LETTER OF CREDIT AGREEMENT
B E T W E E N:
LOWER LAKES TOWING LTD.
(as "Lower Lakes")
- and -
HEDDLE MARINE SERVICE INC.
(as "Heddle")
A. 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. (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 Agent and
Lenders, 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");
B. AND WHEREAS as a condition precedent to providing the Term Loan, the
Secured Parties have requested Lower Lakes to (i) guarantee certain
obligations of Voyageur under the Credit Agreement pursuant to a guarantee
dated as of August 27, 2007 (the "Guarantee"); and (ii) secure the
Guarantee with a letter of credit in the amount of Cdn. $1,250,000 (the
"Lower Lakes L/C");
C. AND WHEREAS it is in the best interest of Heddle that Voyageur enter into
the Credit Agreement and Lower Lakes provide the Guarantee;
D. AND WHEREAS as a condition precedent to providing such credit support,
Lower Lakes has required that Heddle provide a letter of credit or cash
escrow in the amount of $625,000 to support Lower Lakes' obligations under
the Guarantee;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
the covenants and agreements herein contained, the sum of $1.00 now paid by
Lower Lakes to Heddle and other good and valuable consideration (the receipt and
sufficiency of which is hereby acknowledged), the parties agree as follows:
1. Lower Lakes and Heddle acknowledge that at the date hereof, Heddle has
deposited Cdn. $625,000 (the "Escrow Funds") in an escrow account (the
"Escrow Account") with Xxxxxx Xxxxxxx LLP pursuant to an escrow agreement
dated as of the date hereof (the "Escrow Agreement").
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2. At the option of Heddle, it may deliver to Lower Lakes an irrevocable
standby letter of credit (the "Heddle L/C") in the amount of $625,000 and
otherwise in form and substance satisfactory to Lower Lakes, acting
reasonably. Upon receipt of the Heddle L/C, Lower Lakes will instruct
Xxxxxx Xxxxxxx LLP to release the Escrow Funds to Heddle and the Escrow
Agreement shall automatically terminate upon such release.
3. If Lower Lakes receives a Trigger Notice under the Guarantee, then Lower
Lakes shall be entitled to draw against the Heddle L/C or withdraw from
the Escrow Account, as applicable, on such date as payment by Lower Lakes
is required under the Guarantee, an amount equal to fifty (50%) percent of
the amount required to be paid under the Guarantee by Lower Lakes. Lower
Lakes shall promptly provide Heddle with a copy of any Trigger Notice
received by Lower Lakes.
4. If Lower Lakes determines to exercise its right under Section 3.02(a) of
the Guarantee and completes the purchase of the Financed Vessels (as
defined therein) in accordance with the requirements of the Guarantee, it
shall, within 5 Business Days of the closing of that transaction, return
the Heddle L/C for cancellation or instruct the Escrow Agent to release
the Escrow Funds to Heddle, as applicable.
5. If Lower Lakes determines to exercise its rights pursuant to Section
3.02(b) of the Guarantee to lend money on a second subordinated basis to
Voyageur (the "Voyageur Subordinated Loan"), it shall notify Heddle within
5 Business Days of making such determination. In such notice (the "Loan
Notice"), Lower Lakes shall, to the extent known, describe the terms of
the Voyageur Subordinated Loan, including the amount proposed to be loaned
by Lower Lakes and the proposed closing date. Heddle shall have the
option, by giving notice to Lower Lakes within five (5) Business Days of
receiving the Loan Notice, of participating in the loan with Lower Lakes
by lending to the Borrower an amount equal to fifty (50%) percent of the
amount proposed to be loaned by Lower Lakes (in which case the loan to be
made by Lower Lakes shall be reduced by an amount equal to the loan to be
made by Heddle), on the same terms as Lower Lakes; provided that Heddle
shall have no rights with respect to the loan or the security therefor
except to receive its pro rata share of all payments made by Voyageur
under the loan based on the relative original principal amounts of such
loans. For purposes of funding the Voyageur Subordinated Loan by Heddle,
Lower Lakes shall be entitled to draw against the Heddle L/C or withdraw
from the Escrow Account on the closing date of the Voyageur Subordinated
Loan an amount equal to the principal amount of the Voyageur Subordinated
Loan made by Heddle.
