GUARANTEE
THIS GUARANTEE is made as of August 27, 2007.
WHEREAS pursuant to a credit agreement (as amended, supplemented, restated
or replaced from time to time, the "Credit Agreement") made as of August 27,
2007 among Voyageur Maritime Trading Inc., an Ontario corporation (the
"Borrower"), the Persons named therein as Credit Parties, GE Canada Finance
Holding Company, as agent (in such capacity, the "Agent"), for itself, as
Lender, and the other lenders signatory thereto from time to time (the "Lenders"
and, together with Agent, collectively, the "Secured Parties"), the Lenders have
agreed to make a term loan to the Borrower in the principal amount of $5,000,000
(the "Term Loan");
AND WHEREAS in this Guarantee, capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Credit
Agreement;
AND WHEREAS the Borrower, Voyageur Marine Transport Limited, an Ontario
corporation ("Transport"), and Lower Lakes Towing Ltd., a Canada corporation
(hereinafter referred to as the "Guarantor"), are entering into a contract of
affreightment (the "COA") dated as of August 27, 2007 with respect to the
"Maritime Trader", a self-propelled steel cargo vessel of 10,901 gross tones
built in Collingwood, Ontario in 1967 by Canadian Shipbuilding & Engineering
Ltd. and bearing Canadian Certificate of Registry Official Number 325744 (the
"Financed Vessel");
AND WHEREAS the Borrower and the Guarantor are entering into an option
agreement (the "Option Agreement") dated as of August 27, 2007 with respect to
the Financed Vessel;
AND WHEREAS in consideration of the benefit to be realized by the
Guarantor through its time charter of the Financed Vessel pursuant to the COA
and its option to purchase the Financed Vessel pursuant to the Option Agreement,
the Guarantor has agreed to provide certain security for up to $1,250,000 of the
present and future indebtedness, liabilities and obligations of the Borrower in
favour of the Secured Parties under the Credit Agreement and the other Loan
Documents (collectively, the "Guaranteed Obligations");
NOW THEREFORE THIS GUARANTEE WITNESSES that in consideration of the
premises and the covenants and agreements herein contained, the sum of $1.00 now
paid by each of the Secured Parties to the Guarantor and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the Guarantor covenants with each of the Secured Parties as follows:
ARTICLE 1 - GUARANTEE
1.01 Guarantee
The Guarantor hereby unconditionally and irrevocably guarantees payment of
the Guaranteed Obligations; provided that the recourse of the Secured Parties
under and in connection with this Guarantee will be limited solely to the amount
of $1,250,000, plus any amounts owing pursuant to Section 5.13 hereof. At the
sole discretion of the Secured Parties but subject to Section 3.01 hereof,
payment of such amount may be made by making a draw under that certain
irrevocable standby letter of credit dated the date hereof (as amended,
supplemented, replaced or modified, the "Letter of Credit") in the amount of
$1,250,000 provided by Wachovia Bank N.A. on the application of Guarantor for
the benefit of the Agent.
1.02 Obligations Absolute
The liability of the Guarantor hereunder will be absolute and
unconditional and will not be affected by:
(a) any lack of validity or enforceability of any agreement between the
Borrower and the Secured Parties;
(b) any impossibility, impracticability, frustration of purpose,
illegality, force majeure or act of government;
(c) the bankruptcy, winding-up, liquidation, dissolution or insolvency
of the Borrower or any other person or the amalgamation, a merger of
or any other change in the status, function, control or ownership of
the Borrower, the Guarantor, the Secured Parties or any other
person;
(d) any lack or limitation of power, incapacity or disability on the
part of the Borrower or of the directors, partners or agents thereof
or any other irregularity, defect or informality on the part of the
Borrower in its obligations to the Secured Parties; or
(e) any other law, regulation or other circumstance that might otherwise
constitute a defence available to, or a discharge of, the Borrower
in respect of any or all of the Obligations.
ARTICLE 2 - DEALINGS WITH BORROWER AND OTHERS
2.01 No Release
The liability of the Guarantor hereunder will not be released, discharged,
limited or in any way affected by anything done, suffered or permitted by the
Secured Parties in connection with any duties or liabilities of the Borrower to
the Secured Parties or any security therefor including any loss of or in respect
of any security received by the Secured Parties from the Borrower or others.
