EXHIBIT 10.2
GUARANTEE
TO: LASALLE BUSINESS CREDIT, A DIVISION OF ABN AMRO BANK N.V., CANADA BRANCH,
AS LENDER
under the Loan Agreement (as such term is hereinafter defined).
1. For valuable consideration, the undersigned and each of them (if more than
one) hereby jointly and severally unconditionally guarantees and promises
to pay to LASALLE BUSINESS CREDIT, A DIVISION OF ABN AMRO BANK N.V.,
CANADA BRANCH, as lender (the "Lender"), the full and prompt payment when
due (whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise) and performance of all indebtedness,
liabilities and other obligations of Steelbank Inc., as borrower (the
"Borrower"), party to the Loan Agreement dated as of the date hereof by
and among the Borrower and the Lender, as the same may be amended,
supplemented, revised, restated or replaced from time to time (the "Loan
Agreement"), whether arising out of or in connection with this Guarantee,
any Other Agreements or otherwise, including all unpaid principal of the
Loans, all Letters of Credit, all interest accrued thereon, all unpaid
Hedging Liabilities, all fees due under the Loan Agreement and all other
amounts payable by the Borrower to any undersigned person thereunder or in
connection therewith and any and all attorneys' fees, court costs, and
collection charges incurred in endeavouring to collect or enforce any of
the foregoing against the Borrower, the undersigned, or any other person
liable thereon (whether or not suit be brought). The terms "indebtedness,"
"liabilities" and "obligations" are used herein in their most
comprehensive sense and include any and all advances, debts, obligations
and liabilities, now existing or hereafter arising, whether voluntary or
involuntary and whether due or not due, absolute or contingent, liquidated
or unliquidated, determined or undetermined, and whether recovery upon
such indebtedness, liabilities and obligations may be or hereafter become
unenforceable or shall be an allowed or disallowed claim under applicable
law, or whether recovery of such indebtedness may be or hereafter become
barred by any statute of limitations.
Capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Loan Agreement.
2. The liability of the undersigned under this Guarantee shall be unlimited.
Regardless of whether or not any proposed guarantor or any other person or
persons has or have executed or shall execute this Guarantee or is or are
or shall become in any other way responsible to the Lender for the
indebtedness or any part thereof whether under this Guarantee or otherwise
shall cease to be so liable, this shall be a continuing Guarantee relating
to any indebtedness, including that arising under successive transactions
which shall either continue the indebtedness or from time to time renew it
after it has been satisfied and shall secure the ultimate repayment of all
monies owing from the Borrower to the Lender and shall be binding as a
continuing security on the undersigned. Notwithstanding the discontinuance
of this Guarantee by any other person or persons that shall execute this
Guarantee or is or are or shall become in any other way responsible to the
Lender for the indebtedness or any part thereof whether under this
Guarantee or otherwise, it shall remain continuing as to the other or
others and the undersigned, and
this Guarantee shall, as to the other or others and the undersigned,
remain in force and cover all indebtedness of the Borrower inclusive of
those incurred or arising down to the expiration of three (3) months after
notice of discontinuance thereof shall be given in accordance with
paragraph 10 hereof. Any payment by the undersigned shall not reduce the
maximum obligation of the undersigned hereunder.
3. The obligations hereunder are joint and several, and independent of the
obligations of the Borrower, and a separate action or actions may be
brought and prosecuted against the undersigned whether action is brought
against the Borrower or whether the Borrower be joined in any such action
or actions; and the undersigned waive(s) the benefit of any statute of
limitations affecting its/their liability hereunder.
4. The undersigned authorizes the Lender, without notice or demand and
without affecting its/their liability hereunder, from time to time, either
before or after revocation hereof, to:
(a) renew, compromise, extend, accelerate or otherwise change the time
for payment of, or otherwise change the terms of the indebtedness or
any part thereof, including increase or decrease of the rate of
interest thereon;
(b) accept partial payments on the indebtedness;
(c) receive and hold security for the payment of this Guarantee or the
indebtedness guaranteed, and exchange, enforce, waive, release, fail
to perfect, sell upon the occurrence and during the continuance of
an Event of Default, or otherwise dispose of upon the occurrence and
during the continuance of an Event of Default any such security;
(d) xxxxxx, release, compromise, collect or otherwise liquidate the
indebtedness and any security or collateral therefore in any manner;
(e) apply such security and direct the order or manner of sale thereof
as the Lender in its discretion may determine; and
(f) release or substitute any guarantors.
