<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
EURO TRADE & FORFAITING, INC.
- --------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $0.001 Par Value
- --------------------------------------------------------------------------
(Title of Class of Securities)
29870X 10 3
- --------------------------------------------------------------------------
(CUSIP Number)
Michael J. Smith, 6 Rue Charles-Bonnet, 1206, Geneva, Switzerland
Telephone (41-22) 818-2999
- --------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
February 14, 2000
- --------------------------------------------------------------------------
(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 that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
<PAGE> 2
CUSIP No. 29870X 10 3
---------------------------
1) Names of Reporting Persons/I.R.S. Identification Nos. of Above
Persons
MFC Merchant Bank S.A.
-------------------------------------
2) Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ X ]
3) SEC Use Only
--------------------------------------------------------
4) Source of Funds
-----------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
---------------------------------------------------------------------
6) Citizenship or Place of Organization Switzerland
---------------------
Number of (7) Sole Voting Power 0
Shares Bene- -----------
ficially (8) Shared Voting Power 202,663
Owned by -----------------
Each Reporting (9) Sole Dispositive Power 0
Person --------------
With (10) Shared Dispositive Power 202,663
------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person 202,663
--------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
X
---------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11) 1.2%
------------------
14) Type of Reporting Person CO
--------------------------------------------
Page 2 of 8 Pages
<PAGE> 3
CUSIP No. 29870X 10 3
---------------------------
1) Names of Reporting Persons/I.R.S. Identification Nos. of Above
Persons
MFC Bancorp Ltd.
-------------------------------------
2) Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ X ]
3) SEC Use Only
--------------------------------------------------------
4) Source of Funds
-----------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
---------------------------------------------------------------------
6) Citizenship or Place of Organization Yukon Territory, Canada
--------------------------------
Number of (7) Sole Voting Power 0
Shares Bene- ----------------------
ficially (8) Shared Voting Power 202,663
Owned by --------------------
Each Reporting (9) Sole Dispositive Power 0
Person -----------------
With (10) Shared Dispositive Power 202,663
---------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person 202,663
--------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
X
---------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11) 1.2%
------------------
14) Type of Reporting Person CO
--------------------------------------------
Page 3 of 8 Pages
<PAGE> 4
ITEM 1. SECURITY AND ISSUER.
This statement relates to the shares of common stock with a $0.001 par
value each of Euro Trade & Forfaiting, Inc. ("Euro Trade"), a Utah
corporation, having a principal executive office at 9 King Street, Third
Floor, London, England, EC2V 8EA.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is filed on behalf of MFC Merchant Bank S.A. ("Merchant
Bank") and MFC Bancorp Ltd. ("MFC"). MFC operates in the financial
services business and has a principal business and office address at 6 Rue
Charles-Bonnet, 1206 Geneva, Switzerland. Merchant Bank is a wholly-owned
subsidiary of MFC that operates in the banking and financial services
business and has a principal business and office address at 53, Route de
Malagnou, 1211 Geneva 17, Switzerland. See item 6 on pages 2 and 3 of
this Schedule 13D for the jurisdiction of organization of Merchant Bank
and MFC.
The following table lists the names, citizenships, principal business
addresses and principal occupations of the executive officers and
directors of MFC.
<TABLE>
<CAPTION>
==========================================================================
RESIDENCE OR PRINCIPAL
NAME BUSINESS ADDRESS OCCUPATION CITIZENSHIP
==========================================================================
<S> <C> <C> <C>
Michael Smith 6 Rue Charles-Bonnet, 1206 Director, British
Geneva, Switzerland President
and Chief
Executive
Officer of MFC
- --------------------------------------------------------------------------
Julius Mallin 256 Jarvis Street, Apt. 8D, Retired Canadian
Toronto, Ontario, Canada Businessman
M5B 2J4
- --------------------------------------------------------------------------
Oq-Hyun Chin 3, 4th Floor, Kyung Am Bldg., Business Korean
831028 Yeoksam-Dong, Advisor, The
Kangnam-Ku, Seoul, Korea Art Group
Architects &
Engineers Ltd.
- --------------------------------------------------------------------------
Roy Zanatta Suite 1250, 400 Burrard Director and Canadian
Street, Vancouver, British Secretary of
Columbia, Canada, V6C 3A6 MFC
- --------------------------------------------------------------------------
Sok Chu Kim 1071 - 59 Namhyun-Dong, Director of Korean
Gwanak-Kn, Seoul, Korea Korea
Liberalization
Fund Ltd.