Without limiting the generality of the foregoing and without releasing,
discharging, limiting or otherwise affecting in whole or in part the Guarantor's
liability hereunder, without obtaining the consent of or giving notice to the
Guarantor, the Secured Parties may:
(a) discontinue, reduce, increase or otherwise vary the credit of the
Borrower in any manner whatsoever; provided, that the principal
amount of the credit facilities extended by the Lenders to the
Borrower shall not be increased by more than $500,000 absent
Guarantor's prior written consent;
(b) make any change in the time, manner or place of payment under, or in
any other term of, any agreement between the Borrower and the
Secured Parties or the failure on the part of the Borrower to carry
out any of its obligations under any such agreement;
(c) grant time, renewals, extensions, indulgences, releases and
discharges to the Borrower;
(d) take or abstain from taking or enforcing securities or collateral
from the Borrower or from perfecting securities or collateral of the
Borrower;
(e) accept compromises from the Borrower;
(f) apply all money at any time received from the Borrower or from
securities upon such part of the Obligations as the Secured Parties
may see fit or change any such application in whole or in part from
time to time as the Secured Parties may see fit; or
(g) otherwise deal with the Borrower and all other persons and
securities as the Secured Parties may see fit.
2.02 No Exhaustion of Remedies
The Secured Parties will not be bound or obligated to exhaust their
recourse against the Borrower or other persons or any securities or collateral
any may hold or take any other action before being entitled to demand payment
from the Guarantor hereunder.
2.03 No Set-Off
In any claim by the Secured Parties against the Guarantor, the Guarantor
may not assert any set-off or counterclaim that either the Guarantor or the
Borrower may have against the Secured Parties.
ARTICLE 3 - DEMAND
3.01 Demand
Upon the occurrence of any Triggering Event (as hereafter defined), the
Agent will be entitled to make demand upon the Guarantor for the payment of any
or all of the Guaranteed Obligations as set forth under Section 3.02 below. For
the purposes of this Agreement, the occurrence of any of the following events
shall constitute a "Triggering Event":
(a) the Debt Service Coverage Ratio of Voyageur Maritime Holdings Inc.
("Holdings") and its Subsidiaries shall on a consolidated basis be
less than 1.10:1.00 on any date on which it is tested under the
Credit Agreement except that, for the Fiscal Quarter ending April
30, 2008, a Triggering Event shall instead occur if the Debt Service
Coverage Ratio of Holdings and its Subsidiaries shall on a
consolidated basis be less than 0.8:1.0 in respect of the period
commencing on the Closing Date and ending on April 30, 2008;
(b) the amount outstanding under the Term Loan shall exceed the sum of
(i) 100% of the orderly liquidation value of the Financed Vessel
less (ii) the amount secured by Liens attaching to the Financed
Vessel that have or may have priority to the Agent's Lien over the
Financed Vessel;
(c) the Borrower and Transport shall have (i) failed to make the
Financed Vessel available to the Guarantor for loaded voyages at any
time during the Navigation Season (as defined in the COA) for any
reason (including force majeure) or (ii) otherwise have breached,
defaulted under, or failed to perform under, the COA (any
non-declaration or waiver of breach, default or non-performance by
the Guarantor under the COA being ineffective for purposes of this
Section 3.01(c)); or
(d) an Event of Default shall occur under Section 8.1(a), (h) or (i) of
the Credit Agreement.
3.02 Procedure for Exercise of Draw
If the Agent wishes to demand payment under the Guarantee, whether
pursuant to a draw on the Letter of Credit or otherwise, the Agent shall give
notice in writing of its intention to demand payment to the Guarantor at the
address shown in Section 5.06 (the "Trigger Notice"). The Trigger Notice shall
contain a description of the Triggering Event in respect of which the Trigger
Notice is delivered. Except in respect of a Triggering Event arising from an
Event of Default under Section 8.1(h) or (i) of the Credit Agreement (upon which
payment shall be due immediately and a draw may immediately be made under the
Letter of Credit at the Agent's sole discretion), payment under the Guarantee
shall be due on the 60th day (the "Draw Date") after the Guarantor's receipt of
such Trigger Notice (upon which date a draw may be made under the Letter of
Credit at the Agent's sole discretion) unless, prior to the Draw Date:
(a) the Guarantor has completed its purchase of the Financed Vessel in
accordance with the Option Agreement; or
(b) the Guarantor (either alone or together with Heddle Marine Service
Inc.) has made a subordinated secured loan (the "Subordinated
Secured Loan") to the Borrower in an amount at least equal to the
amount of the Guaranteed Obligations and otherwise on terms and
conditions reasonably satisfactory to the Agent, and all or a
portion of the proceeds of such loan in an amount at least equal to
the amount of the Guaranteed Obligations has been paid over by the
Guarantor to the Agent at the direction of the Borrower; or
(c) all Trigger Events have been cured or waived by the Agent.