5. The undersigned hereby agrees that, except as hereinafter provided, its
obligations under this Guarantee shall be unconditional, irrespective of
(i) the validity or enforceability of the indebtedness or any part
thereof, or of any promissory note or other document evidencing all or any
part of the indebtedness, (ii) the absence of any attempt to collect the
indebtedness from the Borrower or any other guarantor or other action to
enforce the same, (iii) the waiver or consent by the Lender with respect
to any provision of any instrument evidencing the indebtedness, or any
part thereof, or any other agreement heretofore, now or hereafter executed
by the Borrower and delivered to the Lender, (iv) failure by the Lender to
take any steps to perfect and maintain its security interest in, or to
preserve its rights to, any security or collateral for the indebtedness,
(v) the institution of any proceeding under Chapter 11 of Title 11 of the
United States Code (11 U.S.C.ss.101 et seq.), as amended (the "Bankruptcy
Code"), or any similar proceeding, by or against the Borrower, or the
Lender's election in any such proceeding of the application of Section
1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a
security
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interest by the Borrower as debtor-in-possession, under Section 364 of the
Bankruptcy Code, (vii) the disallowance, under Section 502 of the
Bankruptcy Code, of all or any portion of the Lender's claim(s) for
repayment of the indebtedness, or (viii) any other circumstance which
might otherwise constitute a legal or equitable discharge or defense of a
guarantor.
The Lender shall have the exclusive right to determine the time and manner
of application of any payments or credits, whether received from the
Borrower or any other source, and such determination shall be binding on
the undersigned, absent manifest error. All such payments and credits may
be applied, reversed and reapplied, in whole or in part, to any of the
indebtedness as the Lender shall determine in its sole discretion without
affecting the validity or enforceability of this Guarantee.
6. The undersigned waives any right to require the Lender to:
(a) proceed against the Borrower or any other person;
(b) proceed against or exhaust any security held from the Borrower or
any other person; or
(c) pursue any other remedy in the Lender's power whatsoever.
The undersigned waives any defense arising by reason of any disability or
other defense of the Borrower, or the cessation from any cause whatsoever
of the liability of the Borrower, or any claim that the undersigned's
obligations exceed or are more burdensome than those of the Borrower, the
undersigned waives, until all the indebtedness and the Liabilities shall
be satisfied in full, any right of subrogation, reimbursement,
indemnification, and contribution (contractual, statutory or otherwise),
arising from the existence or performance of this Guarantee and,
notwithstanding the foregoing, the undersigned waives, forever, any right
to enforce any remedy which the Lender now has or may hereafter have
against the Borrower in connection with the Liabilities, and waive(s) any
benefit of, and any right to participate in, any security now or hereafter
held by the Lender. The Lender may foreclose, either by judicial
foreclosure or by exercise of power of sale, or realize any deed of trust
or other security securing the indebtedness, and, even though the
foreclosure or other realization may destroy or diminish the undersigned's
rights against the Borrower or may result in security being sold at an
under value, the undersigned shall be liable to the Lender for any part of
the indebtedness remaining unpaid after the foreclosure or other
realization. The undersigned waives all diligence, presentments, demands
for performance, notices of nonperformance, protests, notices of protest,
notices of dishonour, filing of claims in the event of receivership or
bankruptcy of the Borrower, and notices of acceptance of this Guarantee
and of the existence, creation, or incurring of new or additional
indebtedness.
7. The undersigned acknowledges and agrees that it shall have the sole
responsibility for obtaining from the Borrower such information concerning
the Borrower's financial conditions or business operations as the
undersigned may require, and that the Lender does not have any duty at any
time to disclose to the undersigned any information relating to the
business operations or financial conditions of the Borrower.
