being commenced for the winding up of the Corporation (save as provided in (i) above); or (iv) as a result of a receiver, administrator or administrative receiver (or any equivalent appointment in any other jurisdiction) being appointed to the Corporation. 17.15 CUSTODIAN The Pledged Shares cease to be held by the Custodian on terms acceptable to the Lender in its absolute discretion. PAGE 34 17.16 ACCELERATION (a) On the occurrence of an Event of Default, the Lender may issue a notice or notices to the Borrower declaring that - (i) the Commitment and all other obligations of the Lender to the Borrower under this Agreement are terminated; and/or (ii) all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand, and take any other action, as a result of the Default or any notice served under this Clause 17.16, the Lender is entitled to take under this Agreement or the Share Pledge Agreement or any applicable law. (b) Any notice given under this Clause 17.16 will take effect in accordance with its terms. (c) On the service of a notice under Clause 17.16(a), the Commitment and all other obligations of the Lender to the Borrower under this Agreement shall terminate. 17.17 EXCLUSION OF LENDER LIABILITY The Lender and any receiver or manager appointed by the Lender, shall have no liability to the Borrower for any loss caused by an exercise of rights under, or enforcement of the Lender's rights under the Share Pledge Agreement or by any failure or delay to exercise such a right or to enforce such rights, except that this shall not exempt the Lender or any receiver or manager from liability for losses shown to have been directly and mainly caused by the gross negligence or wilful misconduct of the Lender's own officers and employees or (as the case may be) such receiver's or manager's own partners or employees. PAGE 35 18 APPLICATION OF RECEIPTS 18.1 Except as otherwise specifically provided in this Agreement or in the Share Pledge Agreement, all moneys received or recovered by the Lender under this Agreement and the Share Pledge Agreement will, after discharging the cost (if any) incurred in collecting such moneys, be applied as follows - FIRST: in or towards payment of all moneys expended or liabilities incurred by the Lender in respect of expenses, fees or charges relating to the preparation, completion and registration of this Agreement and the Share Pledge Agreement or in respect of the protection, maintenance or enforcement of the security they create; SECONDLY: in or towards the satisfaction of the Loan and interest thereon which are then due and payable, whether by reason of payment demanded or otherwise, in such order of application as the Lender may think fit; THIRDLY: at the Lender's discretion, in retention on suspense account of such amount as the Lender may consider appropriate to secure the discharge of any part of the Loan and interest thereon not then due and payable, and, upon the same becoming due and payable, in or towards the discharge thereof in accordance with the foregoing provisions of this Clause 18.1; and FOURTHLY: the balance (if any) shall be paid to the Borrower or other such person so entitled. 18.2 WAIVER OF RIGHT OF APPROPRIATION The Borrower hereby irrevocably waives any rights of appropriation to which it may be entitled. PAGE 36 19 EVIDENCE AND CALCULATIONS 19.1 ACCOUNTS Accounts maintained by the Lender in connection with this Agreement are prima facie evidence of the matters to which they relate for the purpose of any litigation or arbitration proceedings. 19.2 CERTIFICATES AND DETERMINATIONS Any certification or determination by the Lender of a rate or amount under this Agreement will be, in the absence of manifest error, conclusive evidence of the matters to which it relates. 19.3 CALCULATIONS Any interest or fee accruing under this Agreement accrues from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days. 20 INDEMNITIES AND BREAK COSTS 20.1 CURRENCY INDEMNITY (a) The Borrower shall, as an independent obligation, indemnify the Lender against any loss or liability which the Lender incurs as a consequence of - (i) the Lender receiving an amount in respect of the Borrower's liability under this Agreement; or (ii) that liability being converted into a claim, proof, judgment or order, in a currency other than the currency in which the amount is expressed to be payable under this Agreement. PAGE 37 (b) Unless otherwise required by law, the Borrower waives any right it may have in any jurisdiction to pay any amount under this Agreement in a currency other than that in which it is expressed to be payable. 