EXHIBIT 10.9
GUARANTEE
This guarantee and covenant (the "GUARANTEE") dated May 14, 2004 made by
Steelbank Inc. (the "GUARANTOR") to and in favour of Xxxxx Xxxxxx, Xxxxxxx
Xxxxxxxxx and Xxxx Xxxxxxx (collectively, the "VENDORS").
RECITALS:
(a) The Vendors, BST Acquisition Ltd. ("BST") and Tarpon Industries,
Inc. (the "PRINCIPAL") have entered into a share purchase agreement
dated April 2, 2004 as amended by the amending agreement dated May
5, 2004 (collectively, the "PURCHASE AGREEMENT") providing for the
purchase by BST from the Vendors of all of the issued and
outstanding shares in the capital of the Guarantor (the "PURCHASED
SHARES");
(b) As part of the consideration for such purchase, BST has (i) issued
to the Vendors a promissory note dated the date hereof in the
principal amount of $800,000.00 ("NOTE A"); (ii) further issued to
each of the Vendors respectively a promissory note, each dated the
date hereof and each in the principal amount of $135,000.00
(collectively, "NOTES B"); and (iii) agreed to pay to the Vendors an
amount equal to $375,000.00 of the purchase price for the Purchased
Shares in the form of common shares in the capital of the Principal
(the "COVENANT SHARES") pursuant to and in accordance with the
provisions of Section 2.3(d) of the Purchase Agreement (the
"COVENANT");
(c) The Covenant Shares are deemed for purposes of this Guarantee to
have a value equal to $375,000.00 (the "SHARE VALUE AMOUNT");
(d) It is a condition of the closing of the transactions contemplated by
the Purchase Agreement that the Guarantor execute and deliver this
Guarantee;
(e) As security for the payment and performance of the Guarantor's
obligations under this Guarantee, the Guarantor has executed and
delivered a general security agreement dated the date hereof to and
in favour of the Vendors (the "GSA");
(f) All dollar amounts referenced herein are in Canadian funds unless
indicated otherwise; and
(g) Note A and Notes B are hereinafter collectively called the "NOTES";
and
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(h) The term "Business Day" as used herein shall have the same meaning
as ascribed thereto in the Purchase Agreement.
In consideration of the foregoing, the sum of $10.00 now paid by each of
the Vendors to the Guarantor and other good and valuable consideration (the
receipt and adequacy of which are acknowledged by the Guarantor), the Guarantor
covenants and agrees in favour of the Vendors as follows:
1. The Guarantor hereby irrevocably and unconditionally guarantees to the
Vendors the following:
(i) the issuance to the Vendors of the Covenant Shares in accordance
with the terms of the Purchase Agreement, failing which the
Guarantor expressly covenants and agrees to, forthwith upon demand,
pay to the Vendors, by certified cheque or wire transfer, an amount
equal to the Share Value Amount, and
(ii) the payment to the Vendors of all amounts due and owing under the
Notes as and when due, in accordance with the terms thereof.
(the matters contemplated by paragraphs (i) and (ii) above being
hereinafter collectively called the "GUARANTEED OBLIGATIONS").
2. The Guarantor represents and warrants that it has duly and fully complied
with all applicable statutory disclosure requirements in connection with
the Guarantor's granting this Guarantee (including but not limited to
Subsection 20(2) of the Business Corporations Act (Ontario), as
applicable).
3. The Vendors shall not be obligated to pursue any recourse or remedy as
against BST (or any other party) or realize on any security the Vendors
may hold in respect of the Guaranteed Obligations or otherwise before
being entitled to (i) pursue and enforce performance by the Guarantor of
the Guarantor's obligations under this Guarantee or (ii) pursue any other
remedy as against the Guarantor.
4. Any reduction or decrease in, or reduction or decrease in the value of,
the security granted to the Vendors by the Guarantor pursuant to the GSA
shall not discharge pro tanto (or otherwise) or limit or lessen the
liability or any of the obligations of the Guarantor under this Guarantee.
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5. The obligation of the Guarantor to pay to the Vendors the amount of the
Guaranteed Obligations shall arise, and the Guarantor shall make such
payments to the Vendors, forthwith upon demand.
6. The Guarantor waives notice of any and all defaults by BST in regards to
the Notes and/or the Covenant. The Guarantor consents to any and all
extensions of time, waivers or indulgences (of any nature, kind or manner
whatsoever) that the Vendors (or any of them) may grant to BST in regards
to any of the Notes or the Covenant.
7. The Guarantor acknowledges and agrees that mention in this Guarantee of
any particular right or remedy available to the Vendors in regards to any
default by the Guarantor shall not preclude the Vendors from exercising,
or limit the extent of, any other remedy in respect thereof, whether at
law or in equity, or any other provision of this Guarantee. No remedy
available hereunder to the Vendors shall be interpreted as being exclusive
or dependent upon any other remedy, and the Vendors may from time to time
exercise, at their option, any one or more remedies independently or in
combination.
8. No condoning, excusing or overlooking by the Vendors of any default by the
Guarantor under this Guarantee shall operate as a waiver of any of the
Vendors' rights or any of the Guarantor's obligations hereunder and no
waiver shall be inferred from or implied by anything done, delayed or
omitted to be done by the Vendors, save and except only an express waiver
in writing given by the Vendors to the Guarantor.
9. In the event that any portion of this Guarantee shall be declared by a
Court of competent jurisdiction to be invalid, illegal or unenforceable at
law, then such portion shall be deemed severed from this Guarantee, and
the remaining portions shall remain in full force and effect and binding
upon the Guarantor.
10. This Guarantee shall be construed, governed by and interpreted and
enforced in accordance with the laws of the Province of Ontario and the
federal laws of Canada applicable therein. The Guarantor irrevocably
submits and agrees to attorn to the Courts of the Province of Ontario in
the event of any suit, action or other legal proceeding in regards to this
Guarantee or other matter arising in connection therewith.
11. This Guarantee may not be assigned by the Guarantor without the Vendors'
prior written consent. This benefits of this Guarantee may not be assigned
by the Vendors without the Guarantor's prior written consent. No
assignment of this Guarantee shall release the Guarantor of its
obligations and liabilities under this Guarantee. This Note shall enure to
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the benefit of the Vendors and their respective successors, assigns,
heirs, executors, administrators, estate trustees and legal
representatives, and shall be binding upon the Guarantor and its
successors,(including but not limited to successors by amalgamation or
otherwise) and permitted assigns.
IN WITNESS WHEREOF the Guarantor has executed this, Guarantee.
STEELBANKING
By: /s/ XXXXX XXXXXXXX
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Name: XXXXX XXXXXXXX
Title: DIRECTOR
I have the authority to bind the Guarantor.