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8. To secure all of the undersigned's obligations hereunder, the undersigned
assigns and grants to the Lender a security interest in all now owned or
hereafter acquired moneys, securities and other property of the
undersigned now or hereafter in the possession of the Lender, and all
deposit accounts of the undersigned maintained with the Lender (or
otherwise), and all proceeds thereof. Upon default or breach of the
undersigned's obligations to the Lender, the Lender may apply any deposit
account to reduce the indebtedness, and may realize upon any collateral as
provided by law and in any security agreements between the Lender and the
undersigned.
9. Until all the indebtedness shall be satisfied in full and the Liabilities
shall be terminated, any obligations of the Borrower to the undersigned,
now or hereafter existing, including but not limited to any obligations to
the undersigned as subrogee of the Lender or resulting from the
undersigned's performance under this Guarantee, are hereby assigned to the
Lender and postponed and subordinated to the indebtedness. Any such
obligations of the Borrower to the undersigned received by the undersigned
shall be received in trust for the Lender and the proceeds thereof shall
forthwith be paid over to the Lender on account of the indebtedness of the
Borrower to the Lender, but without reducing or affecting in any manner
the liability of the undersigned under the provisions of this Guarantee.
This assignment and postponement is independent of and severable from this
Guarantee and shall remain in full force and effect whether or not the
undersigned is liable for any amount under this Guarantee. Notwithstanding
anything contained herein, the Lender and the undersigned are parties to a
subordination agreement in respect of the Borrower, and any conflict
between this Guarantee and such subordination agreement shall be resolved
in favour of the subordination agreement.
10. This Guarantee may be revoked at any time by the undersigned in respect to
future transactions, unless there is a continuing consideration as to such
transactions which the undersigned does not renounce. Such revocation
shall be effective upon the expiration of three (3) months after actual
receipt by the Lender at Suite 1500, Maritime Life Tower, 00 Xxxxxxxxxx
Xx. Xxxx, Xxxxxxx, Xxxxxxx X0X 0X0, Attention: Xxxxx Xxxxxx: URGENT (or
such address as the Lender may communicate to the Guarantor) of written
notice of revocation. Revocation shall not affect the undersigned's
obligations or the Lender's rights with respect to transactions which
precede the expiration of the three (3) month period following the
Lender's receipt of such notice, regardless of whether or not the
indebtedness related to such transactions, before or after revocation, has
been renewed, compromised, extended, accelerated, or otherwise changed as
to any of its terms, including time for payment or increase or decrease of
the rate of interest thereon, and regardless of any other act or omission
of the Lender authorized hereunder. If this Guarantee is revoked, returned
or cancelled, and subsequently any previous payment or transfer of any
interest in property by the Borrower to the Lender are rescinded or must
be returned by the Lender to the Borrower, this Guarantee shall be
reinstated with respect to any such payment or transfer, regardless of any
such prior revocation, return, or cancellation.
11. Where the Borrower becomes bankrupt or makes an assignment for the benefit
of creditors or if any circumstances arise necessitating the Lender to
file a claim against the Borrower and/or to value its securities, the
Lender shall be entitled to place such valuation on its securities as the
Lender may in its absolute discretion see fit and the
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filing of such claim and the valuing of securities shall not in any way
prejudice or restrict the claim of the Lender against the undersigned and
in no way discharges the undersigned or from its liability hereunder to
the Lender, either in whole or in part and until all indebtedness of the
Borrower to the Lender has been fully paid, the Lender shall have the
right to include in its claim the amount of all sums paid by any of the
undersigned to the Lender under this Guarantee and to prove and rank for
and receive dividends in respect of such claim, any and all rights to
prove and rank for such sums paid for by the undersigned and receive the
full amount of all dividends in respect thereto are hereby assigned and
transferred to the Lender by the undersigned.