3.03 Buy-Out Option
Within fifteen (15) days following the receipt by the Guarantor of any
notice from the Agent of an Event of Default arising under Section 8.1(h) or (i)
of the Credit Agreement (which notice has not been withdrawn in writing by the
Agent prior to the delivery of a Committed Buy-Out Notice (as hereinafter
defined)), (i) the Guarantor shall have the right (the "Purchase Option"), by
giving a written notice (a "Committed Buy-Out Notice") to the Agent to acquire
on the date that is five (5) Business Days after the date of the Agent's receipt
of such Committed Buy-Out Notice, from the Secured Parties all (but not less
than all) of the right, title, and interest of the Secured Parties in and to the
Obligations and the Loan Documents, and (ii) upon the receipt by the Agent of
the Committed Buy-Out Notice, Guarantor irrevocably shall be committed to
acquire, within five (5) Business Days following such receipt, from the Secured
Parties all (but not less than all) of the right, title, and interest of the
Secured Parties in and to the Obligations and the Loan Documents, by paying to
the Agent in cash a purchase price (the "Purchase Price") equal to the sum of:
(a) 100% of the outstanding balance with respect to the Term Loan owing
to the Lenders, including, without limitation, principal, interest
accrued and unpaid thereon, and any unpaid fees, to the extent
earned or due and payable in accordance with the Loan Documents, and
(b) 100% of the expenses to the extent earned or due and payable to the
Secured Parties in accordance with the Loan Documents (including the
reimbursement of extraordinary expenses, attorneys fees, financial
examination expenses and appraisal fees);
whereupon the Secured Parties shall assign to Guarantor, without any
representation, recourse, or warranty whatsoever (except that each applicable
Secured Party shall warrant to Guarantor that (1) the amount quoted in writing
by such Secured Party as its portion of the Purchase Price represents the amount
shown as due with respect to the claims transferred as reflected on its books
and records, (2) it owns, or has the right to transfer to Guarantor, the rights
being transferred, and (3) the assets being transferred will be free and clear
of Liens and adverse claims), their right, title, and interest with respect to
the Obligations and the Loan Documents.
The assignment by the Secured Parties of their right, title, and interest
with respect to the Obligations and the Loan Documents shall be at no expense
(other than the payment of the applicable Purchase Price) to Guarantor other
than the reimbursement by Guarantor of the reasonable out-of-pocket expenses of
the Secured Parties (including their attorneys fees) in connection with
documenting and effecting such assignment and the related delivery to Guarantor
of the original Loan Documents in the possession of such Secured Parties. In
connection with such assignment, the Secured Parties shall deliver to Guarantor
any original Loan Documents and any Collateral in their possession and shall
execute such other documents, instruments, and agreements reasonably necessary
to effect such assignment, whereupon such Secured Parties shall be relieved from
any further duties, obligations, or liabilities to Guarantor pursuant to this
Agreement.
For greater certainty, no Secured Party shall be under any obligation
pursuant to this Agreement to approve any new credit facility or amend the terms
of any existing credit facility for the account of the Guarantor or Heddle
Marine Service Inc. for the purpose of assisting either of them to fund the
Purchase Price.
3.04 Letter of Credit
All payments made by a draw under the Letter of Credit shall reduce any
amount due hereunder on a dollar for dollar basis.
ARTICLE 4 - SUBROGATION
4.01 Subrogation
The Guarantor will not be entitled to subrogation until (i) the Guarantor
performs or makes payment to the Secured Parties of all amounts owing by the
Guarantor to the Secured Parties under this Guarantee and (ii) the Obligations
are performed and paid in full in cash. Thereafter, the Secured Parties will, at
the Guarantor's request and expense, execute and deliver to the Guarantor
appropriate documents, without recourse and without representation and warranty,
necessary to evidence the transfer by subrogation to the Guarantor of an
interest in the Obligations and any security held therefor resulting from such
performance or payment by the Guarantor.