==========================================================================
</TABLE>
Page 4 of 8 Pages
<PAGE> 5
The following table lists the names, citizenships, principal business
addresses and principal occupations of the executive officers and
directors of Merchant Bank.
<TABLE>
<CAPTION>
==========================================================================
RESIDENCE OR PRINCIPAL
NAME BUSINESS ADDRESS OCCUPATION CITIZENSHIP
==========================================================================
<S> <C> <C> <C>
Claudio Morandi 53, Route de Malagnou, 1211 President and Swiss
Geneva 17, Switzerland director of
Merchant Bank
- --------------------------------------------------------------------------
Jimmy S.H. Lee 53, Route de Malagnou, 1211 Trustee, Canadian
Geneva 17, Switzerland President and
Chief Executive
Officer of
Mercer
International
Inc.
- --------------------------------------------------------------------------
Max Huber 53, Route de Malagnou, 1211 Independent Swiss
Geneva 17, Switzerland Consultant
- --------------------------------------------------------------------------
Erich Kaiser 53, Route de Malagnou, 1211 Independent Swiss
Geneva 17, Switzerland Consultant
- --------------------------------------------------------------------------
Hans-Rudolf 53, Route de Malagnou, 1211 Attorney- Swiss
Steiner Geneva 17, Switzerland at-Law
==========================================================================
</TABLE>
During the last five years, neither Merchant Bank or MFC has been, nor, to
the knowledge of Merchant Bank or MFC, have any of their directors or
officers been, convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), nor have they been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding were or are subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, Federal or State securities laws or
finding any violation with respect to such laws.
Merchant Bank and MFC have executed a joint filing agreement consenting to
the joint filing of this Schedule 13D. Such agreement is filed as Exhibit
1 to this Schedule 13D and is incorporated herein by reference.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
N/A
ITEM 4. PURPOSE OF TRANSACTION.
Merchant Bank has entered into a loan agreement dated for reference
January 31, 2000 (the "Loan Agreement") with two stockholders of Euro
Trade, being North Cascade Limited ("Cascade") and Collingwood Investments
Limited ("Collingwood"), the owners of 6,600,000 and 4,400,000 shares
(collectively, the "Euro Shares") of common stock, respectively, of Euro
Trade. Pursuant to the terms thereof, on February 14, 2000, Merchant Bank
advanced a loan of $12.0 million to Cascade and Collingwood secured by a
pledge of the Euro Shares.
Merchant Bank and MFC expressly disclaim beneficial ownership of the Euro
Shares.
Page 5 of 8 Pages
<PAGE> 6
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Merchant Bank is the beneficial owner of 202,663 shares (the "Shares") of
the common stock of Euro Trade. Merchant Bank exercises shared voting
power over the Shares with MFC, which owns all of the issued and
outstanding shares of Merchant Bank.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
As disclosed in their Schedule 13D's dated October 25, 1999, Cascade, a
corporation organized under the laws of the British Virgin Islands and
Collingwood, a corporation organized under the laws of the Bahamas,
beneficially own 6,600,000 and 4,400,000 shares, respectively, in the
common stock of Euro Trade.
Merchant Bank, Collingwood and Cascade entered into the Loan Agreement
pursuant to which Merchant Bank loaned to Collingwood and Cascade
(collectively, the "Borrowers") the principal sum of $12.0 million (the
"Loan"). As security for the Loan, Collingwood and Cascade pledged and
hypothecated the Euro Shares to Merchant Bank pursuant to a securities
pledge agreement dated January 31, 2000. On February 14, 2000, Merchant
Bank advanced the Loan to the Borrowers and received as security share
certificates representing the pledged Euro Shares.
Merchant Bank and MFC expressly disclaim beneficial ownership of the Euro
Shares.
Euro Trade also entered into an administration and management services
agreement (the "Services Agreement") with MFC dated for reference January
31, 2000 pursuant to which MFC will provide operating and management
services to Euro Trade for an initial term of three years.
In addition, Collingwood and North Cascade entered into a support
agreement (the "Support Agreement") with MFC dated for reference January
31, 2000 in the form attached as Schedule "B" to the Services Agreement,
whereby they have agreed to, among other things, (i) take such action as
may be required to effect the Services Agreement, including the
reconstitution of Euro Trade's board of directors and exercising the
voting rights attached to the Euro Shares in favour of electing directors
of Euro Trade as provided for in the Services Agreement, and (ii) grant
MFC a right of first refusal to purchase the Euro Shares.
Reference is made to Euro Trade's second quarter report on Form 10-Q for
the period ended December 31, 1999 and filed on February 14, 2000 for a
complete copy of both the Services Agreement and Support Agreement.