20.2 OTHER INDEMNITIES (a) The Borrower shall indemnify the Lender against any claims, expenses, losses or liabilities which are made or brought against or incurred by the Lender as a consequence of or in connection with - (i) the occurrence of any Default; (ii) any failure by the Borrower to pay any amount due under this Agreement on its due date; (iii) (other than by reason of negligence or default by the Lender) the Loan not being made after the Request has been delivered; (iv) the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment; (v) investigating any event which the Lender reasonably believes to be a Default; or (vi) acting or relying on any notice which the Lender reasonably believes, after due investigation, to be genuine, correct and appropriately authorised. (b) The Borrower's liability in each case includes any loss or expense on account of funds borrowed, contracted for or utilized to fund any amount payable under this Agreement, any amount repaid or prepaid or the Loan. PAGE 38 20.3 BREAK COSTS (a) Save as provided in Clause 6.6(b) the Borrower shall pay to the Lender its Break Costs. (b) Break Costs are the amount (if any) determined by the Lender by which - (i) the interest which the Lender would have received for the period from the date of receipt of any part of the Loan or an overdue amount to the last day of the applicable Term for the Loan or overdue amount if the principal or overdue amount received had been paid on the last day of that Term; exceeds (ii) the amount which the Lender would be able to obtain by placing an amount equal to the amount received by it on deposit with a leading bank in the appropriate interbank market for a period starting on the Business Day following receipt and ending on the last day of the applicable Term. (c) The Lender shall supply to the Borrower details of the amount of any Break Costs claimed by it under this Clause 20.3. 21 COSTS AND EXPENSES 21.1 COSTS OF NEGOTIATION, PREPARATION, VARIATIONS, AMENDMENTS ETC. The Borrower shall pay to the Lender on its demand the amount of all expenses reasonably and properly incurred by the Lender in connection with: (a) the negotiation, preparation, execution and registration of this Agreement and the Share Pledge Agreement or any related document or with any transaction contemplated by this Agreement or the Share Pledge Agreement or a related document including, without limitation, all reasonable and properly incurred legal fees, travel expenses, signing, communication, publicity and out-of-pocket expenses; PAGE 39 (b) any amendment or supplement to this Agreement or the Share Pledge Agreement, or any proposal for such an amendment to be made; or (c) any consent or waiver by the Lender under or in connection with this Agreement or the Share Pledge Agreement, or any request for such a consent or waiver. 21.2 COSTS OF ENFORCEMENT The Borrower shall pay to the Lender, on the Lender's demand the amount of all expenses incurred by the Lender in connection with any step taken by the Lender with a view to the protection, exercise or enforcement of any right or security interest created by this Agreement or the Share Pledge Agreement or for any similar purpose. 21.3 DOCUMENTARY TAXES The Borrower shall promptly pay any Tax payable on or by reference to this Agreement, and shall, on the Lender's demand, fully indemnify the Lender against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrower to pay such a Tax. 22 VARIATIONS AND WAIVERS 22.1 VARIATIONS, WAIVERS ETC. A document shall be effective to vary, waive, suspend or limit any provision of this Agreement, or any Lender's rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax or telex, by the Borrower and by the Lender. 22.2 WAIVERS AND REMEDIES CUMULATIVE The rights of the Lender under this Agreement - PAGE 40 (a) may be exercised as often as necessary; (b) are cumulative and not exclusive of its rights under the applicable law; and (c) delay in exercising or non-exercise of any right is not a waiver of that right. 23 CHANGES TO THE PARTIES 23.1 ASSIGNMENTS AND TRANSFERS BY THE BORROWER The Borrower may not assign or transfer any of its rights and obligations under this Agreement. 23.2 ASSIGNMENTS AND TRANSFERS BY THE LENDER (a) The Lender may, subject to the following provisions of this Clause 23.2, at any time assign all or a proportional part of its position (i.e. its rights and obligations) under this Agreement to a bank or a financial institution (the New Lender). (b) The consent of the Borrower (not to be unreasonably withheld) is required for any assignment or transfer unless the New Lender is a Subsidiary of the Lender. (c) A transfer of obligations will be effective only if the New Lender confirms to the Borrower in form and substance satisfactory to the Borrower that it is bound by the terms of this Agreement as the or a Lender. On the transfer becoming effective in this manner the Lender will be released from its obligations under this Agreement to the extent that they are transferred to the New Lender. 23.3 COSTS RESULTING FROM CHANGE OF LENDER OR FACILITY OFFICE If - PAGE 41 (a) the Lender assigns or transfers any of its rights and obligations under this Agreement or changes its Facility Office; and (b) as a result of circumstances existing at the date the assignment, transfer or change occurs, the Borrower would be obliged to pay a Tax Payment or an Increased Cost, then, unless the assignment, transfer or change is made by the Lender to mitigate any circumstances giving rise to the Tax Payment, Increased Cost or a right to be prepaid and/or cancelled by reason of illegality, the Borrower need only pay that Tax Payment or Increased Cost to the same extent that it would have been obliged to if no assignment, transfer or change had occurred. 