ARTICLE 5 - GENERAL
5.01 Representation and Warranty of the Guarantor
The Guarantor represents and warrants that that it has not had commenced
and served or threatened against it by Canada Steamship Lines Inc. ("CSL") or
the Seafarers' International Union of Canada ("SIU") any litigation, labor
action, or other claim in connection with its charter of the Financed Vessel,
the operation of the Financed Vessel on the Great Lakes or St. Xxxxxxxx Seaway,
or the potential acquisition of the Financed Vessel by the Guarantor.
5.02 Binding Effect of the Guarantee
This Guarantee will be binding upon the successors of the Guarantor and
will enure to the benefit of the Secured Parties and their respective successors
and permitted assigns.
5.03 Entire Agreement
This Guarantee constitutes the entire agreement between the Guarantor and
the Secured Parties with respect to the subject matter hereof and cancels and
supersedes any prior understandings and agreements between such parties with
respect thereto. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements, express, implied or statutory, between
the parties except as expressly set forth herein. The Secured Parties will not
be bound by any representations or promises made by the Borrower to the
Guarantor, and possession of this Guarantee by the Secured Parties will be
conclusive evidence against the Guarantor that the Guarantee was not delivered
in escrow or pursuant to any agreement that it should not be effective until any
condition precedent or subsequent has been complied with and this Guarantee will
be operative and binding notwithstanding the non-execution thereof by any
proposed signatory.
5.04 Amendments and Waivers
No amendment to this Guarantee will be valid or binding unless set forth
in writing and duly executed by the Guarantor and the Agent. No waiver of any
breach of any provision of this Guarantee will be effective or binding unless
made in writing and signed by the party purporting to give the same and, unless
otherwise provided in the written waiver, will be limited to the specific breach
waived.
5.05 Severability
If any provision of this Guarantee is determined to be invalid or
unenforceable in whole or in part, such invalidity or unenforceability will
attach only to such provision or part thereof and the remaining part of such
provision and all other provisions hereof will continue in full force and
effect.
5.06 Notices
All notices and other communications provided for herein shall be in
writing and shall be delivered as follows:
(i) if to be sent to the Guarantor, at:
Xxxxx Xxxxx Xxxxxx Xxx.,
X.X Xxx 0000, 000 Xxxx Xxxxxx, Xxxx Xxxxx,
Xxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxx Xxxxxxxx, President
or Fax: (000) 000-0000
xxxxxxxxx@xxxxxxxxxx.xxx
(ii) if to be sent to the Agent, at:
GE Canada Finance Holding Company
000 Xxxxx Xxxxxx Xxxx
Xxxxx 0000, X.X. Xxx 00
Xxxxxxx, XX
X0X 0X0
Attention: Voyageur Account Manager
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
With copies to:
XxXxxxxx Xxxxxxxx XXX
Xxxxx 0000
Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx-Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxxx / Xxxxx Xxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
and:
General Electric Capital Corporation
000 Xxxxxxx 0
Xxxxxxx, XX
00000
X.X.X.
Attention: Voyageur Account Manager
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
5.07 Discharge
The Guarantor will not be discharged from any of its obligations hereunder
except by a release or discharge signed in writing by the Agent.
5.08 Governing Law
This Guarantee will be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein.
5.09 Headings
The division of this Guarantee into Articles and Sections and the
insertion of headings are for convenience of reference only and will not affect
the construction or interpretation of this Guarantee. The terms "hereof",
"hereunder" and similar expressions refer to this Guarantee and not to any
particular Article, Section or other portion hereof and include any agreement
supplemental hereto. Unless something in the subject matter or context is
inconsistent therewith, references herein to Articles and Sections are to
Articles and Sections of this Guarantee.
5.10 Extended Meanings
In this Guarantee words importing the singular number only include the
plural and vice versa, words importing any gender include all genders and words
importing persons include individuals, partnerships, associations, trusts,
unincorporated organizations and corporations.
5.11 Currency
All amounts in this Guarantee are stated and are to be calculated in
Canadian currency.
5.12 Executed Copy
The Guarantor acknowledges receipt of a fully executed copy of this
Guarantee.
5.13 Costs and Expenses
The Guarantor shall pay on demand by Agent any and all reasonable costs,
fees and expenses (including, without limitation, reasonable legal fees and
expenses) incurred by Agent in enforcing any of its rights under this Guarantee.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
LOWER LAKES TOWING LTD.
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
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Title: President
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GE CANADA FINANCE HOLDING COMPANY, as Agent
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
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Title: Vice President
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