Page 6 of 8 Pages
<PAGE> 7
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit Number Description
-------------- -----------
1 Joint Filing Agreement between Merchant Bank
and MFC dated February 15, 2000.
2 Securities Pledge Agreement among Merchant Bank
and the Borrowers dated for reference January
31, 2000.
3* Administration and Management Services
Agreement with MFC dated for reference January
31, 2000.
___________________
* Incorporated by reference from Euro Trade's Form 10-Q for the quarter
ended December 31, 1999 and filed on February 14, 2000.
Page 7 of 8 Pages
<PAGE> 8
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.
February 15, 2000
--------------------------------
(Date)
MFC MERCHANT BANK S.A.
By: /s/ Claudio Morandi
--------------------------------
(Signature)
Claudio Morandi, President
--------------------------------
(Name and Title)
By: /s/ Peter Hediger
--------------------------------
(Signature)
Peter Hediger, Vice President
--------------------------------
(Name and Title)
February 15, 2000
--------------------------------
(Date)
MFC BANCORP LTD.
By: /s/ Michael J. Smith
--------------------------------
(Signature)
Michael J. Smith, Director
--------------------------------
(Name and Title)
Page 8 of 8 Pages
<PAGE> 9
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
1 Joint Filing Agreement between Merchant Bank
and MFC dated February 15, 2000.
2 Securities Pledge Agreement among Merchant
Bank and the Borrowers dated for reference
January 31, 2000.
3* Administration and Management Services
Agreement with MFC dated for reference January
31, 2000.
- -------------------
* Incorporated by reference from Euro Trade's Form 10-Q for the quarter
ended December 31, 1999 and filed on February 14, 2000.
<PAGE> 1
JOINT FILING AGREEMENT
THIS AGREEMENT dated the 15th day of February, 2000.
WHEREAS:
A. MFC Merchant Bank S.A. ("Merchant Bank") is a wholly owned subsidiary
of MFC Bancorp Ltd. ("MFC") and owns 202,663 shares of the common stock of
Euro Trade & Forfaiting, Inc. ("Euro Trade");
B. Pursuant to a pledge agreement (the "Pledge Agreement") dated for
reference January 31, 2000, Collingwood Investments Limited
("Collingwood") and North Cascade Limited ("Cascade") have pledged to
Merchant Bank 4,400,000 and 6,600,000 shares, respectively (collectively,
the "Euro Shares"), of the common stock of Euro Trade as security for a
loan of $12.0 million made by Merchant Bank to Collingwood and Cascade
pursuant to a loan agreement made among them dated for reference January
31, 2000; and
C. Each of MFC and Merchant Bank (each a "Filer" and collectively, the
"Filers") is responsible for filing a Schedule 13D (the "Schedule 13D")
relating to the acquisition or disposition of the shares of common stock
of Euro Trade pursuant to U.S. securities laws.
NOW THEREFORE THE PARTIES AGREE AS FOLLOWS:
1. Each Filer covenants and agrees that it is individually eligible to
use the Schedule 13D which is to be filed;
2. Each Filer is individually responsible for the timely filing of any
amendments to the Schedule 13D, and for the completeness and accuracy
of the information concerning themselves, but is not responsible for
the completeness and accuracy of any of the information contained in
the Schedule 13D as to the other Filer, unless such Filer knows or
has reason to believe that the information is inaccurate;
3. This Schedule 13D contains the required information with regard to
each Filer and indicates that it is filed on behalf of the Filers;
and
4. Each Filer agrees that the Schedule 13D to which this Joint Filing
Agreement is attached as Exhibit 1 is filed on its behalf.
IN WITNESS WHEREOF the parties have duly executed this Joint Filing
Agreement.
MFC MERCHANT BANK S.A. MFC BANCORP LTD.