12. The undersigned shall make payment to the Lender of the amount of its
liability to the Lender to the extent then due, forthwith after demand
therefor is made in writing and such demand shall be deemed to have been
effectually made (a) upon personal delivery thereof, including, but not
limited to, delivery by overnight mail courier service, (b) four (4) days
after it shall have been mailed by Canada Post mail, first class,
certified or registered, with postage prepaid, or (c) in the case of
notice by facsimile transmission, when properly transmitted, in each case
addressed to the party to be notified as follows:
If to the Lender:
Lasalle Business Credit, A Division of ABN AMRO Bank N.V.,
Canada Branch
Suite 1500, Maritime Life Tower
00 Xxxxxxxxxx Xx. Xxxx,
Xxxxxxx, XX X0X 0X0
Attention: Mr. Xxxxx Xxxxxx
Fax: (000) 000-0000
If to any undersigned person:
Tarpon Industries, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxx, Senior Vice President and Chief
Financial Officer
Fax: (000) 000-0000
or to such other address as each party may designate for itself by
like notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies
shall not adversely affect the effectiveness of such notice, demand,
request, consent, approval, declaration or other communication.
13. In paragraphs 13 to 16, the following terms shall have the following
meanings:
(a) "Excluded Taxes" means taxes, levies, imposts, deductions, charges
or withholdings, including interest, penalties or additions thereto,
and all related liabilities, imposed on or measured by net income or
net profits of the Lender,
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capital taxes or franchise taxes imposed pursuant to the laws of
Canada or by the jurisdiction under the laws of which the Lender is
organized, in which the Lender is resident for tax purposes or in
which the principal office or applicable lending office of the
Lender is located or in which it is otherwise deemed to be engaged
in a trade or business for tax purposes or any subdivision thereof
or therein, and any branch profits taxes or any similar tax imposed
by any jurisdiction on the Lender;
(b) "Governmental Authority" means any nation or government, any state,
province, municipality, region or other political subdivision
thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining
to government, any corporation or other entity owned or controlled,
through stock or capital ownership or otherwise, by any of the
foregoing and any department, agency, board, commission, tribunal,
committee or instrumentality of any of the foregoing;
(c) "Indemnified Taxes" means all Taxes other than Excluded Taxes;
(d) "Other Taxes" means any present or future transfer, mortgage, stamp
or documentary taxes or any other excise or property taxes, charges,
financial institutions duties, debits taxes or similar levies
imposed by Canada, or any province or territory thereof, the United
States or any other jurisdiction that arise from any payment under
this Guarantee or from the execution, delivery, enforcement or
registration of, or otherwise with respect to, the Guarantee;
(e) "Tax" or "Taxes" means any and all current or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
14. Gross-Up for Withholding Tax. All payments to the Lender (or any successor
or assignee thereof) by the undersigned under this Guarantee shall be made
free and clear of and without deduction or withholding for any and all
Indemnified Taxes, unless required by law. If the undersigned shall be
required by law or the interpretation thereof by the relevant Governmental
Authority to deduct or withhold any such Indemnified Taxes from or in
respect of any sum payable under this Guarantee, (i) the amount payable
shall be increased by such additional amount as may be necessary so that
after making all required deductions or withholdings (including, without
limitation, deductions or withholdings applicable to additional amounts
paid under this paragraph 13), the Lender receives a net amount equal to
the full amount it would have received if no deduction or withholding had
been made; (ii) the undersigned shall make such required deductions or
withholdings; (iii) the undersigned shall immediately pay the full amount
deducted or withheld to the relevant Governmental Authority in accordance
with applicable law; and (iv) the undersigned shall deliver to the Lender,
as soon as practicable after it has made such payment to the applicable
Governmental Authority (x) a copy of any receipt issued by such
Governmental Authority evidencing the payment of all amounts required to
be deducted or withheld from the sum payable hereunder or (y) if such a
receipt is not available from such Governmental Authority, notice of the
payment of such amount deducted or withheld.
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15. Other Taxes. The undersigned agrees to immediately pay any and all Other
Taxes which arise from any payment made by the undersigned under this
Guarantee or the execution, delivery or registration of, or otherwise,
with respect to this Guarantee.