24 DISCLOSURE OF INFORMATION (a) Each Party must keep confidential any information supplied to it by or on behalf of the other Party in connection with this Agreement. However, each Party is entitled to disclose information - (i) which is publicly available, other than as a result of a breach by such Party of this Clause; (ii) in connection with any legal or arbitration proceedings; (iii) if required to do so under any law or regulation; (iv) to a governmental, banking, taxation or other regulatory authority; (v) to its professional advisers; (vi) to the extent allowed under paragraph (b) below; or (vii) with the agreement of the other Party. PAGE 42 (b) Each Party may disclose to a Subsidiary or any person with whom it may enter, or has entered into, any kind of transfer, participation or other agreement in relation to this Agreement (a participant) - (i) a copy of this Agreement; and (ii) any information which such Party has acquired under or in connection with this Agreement. (c) However, before a participant may receive any confidential information, it shall agree with the Party concerned to keep that information confidential on the terms of paragraph (a) above, the terms of such agreement to be disclosed to the other Party by the Party so assigning. (d) This Clause supersedes any previous confidentiality undertaking given by either Party in connection with this Agreement. 25 SET-OFF The Lender may set off any amount due to it by the Borrower under this Agreement against any other amount owed by the Lender to the Borrower, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. 26 SEVERABILITY If a term of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect - (a) the legality, validity or enforceability in that jurisdiction of any other term of this Agreement; or PAGE 43 (b) the legality, validity or enforceability in other jurisdictions of that or any other term of this Agreement. 27 COUNTERPARTS This Agreement may be executed in any number of counterparts. This has the same effect as if the signatures on the counterparts were on a single copy of this Agreement. 28 NOTICES 28.1 IN WRITING (a) Any communication in connection with this Agreement must be in writing and, unless otherwise stated, may be given in person, by post or by fax. (b) Unless it is agreed to the contrary, any consent or agreement required under this Agreement must be given in writing. 28.2 CONTACT DETAILS (a) The contact details of the Borrower for this purpose are - Address: c/o Navalmar (UK) Limited, 5-7 St Helen's Place, London EC3A 6AY Fax number: +44-208-5404-088 Phone Number: +44-208-5404-065 Attention: Mr. Andrea Colombo Email: financial@navalmar.co.uk (b) The contact details of the Lender for this purpose are - Address: 1 Moorgate London EC2R 6JH, United Kingdom Fax number: +44-207-726-9593 Phone Number: +44-207-726-9562 Attention: Mr. L.K. Chan, Head of Credit Department Email: l.chan@bipielle.co.uk PAGE 44 (c) The Borrower or the Lender may change their contact details by giving five Business Days' notice to the other Party. (d) Where a Party nominates a particular department or officer to receive a communication, a communication will not be effective if it fails to specify that department or officer. 28.3 PROCESS AGENT The Borrower hereby appoints the following entity as agent for the purpose of accepting service of process in England in any legal action or proceeding with respect to this Agreement - Navalmar (UK) Limited of 5-7 St Helen's Place, London EC3A 6AY 28.4 EFFECTIVENESS Except as provided below, any communication in connection with this Agreement will be deemed to be given and effective as follows: (i) if delivered in person, at the time of delivery; (ii) if posted after being sent by recorded delivery, upon receipt acknowledged in writing by the addressee; and (iii) if by fax, when received in legible form. A communication given under this Clause 28 but received on a non-working day or after business hours in the place of receipt will only be deemed to be given on the next working day in that place. 29 LANGUAGE (a) Any notices given or other communications made in connection with this Agreement must be in English. PAGE 45 (b) Any other document provided in connection with this Agreement must be - (i) in English; or (ii) (unless the Lender otherwise agrees) accompanied by a certified English translation. In this case, the English translation prevails unless the document is a statutory or other official document. 30 GOVERNING LAW This Agreement is governed by and shall be construed in accordance with English law. 31 JURISDICTION 31.1 EXCLUSIVE JURISDICTION Subject to Clause 31.2, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement. 31.2 CHOICE OF FORUM FOR THE EXCLUSIVE BENEFIT OF THE LENDER Clause 31.1 is for the exclusive benefit of the Lender which reserves the right - (a) to commence proceedings in relation to any matter which arises out of or in connection with this Agreement in the courts of any country other than England and which have or claim jurisdiction to that matter; and (b) to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England. The Borrower shall not commence any proceedings in any country other than England in relation to a matter which arises out of or in connection with this Agreement save for the purpose of defending any proceedings brought by the Lender. PAGE 46 31.3 LENDER'S RIGHTS UNAFFECTED Nothing in this Clause shall exclude or limit any right which the Lender may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction. 