By: /s/ Claudio Morandi By: /s/ Michael Smith
-------------------------- -----------------------
Claudio Morandi, President Michael J. Smith, Director
By: /s/ Peter Hediger
--------------------------
Peter Hediger, Vice President
<PAGE> 1
SECURITIES PLEDGE AGREEMENT
---------------------------
THIS AGREEMENT dated for reference the 31st day of January, 2000, by
COLLINGWOOD INVESTMENTS LIMITED, a Bahamas corporation having an office at
9 King Street, Third Floor, London, EC2V8EA, England and NORTH CASCADE
LIMITED, a British Virgin Islands corporation having an office at 9 King
Street, Third Floor, London, EC2V8EA, England (collectively and
interchangeably, the "Borrower" or the "Pledgor") in favour of MFC
MERCHANT BANK S.A., a bank organized under the laws of Switzerland, having
an office at 53, Route de Malagnou, P.O. Box 509, 1200 Geneva 17,
Switzerland (the "Agent"), as agent for and on behalf of, and for the
benefit of, the Lenders, as such term is defined under a loan agreement
(the "Loan Agreement"), among the Borrower, the Lenders and the Agent
dated for reference January 31, 2000;
WHEREAS the Lenders have agreed to lend funds to the Borrower pursuant to
the Loan Agreement;
AND WHEREAS in order to secure the performance of its obligations under,
in connection with or relating to the Loan Agreement, the Pledgor has
agreed to pledge the Securities (as hereinafter defined) to the Agent for
and on behalf of and for the benefit of the Lenders;
AND WHEREAS the Pledgor acknowledges that the Agent is entitled and
authorized to hold security as trustee for and on behalf of and for the
benefit of the Lenders in accordance with the terms of the Loan Agreement
and as more fully set out herein.
NOW THEREFORE, this agreement witnesses that in consideration of the
covenants and agreements herein contained, the parties hereto agree as
follows:
ARTICLE I
---------
ASSIGNMENT, PLEDGE AND HYPOTHECATION
1.1 Collateral
----------
The Pledgor herewith delivers to the Agent the certificates endorsed in
blank for transfer representing the securities listed in Schedule "A"
hereto and any and all accretions, additions, accessions, substitutions
and replacements thereto or therefor (such securities, accretions,
additions, accessions, substitutions and replacements collectively
hereinafter referred to as the "Securities"), together with all money,
income, proceeds and benefits, of every nature and kind whatsoever, now or
at any time hereafter due, owing, payable or accruing on, under or in
respect of the Securities or otherwise attributable or accruing thereto,
including, without limitation, all distributions of earnings or capital
(including, without limitation, all dividends in cash and dividends in
kind, liquidating dividends, stock dividends, new security or other
properties or benefits to which the Pledgor is or may hereafter become
entitled to receive on account of the Securities and all payments by way
of reduction of capital) (the Securities together with all such money,
income, proceeds and benefits are collectively hereinafter referred to as
the "Collateral").
<PAGE> 2
- 2 -
1.2 Indebtedness Secured
--------------------
The Collateral shall be held by the Agent, for and on behalf of and for
the benefit of the Lenders, as general and continuing security in favour
of and as a fixed and specific assignment, pledge and hypothecation unto
the Agent, for and on behalf of and for the benefit of the Lenders, to
secure performance of all obligations of the Borrower to the Lenders,
howsoever arising, including, without limitation hereunder or under, in
connection with or relating to the Loan Agreement, as same may be amended,
extended or replaced from time to time (the "Obligations").
1.3 Additional Security
-------------------
If the Pledgor becomes entitled to receive or receives any certificate
(including, without limitation, any certificate representing a stock
dividend or a distribution in connection with any reclassification,
increase or reduction of capital), bond, note or other instrument, or any
option or right, whether as an addition to or in substitution or exchange
for, any of the Securities, the Pledgor shall accept such certificate,
bond, note, instrument, option or right in trust for the Agent and shall
deliver such certificate, bond, note, instrument, option or right
forthwith to the Agent in the exact form received by the Pledgor, with the
Pledgor's endorsement when necessary, to be held by the Agent, for and on
behalf of and for the benefit of the Lenders, subject to the terms hereof,
as general and continuing security and as a fixed and specific assignment,
pledge and hypothecation unto the Agent, for and on behalf of and for the
benefit of the Lenders, to secure payment of the Obligations.
1.4 Amounts Held in Trust
---------------------
Subject to section 1.6, if any money, income, proceed or other benefit, of
any nature or kind whatsoever, is received by the Pledgor in respect of
any of the Collateral, the Pledgor shall receive such money, income,
proceed or other benefit in trust for the Agent, shall segregate such
money, income, proceed or other benefit from its other property or funds
and shall forthwith upon receipt thereof assign, transfer, set over and
deliver the same to the Agent to be held by the Agent, for and on behalf
of and for the benefit of the Lenders, as general and continuing security
to secure payment of the Obligations in accordance with the terms hereof
and the Agent, as the Agent in its uncontrolled discretion may determine,
may deal with such amounts or benefits in accordance with the provisions
hereof.
1.5 Responsibility of the Agent
---------------------------
It is agreed that the responsibility of the Agent in regard to the
Collateral will be limited to exercising the same degree of care which it
gives to its own valuable property.