16. Indemnity. The undersigned shall indemnify and hold harmless the Lender
for the full amount of Indemnified Taxes or Other Taxes imposed on or paid
by the Lender and any liability (including penalties, interest and
expenses payable or incurred in connection therewith) arising from or with
respect to such Indemnified Taxes or Other Taxes, whether or not they were
correctly or legally asserted. In addition, the undersigned shall
indemnify the Lender for any Taxes (including Excluded Taxes) imposed by
any jurisdiction on or with respect to any increased amount payable by the
undersigned under paragraph 13 or paragraph 16 or any payment by the
undersigned under paragraph 14 or this paragraph 15. Payment under this
indemnification shall be made within 30 days from the date the Lender
makes written demand for it, and the amounts have been fully and finally
settled. A certificate containing reasonable detail as to the amount of
such Taxes submitted to the undersigned by the Lender shall be conclusive
evidence, absent manifest error, of the amount due from the undersigned to
the Lender.
The undersigned shall furnish to the Lender the original or a certified
copy of a receipt, if available, or other reasonably acceptable document
to the Lender evidencing payment of Taxes made by it within 30 days after
the date of any such payment..
17. Authorized Foreign Banks. In addition to the provisions of paragraph 13
hereof, in the event that the undersigned is or becomes a resident of
Canada for purposes of the Income Tax Act (Canada) (the "ITA"), then in
respect of amounts paid or credited by the undersigned to or for the
benefit of a particular lender that is an "authorized foreign bank" for
purposes of the ITA, the obligations under this paragraph 16 to pay an
additional amount shall apply where the particular lender is liable for
Tax under Part XIII of the ITA in respect of such payment, even if the
undersigned is not required under the ITA to deduct or withhold an amount
in respect of Taxes on such payment and paragraph 13 hereof shall apply,
mutatis mutandis, as if the undersigned was required to withhold an amount
in respect of such Taxes. The notification provisions of paragraph 11
hereof shall apply when the relevant person becomes aware of the liability
of the Lender for tax under Part XIII of the ITA.
18. Survival. Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in paragraphs
13 to 16 shall survive the payment in full of principal, interest, fees
and any other amounts payable hereunder and the termination of this
Guarantee.
19. If any provision of this Guarantee is determined in any proceeding in a
court of competent jurisdiction to be void or to be wholly or partly
unenforceable, that provision shall for the purposes of such proceeding,
be severed from this Guarantee at the Lender's option and shall be treated
as not forming a part hereof and all the remaining provisions of this
Guarantee shall remain in full force and be unaffected thereby.
20. The undersigned consents and agrees that the Lender shall be under no
obligation to marshal any assets in favor of the undersigned or against or
in payment of any or all of the indebtedness. The undersigned further
agrees that, to the extent that the undersigned
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makes a payment or payments to the Lender, or the Lender receives any
proceeds of collateral, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to undersigned, its estate, trustee,
receiver or any other party, including, without limitation, the
undersigned, under any bankruptcy law, state or federal law, common law or
equitable theory, then to the extent of such payment or repayment, the
indebtedness or the part thereof which has been paid, reduced or satisfied
by such amount and the undersigned's obligations hereunder with respect to
such portion of the indebtedness, shall be reinstated and continued in
full force and effect as of the date such initial payment, reduction or
satisfaction occurred.
21. Notwithstanding any contrary provision of this Guarantee, it is intended
that neither this Guarantee nor any liens or security interests securing
this Guarantee constitute a Fraudulent Conveyance (as defined below).
Consequently, the undersigned agrees that if this Guarantee or any liens
or security interests securing this Guarantee would, but for the
application of this sentence, constitute a Fraudulent Conveyance, this
Guarantee and each such lien and security interest shall be valid and
enforceable only to the maximum extent that would not cause this Guarantee
or such lien or security interest to constitute a Fraudulent Conveyance,
and this Guarantee shall automatically, if permitted under applicable law,
be deemed to have been amended accordingly at all relevant times. For
purposes hereof, a "Fraudulent Conveyance" means a fraudulent conveyance
under Section 548 of the Bankruptcy Code or a fraudulent conveyance or
fraudulent transfer under any applicable fraudulent conveyance or
fraudulent transfer law or similar law of any state or other governmental
unit as in effect from time to time.
22. This Guarantee shall not be subject to or affected by any promise or
condition affecting or limiting the liability of the undersigned except as
expressly set forth herein and no statement, representation, agreement or
promise on the part of the Lender or any officer, employee or agent
thereof, unless contained herein, forms any part of this contract or has
induced the making thereof or shall be deemed in any way to affect the
liability of the undersigned hereunder.