31.4 MEANING OF `PROCEEDINGS' In this Clause, `proceedings' means proceedings of any kind, including an application for a provisional or protective measure. 31.5 WAIVER OF IMMUNITY The Borrower irrevocably and unconditionally waives any right of immunity which it or its assets now has or may hereafter acquire in relation to any legal proceedings brought against it or its assets in relation to this Agreement and consents generally in respect of any such proceedings to the giving of any relief including, without limitation, the issue of any process in connection with such proceedings, the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in such proceedings. THIS AGREEMENT has been entered into on the date first above written. PAGE 47 SCHEDULE 1 CONDITIONS PRECEDENT DOCUMENTS 1 Certified true copies of the Certificate of Incorporation and Memorandum and Articles of Association (or equivalent constitutional documents) of the Borrower and the Pledgor; 2 An original certificate of incumbency duly signed by a director of the Borrower stating the names of the directors and officers and shareholdings of the shareholders of the Borrower. 3 An original certificate of incumbency duly signed by a director of the Pledgor stating the names of the directors and officers of the Pledgor and the names and shareholdings of the shareholders of the Pledgor. 4 A certificate of good standing (or equivalent) of each of the Borrower and the Pledgor dated not less than (5) days prior to the proposed Utilisation Date. 5 Certified true copies of the resolutions of the board of directors and the shareholders of the Borrower approving the terms of, and the transactions contemplated by, and authorising the due execution of this Agreement (and authorising named officers to issue a Utilisation Notice); 6 Certified true copies of the resolution of the board of directors and shareholders of the Pledgor approving the terms of, and the transactions contemplated by, and authorising the due execution of, the Share Pledge Agreement; 7 A duly executed original of the Share Pledge Agreement and all other documents required to be delivered pursuant thereto; 8 Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the laws of England Portugal Liberia and New York and such other relevant jurisdictions as the Lender may require, addressed to the Lender, on such PAGE 48 matters in connection with the execution and validity of this Agreement and the Share Pledge Agreement and such other matters as the Lender may require; 9 At the cost and expense of the Borrower, an independent certification of the market value of the Original Pledged Shares (evidencing that the Borrower is in compliance with Clause 16.9); 10 Payment of the Arrangement Fee; 11 Confirmation that the Original Pledged Shares have been transferred to and deposited with the Custodian and are held to the order of the Lender in accordance with the terms of the Share Pledge Agreement. PAGE 49 SCHEDULE 2 SHARE PLEDGE AGREEMENT PAGE 50 SCHEDULE 3 FORM OF REQUEST FOR UTILISATION To: BANCA POPOLARE ITALIANA, LONDON BRANCH Attention: [Loans Administration] From: NAVALMAR TRANSPORTES MARITIMOS LDA Date: [ ] The Borrower - USD 5,000,000 Facility Agreement dated [ ] September 2005 (the Agreement) 1 We refer to the Agreement made between, inter alia, ourselves, as Borrower, and yourselves, as Lender, in connection with a loan facility in the amount of up to US$5,000,000. Terms defined in the Agreement have their defined meanings when used in this Form of Request for Utilisation. 2 We request to borrow a Loan on the following terms - (a) Amount: $[ ]; (b) Utilisation Date: [ ]; (c) Duration of the first Interest Period shall be to [ ] 200[ ] ; (d) Payment Instructions: account of [ ] account number [ ] with [ ] of [ ] . PAGE 51 3 We represent and warrant that - (a) The representations and warranties in Clause 14 of the Agreement and those of the Borrower or any Security Party which are set out in any other Finance Document would remain true and not misleading if repeated on the date of this notice with reference to the circumstances now existing; (b) No event of default or Potential Event of Default has occurred or will result from the borrowing of the Loan to which this Form of Request relates; and (c) The general undertakings in Clause 16 of the Agreement and those of the Borrower or any Security Party which are set out in any other Finance Document would remain true and not misleading if repeated on the date of this Form of Request with reference to the circumstances now existing. 4 This notice cannot be revoked without your prior consent. [Name of Signatory] - ----------------------------- Director For and on behalf of Navalmar Transportes Maritimos Lda PAGE 52 SIGNATORIES Borrower NAVALMAR TRANSPORTES MARITIMOS LDA By - Lender BANCA POPOLARE ITALIANA SOCIETA COOPERATIVA, LONDON BRANCH By: PAGE 53 -----END PRIVACY-ENHANCED MESSAGE-----