<PAGE> 3
- 3 -
1.6 Voting Rights Prior to Default
------------------------------
So long as no Event of Default (as hereinafter defined) or event which,
with the giving of notice or lapse of time, or both, would become an Event
of Default has occurred and is continuing, the Pledgor shall be entitled
to vote or refrain from voting the Securities at any meeting, whether
special or general, at which the holder of the Securities is entitled to
vote and shall be entitled to take part in or consent to or refrain from
taking part in or consenting to any corporate or shareholders' action
which the holder of the Securities is entitled to take part in or consent
to, provided that:
(a) the Pledgor has given the Agent at its address set forth above
not less than 15 days' written notice of the manner in which it
intends to exercise, or the reasons for refraining from
exercising, any such right to vote or to take part in or
consent to any such corporate or shareholders' action;
(b) the exercise of such right to vote or to take part in or
consent to any such corporate or shareholders' action would not
result in a contravention of any covenant or agreement of the
Pledgor to the Agent hereunder or under any other agreement
evidencing or securing any of the Obligations and if so, the
Pledgor shall not vote in such a manner; and
(c) the Pledgor has not received from the Agent notice that, in the
judgment of the Agent, the exercise of such right to vote or to
take part in or consent to any such corporate or shareholders'
action would have a material adverse effect on the value of the
Collateral or any part thereof.
1.7 Voting Rights After Default
---------------------------
Upon the occurrence and during the continuance of any Event of Default or
event which, with the giving of notice or lapse of time, or both, would
become an Event of Default, all rights of the Pledgor pursuant to section
1.6 shall cease and the Agent shall be entitled (whether or not the
Securities are registered in the name of the Agent or its nominee) to vote
or refrain from voting or direct the Pledgor or any other person as the
Agent may appoint to vote or refrain from voting the Securities at any
meeting, whether special or general, at which the holder of the Securities
is entitled to vote and shall be entitled to take part in or consent to or
refrain from taking part in or consenting to or direct the Pledgor or any
other person as the Agent may appoint to take part in or consent to or
refrain from taking part in or consenting to any corporate or
shareholders' action which the holder of the Securities is entitled to
take part in or consent to and the Pledgor hereby irrevocably constitutes
and appoints the Agent and any other person appointed by the Agent as its
true and lawful attorney-in-fact and agent for, in the name of and on
behalf of the Pledgor, to act and vote and otherwise exercise all powers
exercisable with respect to the Securities or to take part in or consent
to any such corporate or shareholders' action, and when so acting or
refraining from acting, neither the Agent nor any person appointed by the
Agent shall incur any liability or responsibility of any kind whatsoever
to the Pledgor.
<PAGE> 4
- 4 -
ARTICLE II
----------
WARRANTIES AND COVENANTS OF THE PLEDGOR
2.1 Warranties and Covenants
------------------------
The Pledgor hereby warrants, covenants and agrees with the Agent that:
(a) the Pledgor is a corporation organized and is validly
subsisting and in good standing under the laws of its
jurisdiction of organization and has full corporate right,
power and authority to enter into and perform its obligations
under this agreement, and when executed and delivered by the
Pledgor, this agreement will constitute legal, valid and
binding obligations of the Pledgor enforceable against it in
accordance with its terms, subject only to: (i) any applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally; and (ii) general
principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law);
(b) the Pledgor is the sole legal and beneficial owner of all of
the Securities, with good and marketable title thereto, free
and clear of all liens, charges and encumbrances and, without
limiting the generality of the foregoing, none of the
Securities are subject to any voting trust, shareholder
agreement or voting agreement;
(c) the Securities have been duly authorized and validly issued and
are outstanding as fully paid and non-assessable and were
issued in compliance with all applicable corporate and
securities laws;
(d) the Pledgor authorizes the Agent to file, in jurisdictions
where this authorization shall be given effect, a financing
statement or other statement disclosing the security interest
created herein signed only by the Agent or its agent covering
the Collateral; and, at the request of the Agent, the Pledgor
shall join the Agent in executing one or more financing or
other such statements, in form satisfactory to the Agent, and
shall pay the cost of filing the same or filing or recording
this agreement in all public offices wherever filing or
recording is deemed by the Agent to be necessary or desirable,
it being further stipulated in this regard that the Agent may
also at any time or times sign any counterpart of this
agreement signed by the Pledgor and file same as a financing
statement if the Agent shall elect to do so;
(e) the Pledgor shall not sell, assign, transfer or otherwise
dispose of the Collateral or any interest therein or agree to
sell, assign, transfer or otherwise dispose of the Collateral
or any interest therein without the prior written consent of
the Agent;
<PAGE> 5
- 5 -
(f) the Pledgor shall not create, incur or permit to exist any
adverse claim, mortgage, assignment, pledge, hypothecation,
lien, charge or other encumbrance or security interest
whatsoever with respect to any of the Collateral (other than
pursuant to this agreement); and
(g) the Pledgor shall pay to the Agent on demand all expenses and
expenditures, including, without limitation, legal fees and
disbursements, incurred or paid by the Agent in connection with
the confirming, perfecting and preserving of the assignment,
pledge and hypothecation constituted hereby, in connection with
protecting the Agent or the Lenders against the claims or
interests of any third person against the Collateral and in
connection with the exercise by the Agent of any right, power
or remedy conferred by this agreement or by law.