23. There are no representations, collateral agreements or conditions with
respect to this Guarantee and agreement affecting the liability of the
undersigned hereunder other than contained herein.
24. This Guarantee and agreement shall extend to and enure to the benefit of
the Lender and its successors and assigns, and shall extend to and be
binding upon the undersigned and its or their respective successors and
permitted assigns.
25. It is not necessary for the Lender to inquire into the powers of the
Borrower or the undersigned or of the officers, directors, partners, or
agents acting or purporting to act on their behalf, and any indebtedness
made or created in reliance upon the professed exercise of such powers
shall be guaranteed hereunder.
26. The Lender may, without notice to the undersigned and without affecting
the undersigned's obligations hereunder, assign the indebtedness and this
Guarantee, in whole or in part. Subject to the confidentiality provisions
in Section 20(i) of the Loan Agreement, the undersigned agrees that the
Lender may disclose to any assignee or
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purchaser, or any prospective assignee or purchaser, of all or part of the
indebtedness any and all information in the Lender's possession concerning
the undersigned, this Guarantee, and any security for this Guarantee.
27. If for the purpose of obtaining judgment in any court or for the purpose
of determining, pursuant to the obligations of the undersigned, the
amounts owing hereunder, it is necessary to convert an amount due
hereunder in the currency in which it is due (the "Original Currency")
into another currency (the "Second Currency"), the rate of exchange
applied shall be that at which, in accordance with normal banking
procedures, the Lender could purchase, in the Toronto foreign exchange
market, the Original Currency with the Second Currency on the date two (2)
Business Days preceding that on which judgment is given or any other
payment is due hereunder. The undersigned agrees that its obligation in
respect of any Original Currency due from it to the Lender hereunder
shall, notwithstanding any judgment or payment in such other currency, be
discharged only to the extent that, on the Business Day following the date
the Lender receives payment of any sum so adjudged or owing to be due
hereunder in the Second Currency the Lender may, in accordance with normal
banking procedures, purchase, in the Toronto foreign exchange market the
Original Currency with the amount of the Second Currency so paid; and if
the amount of the Original Currency so purchased or could have been so
purchased is less than the amount originally due in the Original Currency,
the undersigned agrees as a separate obligation and notwithstanding any
such payment or judgment to indemnify the Lender against such loss. The
term "rate of exchange" in this paragraph 27 means the spot rate at which
the Lender, in accordance with normal practices is able on the relevant
date to purchase the Original Currency with the Second Currency and
includes any premium and costs of exchange payable in connection with such
purchase.
28. All words used herein in the plural shall be deemed to have been used in
the singular where the context and construction so require.
29. This Guarantee shall be governed by and construed in accordance with the
laws of the Province of Ontario.
30. The Guarantor and the Lender irrevocably consent and submit to the
non-exclusive jurisdiction of the Courts in the Province of Ontario in
connection with the resolution of any disputes relating to this Guarantee.
The Guarantor irrevocably waives any objection based on venue or forum non
conveniens with respect to any action instituted therein arising under
this Guarantee.
31. The Guarantor and the Lender each hereby waive any right to trial by jury
of any claim, demand, action or cause of action arising under this
Guarantee or in respect of this the Guarantor and Xxxxxx each hereby
agrees that any such claim, demand, action or cause of action shall be
decided by court trial without a jury and that borrower or lender may file
an original counterpart of this Guarantee with any court as written
evidence of the consent of the parties to the waiver of their right to a
trial by jury.
32. The undersigned and each of them acknowledges receipt of an executed copy
of this Guarantee.
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The parties acknowledge that they have required that this agreement and all
related documents be prepared in English.
Les parties reconnaissent avoir exige que la presente convention et tous les
documents connexes soient rediges en anglais.
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Executed under seal as of this 17th day of February, 2005.
TARPON INDUSTRIES, INC.
Per: /s/ X. XXXXX XXXXXXXX
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Name: X. XXXXX XXXXXXXX
Title: CEO
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