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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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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