ARTICLE III
-----------
GENERAL COVENANTS
3.1 Continuing Security
-------------------
This shall be a continuing agreement and the Collateral is in addition to
and not in substitution for any other security held now or hereafter by
the Agent, for and on behalf of and for the benefit of the Lenders, and
shall not operate as a merger of any simple contract debt or suspend the
fulfillment of, or affect the rights, remedies and powers of the Agent or
the Lenders in respect of the Obligations or the Collateral and this
agreement and the assignment, pledge and hypothecation constituted hereby
shall continue in full force and effect in accordance with the terms
hereof until all of the Obligations have been fully paid and satisfied by
the Borrower and discharged by the Lenders. All claims, present and
future, of the Pledgor against any person liable upon or for payment of
any of the Securities are hereby assigned to the Agent, for and on behalf
of and for the benefit of the Lenders.
3.2 Future Securities
-----------------
Any and all securities and other properties heretofore, now or hereafter
delivered by the Pledgor to the Agent, or in the Agent's possession, each
for and on behalf of and for the benefit of the Lenders, shall also secure
payment of the Obligations and shall be held and construed to be a part of
the Collateral hereunder to the same extent as fully described herein.
<PAGE> 6
- 6 -
3.3 Appointment as Attorney
-----------------------
The Pledgor hereby irrevocably constitutes and appoints the Agent and any
other person appointed by the Agent as its true and lawful attorney-in-
fact and agent for, in the name of and on behalf of the Pledgor, to
execute and deliver, and to receive delivery of, all such assignments,
transfers, deeds, assurances and instruments as may be necessary to
transfer all or any of the Collateral (including, without limitation, to
fill in all blanks in any transfers of stocks or any powers of attorney or
other documents delivered to the Agent) and when so acting neither the
Agent nor any person appointed by the Agent shall incur any liability or
responsibility of any kind whatsoever to the Pledgor.
3.4 Records of the Agent
--------------------
The records of the Agent as to the occurrence of any Event of Default (as
hereinafter defined), as to the Obligations secured hereby or as to any
demand having been made on the Pledgor shall be prima facie evidence of
such default, Obligation or demand.
3.5 No Obligation to Collect
------------------------
The Agent shall not be bound or obliged, at any time or under any
circumstances, to collect or see to the payment of any interest, dividends
or other income of, on or from any of the Collateral, or to sell, transfer
or otherwise realize upon any of the Collateral and the Agent shall not be
responsible for any loss occasioned by any sale of any of the Collateral
or by the retention of or refusal to sell the same.
3.6 No Obligation to Release
------------------------
If any payment on account of the Obligations is made the Agent shall not
by reason thereof be required to surrender any of the Collateral; provided
that the Agent shall, at the request of the Pledgor, surrender the
Collateral to the Pledgor upon demand following the date on which all
indebtedness and liability of the Borrower to the Lenders has been fully
paid and satisfied.
ARTICLE IV
----------
EVENTS OF DEFAULT
4.1 Events of Default
-----------------
The Pledgor shall be in default under this agreement upon the occurrence
of an Event of Default as such term is defined in the Loan Agreement, as
same may be amended, extended or replaced from time to time.