6. Without limiting Lower Lakes' rights pursuant to Section 3 above, if
Heddle fails to respond to the Loan Notice or, alternatively, notifies
Lower Lakes that it does not wish to participate in the Voyageur
Subordinated Loan, Lower Lakes shall be entitled to draw against the
Heddle L/C or withdraw from the Escrow Account, as applicable, on the
closing date of the Voyageur Subordinated Loan made by Lower Lakes, an
amount equal to fifty (50%) percent of the principal amount of such
Voyageur Subordinated Loan made by Lower Lakes.
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7. If Lower Lakes determines to acquire the loans made pursuant to the Credit
Agreement from the Secured Parties pursuant to Section 3.03 of the
Guarantee, then the provisions of Section 6 shall apply mutatis mutandis.
8. If a Lower Lakes Bankruptcy Event occurs, Lower Lakes will immediately
return the Heddle L/C for cancellation or instruct the Escrow Agent to
release the Escrow Funds to Heddle, as applicable. For purposes of this
Section 8 a "Lower Lakes Bankruptcy Event" means that Lower Lakes (i)
admits in writing its inability to pay its debts generally or makes a
general assignment for the benefit of creditors, or (ii) institutes or has
instituted against it any proceeding seeking (x) to adjudicate it a
bankrupt or insolvent, (y) liquidation, protection, relief or composition
of it or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors including any plan of compromise or
arrangement or other corporate proceeding involving its creditors, or (z)
the entry of an order for relief or the appointment of a receiver, trustee
or other similar official for it or for any substantial part of its
properties and assets, and in the case of any such proceeding instituted
against it (but not instituted by it), the proceeding remains undismissed
or unstayed for a period of 90 days.
9. Any notice, consent, waiver or other communication given under this
agreement shall be in writing and may be given by delivering it or sending
it by facsimile addressed:
(a) to Heddle at:
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
(b) to Lower Lakes at:
X.X. Xxx 0000
000 Xxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
Any such communication shall be deemed to have been delivered on the date
of personal delivery or transmission by facsimile, as the case may be, if
such day is a Business Day and such delivery or transmission was received
by the recipient party prior to 5:00 p.m. (Toronto time) and otherwise on
the next Business Day. Any person may change its address for service by
notice given in accordance with the foregoing and any subsequent notice
shall be sent to such person at its changed address.
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10. For purposes of this agreement, "Business Day" means any day other than a
Saturday, Sunday or statutory or civic holiday in Xxxxxxx, Xxxxxxx.
11. This agreement may only be amended, supplemented or otherwise modified by
written agreement of all of the parties.
12. The failure or delay by a party in enforcing or insisting upon strict
performance of any of the provisions of this agreement shall not be
considered to be a waiver of such provision or in any way affect the
validity of this agreement or deprive a party of the right, at any time or
from time to time, to enforce or insist upon strict performance of that
provision or any other provision of this agreement.
13. If any provision of this agreement is determined by a court of competent
jurisdiction in a final ruling to be illegal, invalid or unenforceable,
that provision shall be severed from this agreement and be ineffective to
the extent of such illegality, invalidity or unenforceability and the
remaining provisions shall continue in full force and effect, without
amendment.
14. Time shall be of the essence of this agreement.
15. This agreement shall become effective when executed by the parties and
after that time shall be binding upon and enure to the benefit of the
Parties and their respective successors and permitted assigns. Neither
this agreement nor any of the rights, duties or obligations under this
agreement are assignable or transferable by a party without the prior
written consent of the other parties.
16. This agreement may be executed in any number of separate counterparts
(including by facsimile or other electronic means) and all such signed
counterparts shall together constitute one and the same agreement.
IN WITNESS WHEREOF the parties have executed this agreement as of the 27th day
of August, 2007.
LOWER LAKES TOWING LTD.
Per: /s/ Xxxxx Xxxxxxxx
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Authorized Signing Officer
HEDDLE MARINE SERVICE INC.
Per: /s/ Xxxxxxx Xxxxxx
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Authorized Signing Officer