<PAGE> 7
- 7 -
ARTICLE V
---------
POWERS AND REMEDIES
5.1 Sale
----
Upon the occurrence of an Event of Default and at any time thereafter, at
the option of the Agent, the Obligations shall become immediately due and
payable without presentment or demand or any notice to the Pledgor or any
other person obligated thereon and the Agent shall have and may exercise
with reference to the Collateral and the Obligations any and all of the
rights and remedies of the Agent under this agreement and such other
rights and remedies as are provided by law or by equity or by statute,
including, without limitation, the right and power to sell on any
recognized exchange dealing in such securities or by public or private
sale or sales, or otherwise dispose of or utilize, the Collateral and any
part or parts thereof as fully and effectually as if the Agent were the
absolute owner thereof, and to apply the proceeds thereof toward payment
of any costs and expenses (including, without limitation, legal fees and
disbursements) thereby incurred by the Agent and toward payment of the
Obligations, in such order, manner and priority as the Agent in its
uncontrolled discretion may see fit. To the extent permitted by law, the
Pledgor expressly waives any notice of sale or other disposition of the
Collateral and any other rights or remedies of the Pledgor or formalities
prescribed by law or by equity or by statute relative to the sale or other
disposition of the Collateral or exercise of any other right or remedy of
the Agent; and to the extent any such notice is required and cannot be
waived, the Pledgor agrees that if such notice is mailed, postage prepaid,
to the Pledgor at the address shown above at least five days before the
time of the sale or disposition, such notice shall be deemed reasonable
and shall fully satisfy any requirement for giving of said notice. The
Pledgor expressly acknowledges and agrees that at any sale or realization
of the Securities under this section, the Agent may purchase the
Securities or any part thereof, free from any right of redemption on the
part of the Pledgor or anyone claiming through the Pledgor, which right
is, to the extent permitted by law, hereby waived and released.
5.2 Transfer of Securities
----------------------
The Agent is hereby granted the right, at its option, either before or
after the occurrence of an Event of Default, to transfer at any time to
itself or its nominee the Securities or any part thereof and to have the
Securities or any part thereof registered in its name or in the name of
its nominee.
<PAGE> 8
- 8 -
5.3 Right to Exercise Option
------------------------
Upon the occurrence and during the continuance of any Event of Default or
event which, with the giving of notice or lapse of time, or both, would
become an Event of Default, the Agent shall have the right but shall not
be bound nor required to exercise any option or right which the holder of
any of the Collateral may at any time have, and any and all costs,
charges, expenses, fees, outlays and premiums incurred by the Agent in
connection with the exercise of any such option or right shall be added to
and form part of the Obligations and be secured hereby.
5.4 Compromise and Release
----------------------
The Agent will not be obliged to exhaust its recourse against the Pledgor
or any other person or against any other security or securities which it
may hold before realizing on or otherwise dealing with the Collateral, and
the Agent may grant time, renewals, extensions, indulgences, releases and
discharges to, may take securities from and give the same and any and all
securities up to, may abstain from taking securities from, or from
perfecting securities of, may accept compositions from, and may otherwise
deal with, the Pledgor and all other persons as the Agent may see fit,
without prejudice to the right of the Agent to hold, deal with, sell,
transfer and otherwise realize on the Securities in accordance with the
terms of this agreement.
5.5 Cooperation with Agent
----------------------
The Pledgor shall cooperate fully with the Agent in order to permit the
Agent to sell, transfer or otherwise realize on the Collateral in
accordance with the terms hereof. Specifically, the Pledgor shall fully
comply with all applicable securities laws and the requirements of any
Official Body as such term is defined in the Loan Agreement having
jurisdiction in respect of the Collateral, and the rules, bylaws and
regulations of any stock exchange on which the Securities may be traded,
and shall take such action as may be necessary to permit the Agent to
sell, transfer or otherwise realize on the Securities in compliance with
such laws, rules, bylaws and regulations.
5.6 Application of Collateral
-------------------------
The Agent may, at its option, hold any and all proceeds, payments, monies,
income or benefits attributable or accruing to the Collateral which is
received by the Agent, for and on behalf of and for the benefit of the
Lenders, as security for the Obligations, or, apply any or all of such
proceeds, payments, monies, income or benefits to the Obligations, whether
or not then due, in such order manner or priority as the Agent may, in its
uncontrolled discretion, determine.
5.7 Dealings with Collateral
------------------------
Notwithstanding anything else contained herein, and either before or after
an Event of Default:
<PAGE> 9
- 9 -
(a) whenever the Pledgor is indebted to the Lenders or the Agent,
any Securities may without notice to the Pledgor be pledged or
repledged as security for any of the Agent's or Lenders'
indebtedness, whether for more or less than the amount owing by
the Pledgor and either separately or together with other
securities, and the Agent may without notice to the Pledgor
loan such Securities either separately or together with other
securities, and the Agent may without notice to the Pledgor use
any securities held in the account for making delivery against
a sale; and
(b) the Agent is not obligated to deliver the same Securities as
those deposited with or received by the Agent for the Pledgor's
account but that the Agent's obligation shall be discharged by
delivering securities of an equivalent amount and of the same
nature and kind.
ARTICLE VI
----------
MISCELLANEOUS
-------------
6.1 Further Assurances
------------------
At the request of the Agent the Pledgor shall, at its own expense, execute
all such transfers, stock powers, proxies and other documents as may be
required by the Agent, with all such powers of sale and other necessary
powers as may be expedient for vesting in the Agent, or such person or
person as the Agent may appoint, the Securities and to otherwise carry
into effect the intent and purposes of this agreement.
6.2 No Revocation
-------------
The appointment and power of attorney contained in sections 1.7 and 3.3,
respectively, shall be deemed to be coupled with an interest and shall not
be revoked by the bankruptcy, insolvency, winding-up, liquidation or
dissolution of the Pledgor and the Pledgor hereby ratifies and confirms
and agrees to ratify and confirm all that the Agent or any person
appointed by the Agent, as attorney-in-fact and agent for, in the name of
and on behalf of the Pledgor, may lawfully do or cause to be done by
virtue of sections 1.7 and 3.3.
6.3 Waiver
------
No delay or omission on the part of the Agent in exercising any rights
hereunder shall operate as a waiver of any such right or any other right.
A waiver on any one or more occasions shall not be construed as a bar to
or waiver of any right or remedy on any future occasion.
<PAGE> 10
- 10 -
6.4 Seizure of Collateral
---------------------
Upon the occurrence of an Event of Default the Agent shall have the
absolute and unconditional right, without prior notice or any prior
hearing of any kind whatsoever, to seize and take possession of the
Collateral, and the Pledgor does hereby expressly waive any right to any
prior notice or any prior hearing prior to seizure and taking possession
of the Collateral by the Agent.
6.5 Successors and Assigns
----------------------
This agreement shall be binding on the Pledgor, and its successors and
assigns, and shall enure to the benefit of the Agent, and its successors
and assigns.
6.6 Rights Cumulative
-----------------
The rights and remedies of the Agent hereunder are cumulative and the
exercise of any one or more of the remedies provided herein shall not be
construed as a waiver of any of the other remedies of the Agent.
6.7 Severability
------------
If any provision of this agreement shall be found or determined to be
invalid, illegal or unenforceable it shall be severable from this
agreement and the remainder of this agreement shall be read and construed
as if such invalid, illegal or unenforceable provision or part had been
deleted herefrom.
6.8 Applicable Law
--------------
The Pledgor hereby irrevocably agrees that any legal action or proceedings
against it with respect to this agreement may be brought in the courts in
Geneva or in such other court as the Agent may elect and, by execution and
delivery of this agreement, the Pledgor hereby irrevocably submits to the
jurisdiction of each such court. This agreement shall be governed by and
construed in accordance with the laws in force in Switzerland. The
parties agree that any actions or proceedings in respect of this agreement
shall be conducted in the English language.
6.9 Ownership Certificates
----------------------
In connection with the Securities the Agent is hereby authorized to sign
on behalf of and as agent for the Pledgor such income tax ownership
certificates as may be required.
<PAGE> 11
- 11 -
6.10 Multiple Pledgor
----------------
If more than one party executes this instrument as Pledgor, then the
provisions hereof shall be read with all grammatical changes thereby
rendered necessary and each reference to the Pledgor shall include each
and every one of them severally, all representations, warranties,
covenants and agreements of the Pledgor herein shall be deemed to be joint
and several representations, warranties, covenants and agreements of each
such party, and any notice shall be deemed to have been given to each
party comprising the Pledgor when such notice is first given to any such
party.
IN WITNESS WHEREOF the parties have caused this agreement to be duly
executed under seal, in the case of a corporation by its duly authorized
officer or officers, as of the date first written above.
COLLINGWOOD INVESTMENTS LIMITED
By: /s/ Richard Adam Baker
-----------------------------
Name: Richard Adam Baker c/s
---------------------------
Title: Director
--------------------------
NORTH CASCADE LIMITED
By: /s/ Robert Edward Griffin
-----------------------------
Name: Robert Edward Griffin c/s
---------------------------
Title: Director
--------------------------
<PAGE> 12
SCHEDULE "A"
------------
SECURITIES
<TABLE>
<CAPTION>
Number and
Description
Of Shares Registered Holder
----------- -----------------
<S> <C>
4,400,000 shares of
common stock of Euro Collingwood Investments
Trade & Forfaiting, Inc., Limited
each having a par value
of $0.001 per share
6,600,000 shares of
common stock of Euro North Cascade Limited
Trade & Forfaiting, Inc.,
each having a par value
of $0.001 per share
</TABLE>
